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All accounts of a business should be listed in a chart of accounts. Usually the accounts are classified as
- assets,
- liabilities,
- owner's equity,
- revenue, and
- expenses.
Accounts appear in the general ledger in a sequential order of the chart of accounts. The first digit of a number in the chart of accounts indicates the major division in which the account is placed. A second number of an account represents a specific category When the general ledger is first prepared and account balances from the previous period are entered, this is known as opening the ledger.
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