ocr: Account Classification The purpose of bookkeeping is to produce the accounts or financial statements ofal business. These financial statements are the means by which a business reports its performance (Profit and Loss Account) and its financial position (Balance Sheet). Every transaction causes a debit entry in one account and a credit entry in another and you will find it simplifies matters considerably if you classify all accounts as belonging to one of the following five categories: ASSETS LIABILITIES Balance Sheet CAPTIAL Profit &r Loss INCOME Account EXPENSES
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