What are the five main account types in accounting?

The five main account types in accounting are essential for understanding the structure of financial statements and the flow of transactions. These types comprise Assets, Liabilities, Equity, Revenue, and Expenses.

Assets represent everything that a business owns which has economic value (like cash, inventory, and property). Liabilities are obligations that the business owes to outside parties, such as loans and accounts payable. Equity reflects the residual interest in the assets of the entity after deducting liabilities, essentially representing the owners' stake in the business. Revenue accounts for the income generated from normal business operations, while Expenses capture all costs incurred in the process of earning that revenue.

Each of these account types plays a crucial role in the accounting equation (Assets = Liabilities + Equity) and the preparation of financial statements such as the balance sheet and income statement. Including all five account types provides a comprehensive view of a company's financial health, making option C the correct selection.