Classes of transactions & account balance

They don’t require formal definition – they are generally understood terms – an account balance is just that – any balance on a (general ledger) a/c that will be a balance in SoFP. Class of transactions – transactions of the same type/class – e.g. sales is a class, purchases is a class, etc.

If you consider the financial statement assertions it wouldn’t make sense to consider these independently for “water and electric expense” and separately again for “rent and rates”, etc, etc. So a class is what you can put together as “like” items – and in that respect I would say “like” should include how the transactions are processed. So I would distinguish purchases (of raw materials/finished goods) from expenses (collectively). Even though all may be recorded in a purchase day book/purchase ledger, purchases would also have inventory-related documents and records.

Bear in mind that additions to non-current assets would be a separate class of transactions (e.g. they require different authorisation and they are also recorded in an asset register, etc) and disposals of non-current assets would be a separate class (distinguishable from sales of goods).