Account Classification Rubric
Document Reference: ACR-2084-02
Effective Date: [Month, Day Year]
This document outlines our company's Account Classification Rubric, a systematic approach to categorize financial accounts for efficient management and reporting. This rubric ensures consistency and clarity in our financial documentation and analysis.
Classification Criteria
The accounts are classified based on the following criteria:
Nature of Transaction (Revenue, Expense, Asset, Liability, Equity)
Frequency of Transaction (Regular, Occasional, Rare)
Amount Range (Small, Medium, Large)
Account Categories
Revenue Accounts
Regular Income: Recurring revenue streams
Occasional Income: Non-recurring or seasonal income
Other Income: Miscellaneous or infrequent income sources
Expense Accounts
Operational Expenses: Regular business operation costs
Capital Expenses: Infrequent, high-value expenditures
Miscellaneous Expenses: Unplanned or irregular expenses
Asset Accounts
Current Assets: Assets convertible to cash within a year
Fixed Assets: Long-term tangible assets
Intangible Assets: Non-physical assets with value
Liability Accounts
Short-term Liabilities: Obligations due within a year
Long-term Liabilities: Obligations due beyond a year
Equity Accounts
Owner's Equity: Owner's investment in the business
Retained Earnings: Profits reinvested in the business
Rubric for Classification
Account Type | Frequency | Amount Range | Example |
Revenue | Regular | Small-Medium | Sales Revenue |
Revenue | Occasional | Large | Asset Disposal Gain |
Expense | Regular | Small | Utility Bills |
Expense | Rare | Large | Machinery Purchase |
Asset | - | Medium-Large | Office Building |
Liability | - | Medium | Bank Loan |
Equity | - | Large | Shareholder Capital |
Application of Rubric
To demonstrate the application of this rubric, consider the following financial transactions:
Transaction A: Sale of goods totaling $5,000 (Regular, Small-Medium, Revenue)
Transaction B: Purchase of a new office computer for $1,200 (Rare, Small, Expense)
Transaction C: Receipt of a bank loan for $50,000 (Large, Liability)
According to our rubric:
Transaction A is classified under Regular Revenue.
Transaction B falls under Rare Expenses.
Transaction C is categorized as a Medium Liability.
Prepared By: [Finance Department Head Name]
Reviewed and Approved By: [Chief Financial Officer Name]
Document Completion Date: [Month Day, Year]
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