Types of Natural Accounts:
Accounting Definition:
A Systematic process of identifying, registering,
measuring, classifying, verifying, summarizing, interpreting and reporting the
financial information is called as Accounting.
It provides the profit or loss for a given period and the
value and nature of a firm's assets, liabilities and owners' equity.
Accounting
Equation:
Assets - What it owns
Liabilities - What it owes to others
Owner's Equity - Difference between assets and
liabilities
In other words, the Accounting Equation can be rewritten
as:
Balance Sheet:
Organizations which are registered under Government is
obliged to disclose the above mentioned balance in a document which is called as
Balance Sheet.
Types of Natural Accounts:
The types of natural accounts are:
1. Assets Account
2. Expense Account
3. Liability Account
4. Owner’s Equity Account
5. Revenue Account
In Oracle General Ledger, when we attach
the “Natural Account” Flexfield Qualifier to a segment. System
attaches the 5 nature on the Value form.
When we add the Natural Account Value, we have to define
the nature of the account as well.
1. Assets
Account:
An asset which is belongs to an organization used for
future operations.
Example: Cash On Hand, Notes Receivable, Accounts
Receivable, Other Receivable, Pre-paid Expense, Land, Equipment, Building, Bank
Account, Purchase Area, etc…
Asset Account increases
when it is debited and decreases when credited.
2. Expense /
Cost Account:
Expenditure is incurred by the enterprise or organization
to earn revenue.
Example: Salary, Wages, Repair Suppliers, Services, Rent.
Expense Account
increases when it is debited and decreases when credited.
3. Liability
Account:
Amounts owed by the organization to the outsiders except
the owner of the organization.
Example: Bank Overdraft, Creditors, Accounts Payable,
Notes Payable and Interest.
Liability
Account increases when it is credited and decreases when debited.
4. Owner's
Equity Account:
Owner's Equity is the total Claim by the owner against
the organization.
Example: Capital.
Equity Account increases
when it is credited and decreases when debited.
5. Revenue
Account:
Revenue is the Monetary earning through the
organization's primary business.
Example: Sale of Products, Services, etc.
Revenue Account
increases when it is credited and decreases when debited.
The below table summarize the nature account credit &
debit:
