What is an Account

I know every one of you wants to know what is an Account. 

It is a new subject when you choose your stream in COMMERCE. Yes, u can say it maths because u have to do calculations during accounting.

Hi guys, I am Madhav Kaushik  { I am a commerce student }  

You can ask any questions about the topic in comment box.

 So, lets start the Topic .

An account (in book-keeping) refers to assets, liabilities, income, expenses, and equity, as represented by individual ledger pages, to which changes in value are chronologically recorded with debit and credit entries. These entries, referred to as postings, become part of a book of final entry or ledger. Examples of common financial accounts are sales, accounts ^[1]receivable, mortgages, loans, PP&E, common stock, sales, services, wages and payroll.

A chart of accounts provides a listing of all financial accounts used by particular business, organization, or government agency.

The system of recording, verifying, and reporting such information is called accounting. Practitioners of accounting are called accountants.

What are the Different Account Types in Accounting?

• Cash Accounts. A cash account is the easiest way to record cash payments, deposits and withdrawals. ...
• Bank Accounts. We use this account type to refer to bank accounts that are used for the purpose of running your business. ...
• Credit Cards. ...
• Undeposited Funds. ...
• Income Accounts. ...
• Expense Accounts. ...
• Assets. ...
• Liabilities.

Debits and credits

In double entry bookkeeping, debits and credits (abbreviated Dr and Cr, respectively) are entries made in account ledgers to record changes in value resulting from business transactions. Generally speaking, the source for spending money in a transaction in the account is credit (that is, an entry is made on the right side of the account's ledger), and what the money obtained with the credit is described as a debit (that is, an entry is made on the left side). Credits could be share capital, revenues, etc., while debits could be assets, dividends, and so on. From a technical point of view, the sides refer to the balance sheet placement of accounts.^[1] Total debits must equal total credits for each transaction; individual transactions may require multiple debit and credit entries.^[2][3]

The difference between the total debits and total credits in a single account is the account's balance. If debits exceed credits, the account has a debit balance; if credits exceed debits, the account has a credit balance.^[4] For the company as a whole, the totals of debit balances and credit balances must be equal as shown in the trial balance report, otherwise an error has occurred.^{[citation needed]}

Accountants use the trial balance to prepare financial statements

History

The first known recorded use of the terms is Venetian Luca Pacioli's 1494 work, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (translated: Everything That Is Known About Arithmetic, Geometry, Proportions and Proportionality). Pacioli devoted one section of his book to documenting and describing the double-entry bookkeeping system in use during the Renaissance by Venetian merchants, traders and bankers. This system is still the fundamental system in use by modern bookkeepers.^[5] Indian merchants had developed a double-entry bookkeeping system, called bahi-khata, predating Pacioli's work by at least many centuries,^[6] and which was likely a direct precursor of the European adaptation.^[7]

One theory is that in its original Latin, Pacioli's Summa used the Latin words debere (to owe) and credere (to entrust) to describe the two sides of a closed accounting transaction. Assets were owed to the owner and the owners' equity was entrusted to the company. At the time negative numbers were not in use. When his work was translated, the Latin words debere and credere became the English debit and credit. Under this theory, the abbreviations Dr (for debit) and Cr (for credit) derive from the original Latin.^[8] However, Sherman^[9]casts doubt on this idea because Pacioli uses Per (Latin for "from") for the debtor and A (Latin for "to") for the creditor in the Journal entries. Sherman goes on to say that the earliest text he found that actually uses "Dr." as an abbreviation in this context was an English text, the third edition (1633) of Ralph Handson's book Analysis or Resolution of Merchant Accompts^[10] and that Handson uses Dr. as an abbreviation for the English word "debtor." (Sherman could not locate a first edition, but speculates that it too used Dr. for debtor.) The words actually used by Pacioli for the left and right sides of the Ledger are "in dare" and "in havere" (give and receive).^[11] Geijsbeek the translator suggests in the preface:

'if we today would abolish the use of the words debit and credit in the ledger and substitute the ancient terms of "shall give" and "shall have" or "shall receive", the personification of accounts in the proper way would not be difficult and, with it, bookkeeping would become more intelligent to the proprietor, the layman and the student.'^[12]

As Jackson has noted, "debtor" need not be a person, but can be an abstract operator (cf. "divisor" in math):

"...it became the practice to extend the meanings of the terms ... beyond their original personal connotation and apply them to inanimate objects and abstract conceptions..."^[13]

HERE A VIDEO IS FOR YOU TO KNOW MORE ABOUT ACCOUNTING. ↘