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 some 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.