Account Types
- Cash
- The cash account type is used to denote the cash
that you store in your wallet, shoebox, piggybank, or
mattress.
- Bank
- The Bank account type denotes a savings or
checking account held at a bank or other financial
institution.
- Such accounts sometimes bear interest.
- Credit
- The Credit card account is used to denote credit
card accounts, whether involving floating lines of credit as
with VISA, MasterCard, or Discover, as well as others like
American Express that do not permit you to maintain
continuing balances.
- The introduction of Check
Cards where payments are withdrawn directly from a
checking account makes the selection less clear; it is
probably more appropriate to treat a "Check Card" as a
Bank account, as it does withdraw amounts directly from
such an account, not really involving any granting of
credit.
- Asset, Liability
- Asset and Liability accounts are used for
tracking things that are of value, but that are not so
directly translated into cash .
- For instance, you might collect the costs of purchasing a
house into an asset account entitled My House, or the
cost of a car into My Car, or collect together the
value of your Computer Equipment.
- And the home mortgage or car loan would be represented by
liability accounts, Home Mortgage and Car
Loan, to be drawn down as payments are made on these
loans.
- If you hold assets for business purposes, their decline
in value over time might be treated as a deduction for tax
purposes, that deduction being called Depreciation.
- On the other hand, if you own assets that
appreciate in value over time, such as real estate,
collectibles like paintings, and investments like shares in
companies, you may see them appreciate in value, and have to
recognize, for tax purposes, what are called Capital Gains.
- Stock, Mutual Fund
- Securities that you invest in are a form of asset that
are normally acquired with the express purpose of receiving
income either in the form of dividends, interest, or Capital Gains. There are a
multitude of securities markets around the world, and
securities that are widely enough traded can have pretty
concrete values that may be analyzed on a day-to-day
basis.
-
Stock and Mutual Fund accounts are typically tracked in
registers having three main columns:
- Price
- Number of shares
- Cost
-
In order to get useful information out of the
register, it is necessary to have multiple "views" on the
data so that you may assess such things as:
- Total Values by security
- Gains/Losses by security
- Return On Investment rates by security
- More details may be found in the Stock Ticker section.
- Income,
Expense
- Income and Expense accounts are used to
collect incomes and expenses.
- Equity
- Equity accounts are used to balance the balance
sheet, indicating the portion of the "corporate" value
represents the net amount that the owners own.
- On a year-by-year basis, a computed value called
Retained Earnings indicates the net value of the
enterprise; it is generally considered a good thing when this
value increases.
- Currency
- Currency Accounts are used for trading
currencies.
- In most ways, they behave like stocks, except that the
only way that "income" may be gotten from them is from
fluctuations in the relative values of currencies. Note that
transfers cannot be made directly between two accounts
denominated in different currencies. Such transfers may only
be made into currency trading accounts.
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