Types of Accounts and Line Items

It's hard to determine where transactions should be recorded in the business' books. From our meetings with entrepreneurs, here are a couple of the most common:

  • Cost of Goods Sold: the costs that can be linked directly to the production of what the business sells. Examples:

    • The supplies a restaurant uses to make its dishes

    • All of the material used to make a handbag

  • Inventory: an asset that is intended to be sold in the ordinary course of business.