Lesson: The 5 Account Families
Assets: Things owned with future economic value (Cash, A/R, Inventory, Equipment).
Liabilities: Settled debts owed to third parties (A/P, Notes Payable, Unearned Revenue).
Equity: Residual owner claim = Assets − Liabilities (Common Stock, Retained Earnings).
Revenue: Gross inflows from delivering goods or services (Sales, Consulting Fees).
Expense: Operational costs consumed to generate revenue (Rent, Utilities, Wages).
Common Trap: Prepaid Rent is an Asset (benefit owed to you), whereas Unearned Revenue is a Liability (service you owe to a customer).