General ledger accounts are divided into five types of categories. The types include assets, liabilities, income, expense and capital. Assets represent what an individual or entity owns while liabilities represent what is owed. Income is money that is earned while expense is money that is spent. Capital is comprised of net income and expense plus the money that the owner originally invested.




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General ledger liability accounts represent the financial obligations that a business entity owes to outside parties. Liability accounts are also categorized as current or non-current. Current liabilities are those items that must be paid within one year, such as salaries and accounts payable. Non-current liabilities are debts and other financial obligations that are due after one year, such as long-term loans and notes. Assigned general ledger numbers for a liability account are 2000 through 2999.



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General ledger revenue accounts are items that a business entity earns from third parties in the form of income, such as sales revenue, fees and services earned. Revenue accounts reflect credit balances unless they are offset by contra accounts, such as sales returns and allowances. Assigned general ledger numbers for revenue accounts are 3000 through 3999.



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General ledger expense accounts are items that the business enterprise must pay in order to earn revenue. These costs include direct expenses incurred, such as the purchase of materials used to create goods, as well as indirect expenses for the operation of the business enterprise, such as utilities. Expense accounts reflect debit balances unless they are offset by contra accounts. Assigned general ledger numbers for expense accounts are 4000 through 4999.



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General ledger capital accounts represent shareholder equity that consists of the original amount of money invested into the business along with the remaining balance of retained earnings from net profits transferred to capital. Capital accounts should reflect credit balances unless the company is operating at a loss. Assigned general ledger numbers for capital accounts are 5000 through 5999.