Every business organisation have properties, liabilities capital. For running business it will earn certain income or revenue or has to incur expenses or losses.

As per American approach accounts of a business can classified into five heads. They are,

1. Assets accounts: Assets are properties of Business. The rights and resources owned by business for running its activities as per objectives come under Assets accounts. 

Example: Land and Building, Machinery, Furniture etc.

2. Liabilities accounts: These are the amounts of credit or debt owed by business to external persons.

Example: Creditors Bank loan, Bills payable, outstanding expenses etc.

3. Capital accounts: It represent owner’s fund or internal funds, owners claim on assets of the business. Capital is an excess of Assets over liabilities. It includes fund invested by owners, reserves and surplus. Capital is personal accounts of owner. 

4. Income accounts: Amount received or receivable by business from sale or service of its product. Example: Commission Discounts, Rent Interests, dividend received etc. These accounts are same as the “Nominal A/c” in English system.

5. Expenses accounts: Amount paid or payable for service obtained by business from outsiders are recorded in these a/c. These Expenses need for carrying out business operations. Example: Salary, Rent, Carriage, Advertising etc.