The purpose of accounts is to report on financial information about the financial position and cash flows of a business. This information is then used to make decisions about what to do with the businesses money and how to run the company.
Definitions of the five different categories of accounts
An asset is something of value that is owned by a company. It can be a current asset or long term asset.A liability is something that the business is going to pay like creditors or vat either as a current liability or a long term liability.Equity is what the owners have invested in a business. It represents what the business owes to its ownersRevenue is the money that a business earns from selling products.An expense is the money that goes out of a business or the money that a business spends
The difference between capital and revenue accounts
Capital accounts are the net of public and private international investments or the net worth of a business at a specific point in time. Revenue accounts are a equity accounts with a credit balance. Revenue accounts are rarely debited because revenue are only generated unlike capital accounts.