Chart Of Accounts For Real Estate Investment Company
Introduction
Real estate investment is a lucrative business that requires proper bookkeeping and accounting. A chart of accounts is a critical tool that helps real estate investors keep track of their financial transactions. A chart of accounts is a comprehensive list of all the accounts used by a company to record transactions. In this article, we will discuss the chart of accounts for a real estate investment company.
Asset Accounts
Asset accounts are accounts that represent the resources owned by the real estate investment company. These accounts include cash, accounts receivable, inventory, and property. Cash accounts are used to track the cash balance of the company, while accounts receivable accounts are used to track the amount of money owed to the company by its customers. Inventory accounts are used to track the properties owned by the company, while property accounts are used to track the value of the properties owned by the company.
Liability Accounts
Liability accounts are accounts that represent the debts owed by the real estate investment company. These accounts include accounts payable, loans payable, and mortgages payable. Accounts payable accounts are used to track the amount of money owed by the company to its suppliers, while loans payable accounts are used to track the amount of money owed by the company to its lenders. Mortgages payable accounts are used to track the amount of money owed by the company on its properties.
Equity Accounts
Equity accounts are accounts that represent the equity or ownership of the real estate investment company. These accounts include common stock, retained earnings, and owner's equity. Common stock accounts are used to track the value of the company's outstanding shares, while retained earnings accounts are used to track the amount of money that the company has earned and retained. Owner's equity accounts are used to track the value of the company's assets minus its liabilities.
Revenue Accounts
Revenue accounts are accounts that represent the income earned by the real estate investment company. These accounts include rental income, sales revenue, and service revenue. Rental income accounts are used to track the income earned by the company from its rental properties, while sales revenue accounts are used to track the income earned by the company from the sale of its properties. Service revenue accounts are used to track the income earned by the company from its services.
Expense Accounts
Expense accounts are accounts that represent the expenses incurred by the real estate investment company. These accounts include salaries and wages, rent, utilities, repairs and maintenance, and property taxes. Salaries and wages accounts are used to track the amount of money paid by the company to its employees, while rent accounts are used to track the amount of money paid by the company for rent. Utilities accounts are used to track the amount of money paid by the company for utilities, while repairs and maintenance accounts are used to track the amount of money paid by the company for repairs and maintenance. Property taxes accounts are used to track the amount of money paid by the company for property taxes.
Conclusion
A chart of accounts is an important tool for real estate investors to keep track of their financial transactions. It is essential to have a chart of accounts that is specific to the real estate investment business. By following the guidelines outlined in this article, real estate investors can create a comprehensive chart of accounts that will help them keep track of their finances and make informed business decisions.
