When labeling accounts, the 400s are used for which type of accounts?

• A. Asset accounts
• B. Liability accounts
• C. OE accounts
• D. Revenue accounts

Answer: (D)

In most chart-of-accounts systems, numbers are grouped by account type, so you can identify an account's category just by its number. The 400s are reserved for revenue accounts, such as Sales Revenue or Service Revenue. Revenue accounts are linked to income and thus to equity; they increase with credits and typically have credit balances, which is why they’re placed in the revenue range. This organization also aligns with how revenues appear on the income statement and influence net income. By contrast, asset accounts are usually in the 100s (debit balances), liability accounts in the 200s (credit balances), and owner’s equity in the 300s (credit balances). Expenses, when used, often fall in the 500s, though numbering can vary by chart of accounts.