The double entry method is akin to a revolution in accounting. Its essence is that a business transaction is reflected simultaneously on two different accounts, due to which the overall balance is always maintained. Active accounts and passive, active-passive - what's the difference, what is the order of recording on them? Read more in the article.
Assets and liabilities
Any account is designed to reflect on it business transactions that occur in the enterprise. In any firm there are assets, what they possess: money and their equivalents, property. And there are sources, that is, funds, due to which money and property appeared at the enterprise. These can be loans, debts to suppliers and much more.
It is this principle that underlies the division of accounts. Active accounts are those on which property is counted. Passive accounts are those that reflect obligations or sources. There are also a number of accounts that can be both active and passive at the same time.
The order of recording on the active account is as follows: initial balances (balance) can be reflected only by debit, credit transactions, when the company receives property, are always reflected by debit, expenditure (disposal of valuables from the organization) - by credit. End balances can only be written by debit. If suddenly in the program the remains are displayed differently, this indicates an error.
List of active accounts
You can find all accounts and see which section they belong to in the chart of accounts for accounting. The section "Active Accounts" is the longest in terms of terms, it contains 21 points.
Conventionally, they are divided into groups. Accounts 01 and 03 are used for information about fixed assets in an enterprise, as well as investments that have been made in the creation or acquisition of wealth.
The following three accounts are devoted to intangible assets (04, 08, 09), the reflection of information about them, about investments in their creation and about deferred assets, respectively.
On account 10, records of materials are kept, at 19 VAT is collected on acquired values and services, which will be accepted for offset.
The numbers of active accounts from 20 to 29 are related to the production activity of the enterprise. These accounts are not maintained in all companies, but only in those engaged in the production of products.
Account 41 is intended to reflect information about purchased goods, 43 - to account for finished products in production. Account 44 collects all expenses incurred by the company in connection with the sale of purchased goods or manufactured products.
Account 45 takes into account those goods that are on the way at the time of accounting, that is, they are shipped from the warehouse, but there is still no confirmed fact of their receipt by the buyer.
Accounts 50, 51 and 52 are set up to account for cash. Respectively: cash, current account and those in foreign currency. Account 58 takes into account all financial investments made in the enterprise.
The last account in this section, number 97, is used to account for deferred expenses.
Features of the passive account
Since these accounts are intended to account for sources, then records on them are kept quite differently. Initial balances are reflected only on the loan. Operations to reduce liabilities - debit, for the growth of liabilities used credit.
The final balances are reflected only on the credit of the account. If in the accounting program this is not the case, the reason may be only an error made by the accountant.
List of passive accounts
It is much shorter, it includes only nine points. Accounts 02 and 05 are provided for accounting for depreciation of fixed assets and intangible assets.
On account 42 accounting of the trade margin is kept. 66 and 67 are designed to account for loans and credits that the company has issued for a short time or for a long time.
Account 70 is intended to keep records of wages to employees of the enterprise. On account 77 settled deferred tax liabilities.
Features of active-passive accounts
These accounts are used both to reflect information about the property of the organization, and about all sources of its occurrence.
In this group allocate accounts with one-sided or two-sided reflection of the balance. The first group includes the account 99, which takes into account the profits and losses of the enterprise. After all, the result of the work can only be one or the other: good or bad. Accordingly, if the amount of income of the organization exceeds the amount of expenses, then the result will be a profit, and the final balance will be recorded on the credit of the account, will fall into the liabilities side of the balance, as it relates to sources.
If expenses exceed income, then the result will be a loss, which will be reflected in the account in the form of the balance of the debit account 99.
Bilateral balance can be on the account 76, designed to reflect the calculations with different debtors and creditors. If the final balance is reflected in the debit, then the score 76 is active, if the loan, then it becomes passive. Rolling up the balance on an active-passive account with a double balance by arithmetical method when drawing up a balance sheet is a serious mistake. Debit balances should be placed in the asset balance, and credit - in the liability.
Consequently, the initial balances on accounts that belong to the active-passive group can be both in debit and in credit. Movement is also reflected on both sides, we have already considered the final balances.
List of active-passive accounts
This group has 14 points. Accounts 99 and 76 are already familiar to you. In addition to them, there is a score of 40, which reflects the output. The accounts of calculations include 60 and 62. The first one is for buyers, the second one is for suppliers. Accounts 68 and 69 recorded relationships with tax authorities, the pension fund and other social institutions on accrued and transferred taxes and fees.
Accounts 71, 73, 75 and 79 are used for settlements within the enterprise, with accountable persons, personnel, founders. Score 71 is active when debit balances on it, passive - when credit. 73,75 and 79 behave the same way.
There is still a small group of accounts that are necessary to reflect the financial results of the enterprise. This is account 84, which records information about retained earnings or uncovered loss. Then the score 90 for sales results, the score 91, which is used for income and expenses that are not related to the main activity of the enterprise. And the score of 99, described above.
Account Features 90
In general, the accounting logic is simple, but there are several accounts that are more difficult to understand.
Is the score 90 active or passive? He is in the active-passive group, but he behaves interestingly. Inside the account there are subaccounts. 90.1 is intended to reflect revenue and can only be passive. Subaccount 90.2 is used to reflect the cost of goods sold and can only be active. Subaccount 90.3 is intended for records of VAT information and can only be active.
Subaccount 90.9 is designed to reflect the financial results of the sale and manifests itself both active and passive, depending on what was the result: profit or loss.
Therefore, the answer to the question of whether the score 90 is active or passive cannot be unequivocal. Perhaps both the first and second.
Features of billing accounts
There are subtleties in accounts 60 and 62. Despite the fact that they are in the group of active-passive, each of them has its own inclinations. Score 60 predominantly behaves as passive, since the more common situation is that the company owes to the suppliers, and not vice versa. If the feature of the contract is to work on a prepaid basis or the amount is transferred by mistake more than required, then the account shows signs of active.
62 account is active-passive, but in most cases it behaves as active. Since usually buyers owe money to the company, and not vice versa.
Both of these accounts relate to those for which the balance for the balance does not fold, but are recorded in both directions, if there is both a debit balance and a credit balance.
Off-balance sheet accounts
For completeness, it remains to consider a small group of accounts that do not affect the balance of the company, and therefore are called off-balance sheet. They are used to account for property and valuables that do not belong to the enterprise. For example, leased equipment or values accepted under a custody agreement. Among them are also active accounts and passive. Companies operating under a commission agreement are all off-balance accounting, since they sell goods whose ownership remains with the principal.
Another important feature. Double entry on off-balance accounts is not maintained. Information is entered as a simple entry either to the debit of the account or to credit.