Accounting accounts are the categories used to classify transactions when preparing financial statements. They come in two major types: assets, liabilities and equity (known as Real Accounts) and income and expenses (known as Nominal Accounts). Asset accounts contain items owned by a business, such as cash, inventory and equipment. Liability accounts contain debts owed to a business, such as loans, credit lines and other payables. Equity accounts represent the owners’ stake in the business and include retained earnings, capital contributed by owners, and any revaluations of assets. Income accounts reflect sales revenue or other inflow of funds, while expense accounts track costs or other outgoings from a business. Together, these account types form the foundation for understanding your business’s financial performance.