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Being able to identify an account as an assets, liabilities, or owner equity is critical.
You need to be able to look at every change in account and be able to understand the implications for the company.
If you know the accounting equation, you've already learned was assets, liabilities and equity are.
There are three more important types that you need to learn next:
- Draw - Money that an owner takes out of the company
- Expense - Money that a company has spent
- Revenue - Money that a company received from product and service sales