Expense and Revenue Accounts
These represent the daily cost to keep the business in effective operation. Expenses would include light , water bills, telephone charges, wages and salaries, cleaning, transportation, stationery used, and insurance. All expense accounts are debited.
Revenues represent the monetary value of goods and services that have been delivered to customers. Revenues would include rent received, commissioned received and discount received. All revenue accounts are credited.
Profit is the excess of revenues over expenses for an accounting period. It is represented by revenues minus expenses for the accounting period. Profits will have an increasing effect on increase capital.
Loss is the excess of expenses over revenues for an accounting period. Loss will decrease capital.
Drawings represent the monetary of any asset which the owner takes out of the business for his personal and private use. The drawings account is debited.