Final answer:
Transactions on account impact a company's balance sheet, affecting both expense accounts and liability accounts. However, they can also affect other types of accounts, such as assets and revenues, depending on the nature of the transaction. A T-account can help visualize these accounting entries.
Step-by-step explanation:
When a transaction includes the phrase on account, it typically means that a transaction is being made on credit rather than with immediate payment. This kind of transaction affects the company's balance sheet by impacting both expense accounts and liability accounts. For example, if a company purchases supplies on account, this increases the company's expenses and also increases its accounts payable, which is a liability. However, saying that transactions on account will only impact expense and liability accounts is misleading. For instance, purchasing equipment on account would increase assets and liabilities, specifically under equipment (an asset) and accounts payable (a liability). Similarly, making sales on account would affect revenues (income statement) and accounts receivable (balance sheet).
The concept of a T-account helps to visualize these transactions. One side represents debits and the other credits, affecting different accounts based on the type of transaction. Time deposit accounts involve putting money in a bank for a set period and are related to savings, not expenses or liabilities. Transaction costs refer to expenses associated with financial transactions but are not specific to on account transactions. A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions, but it is not limited to expenses and liabilities. Therefore, while transactions on account do impact expenses and liabilities, they can also affect a broad range of other accounts depending on the context of the transaction.