What type of accounts include revenue and expense accounts?

Revenue and expense accounts are essential components of a company's financial performance and are documented on the income statement. The income statement primarily reflects a business's operational effectiveness over a specific period, detailing how much money was earned and spent.

Revenue accounts capture the inflow of resources from sales and services, showcasing the company’s ability to generate income. Expense accounts, on the other hand, represent the costs incurred in the process of generating that revenue, such as salaries, rent, and utilities. The net effect of these accounts—total revenues minus total expenses—determines the company's profit or loss for the period, which is critical for assessing the overall financial health of the organization.

In contrast, balance sheet accounts are focused on what the company owns and owes at a specific point in time, such as assets, liabilities, and owner's equity; they do not reflect operational results over time. Similarly, asset accounts are part of the balance sheet, listing individual resources owned by the business, while owner's equity accounts represent the residual interest in the assets of the business after deducting liabilities. These accounts do not pertain to revenues or expenses, further emphasizing the distinction made by the income statement.