Accounts are classified in the ledger

Accounts in a ledger are typically classified into five main categories:

1. Assets: These are resources owned by a business that have economic value. Examples include cash, accounts receivable, inventory, and property.

2. Liabilities: These are obligations that the business needs to pay in the future. Examples include loans, accounts payable, and mortgages.

3. Equity: This represents the owner's interest in the business. It includes common stock, retained earnings, and additional paid-in capital.

4. Revenues: These are the earnings generated from the business's core activities, such as sales revenue and service revenue.

5. Expenses: These are the costs incurred in the process of earning revenue, such as rent, utilities, and salaries.

Each category helps in organizing financial information to provide a clear picture of the financial health and performance of a business.