Professional Documents
Culture Documents
• Introduction to Accounting
• Branches of Accounting
• Users of Accounting Information
• Forms of Business Organization
• Types of Business According to Activities
• Accounting Concepts and Principles
• Types of Major Accounts and Accounting Equation
• Financial Statements and Books of Accounts
• Business Transactions and Their Analysis As Applied to the
Accounting
ASSETS
LIABILITIES
EQUITY
INCOME
EXPENSES
resources controlled by the entity as a result of past transactions or events and from
ASSETS which future economic benefits are expected to flow to the entity.
are present obligations of the entity arising from past transactions or events the
LIABILITIES settlement of which is expected to result in an outflow from the entity of resources
embodying economic benefits
EQUITY residual interest in the assets of the entity after deducting all its liabilities
increase in economic benefit during the accounting period in the form of inflow or
INCOME increase in asset or decrease in liability that results in increase in equity, other than
contribution from equity participants
decrease in economic benefit during the accounting period in the form of outflow or
EXPENSES decrease in asset or increase in liability that result in decrease in equity other than
distribution to equity participants
DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT
TYPES OF MAJOR ACCOUNTS
OR
BALANCE SHEET
(Real or Permanent Accounts)
3 ELEMENTS
1. ASSETS
2. LIABILITIES
3. OWNER'S EQUITY
Current Current
- are financial obligations
- all assets that are
of the enterprise which are
expected to be realized,
expected to be settled in
sold or consumed within 1
the normal course of the
year
operating cycle (1 year)
ASSETS
CURRENT ASSETS NON CURRENT ASSETS
Cash Property and Equipment
Cash Equivalent Land
Petty Cash Fund
Building
Notes Receivable
Equipment
Accounts Receivable
Furniture and Fixtures
Est. Uncollectible Accounts
Intangible Assets
Advances to Employees
Accumulated Depreciation
Inventories
Accrued income
Prepaid Expenses
DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT
TYPES OF MAJOR ACCOUNTS
CURRENT ASSETS
Petty Cash Fund an account title for money that is separetely placed inside the box and
set aside for petty or small expenses.
the account title for amounts collectible arising from services rendered to
Accounts Receivable a customer or client on credit or sale of goods to customers on accounts.
This constitutes an oral or verbal promise to pay by a customer or client.
the account title for amounts collectible from employees for allowing
Advances to Employees
them to make cash advances which are deductible against their salaries
and wages.
these are assets which are (1) held for sale in the ordinary course of
Inventories business; (2) in the process of production for such sale; or (3) in the form
of materials or supplies to be consumed in the production process or in
the rendering of services.
an account title for cost of stationery and other supplies purchased for
Supplies Inventory or Unused
use but are left on hand and still unused. The account title should be
Supplies
specified as to Unused Office Supplies if intended for the office, Unused
Shop Supplies if intended for the shop, etc.
Accrued Income
income already earned but not yet received.
account title for expenses that are paid in advance but are not yet
Prepaid Expenses incurred or have not yet expired such as Prepaid Rental, Prepaid
Insurance, Prepaid Interest, Prepaid Advertising, etc.
an account title for the site where the building used as office or store is
Land
constructed.
includes chairs, tables, counters, display cases and the like. If these are
Furniture and Fixtures used the office, the account title is Office Furniture and Fixture and if
these are used in store, the account title is Store Furniture and Fixtures.
The assets that are classified as Property & Equipment or Fixed Assets are called Depreciable Assets are
subject to Decpreciation except “land”. Land is not subject to depreciation because it is expected to be
useful to the business enterprise for an indefinite period of time.
DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT
TYPES OF MAJOR ACCOUNTS
LIABILITIES EQUITY
CURRENT LIABILITIES Ayao, Capital
Accounts Payable Ayao, Drawings
Notes Payable Share Capital
Loan Payable Share Premium
Unearned Income Retained Earnings
Accrued Expenses Income and Expense Summary
Notes Payable
Mortgage Payable
these are expense incurred by the enterprise but are not yet
Accrued Expenses paid. This normally occurs when the accounting period ended,
such as rent payable, salaries payable, interest payable, taxes
payable etc.
Notes Payable (long-term) same nature with that of Notes Payable (short-term) but only, this
requires payment for more than a year.
2 ELEMENTS
1. INCOME OR REVENUE
2. EXPENSES
Service Income - this is the account title used for all types of income derived from
rendering of services. Sometimes the account title used is Service Revenue.
Professional Income - the account title used by professional for income earned from the
practice of their profession or may be specified as Accounting or Auditing Fees Income
for Accountants, Legal Fees Income for Lawyers, Dental Fees Income for Dentists, Medical
Fees Income for Doctors, etc.
Rental Income - income earned on buildings, space or other properties owned and
rented out by the business as the main line of its activity.
Interest Income - income received by the business arising from an amount of money
borrowed by a customer and usually covered by a promissory note.
Miscellaneous Income - income earned by the business which is not the main line of its
activity and could not be clearly classified.
EXPENSES - these are the gross outflow of economic benefits ng the period arising in the
course of ordinary activities of an enterprise when those outflow result in decrease in
equity, other than those relating to distribution to owners.
Supplies Expense - this represents cost of supplies that were used and consumed that
bears specific titles as office supplies expense, store supplies expense, shop supplies
expense etc.
Rent Expense - for the amount paid or incurred for use of property, usually premises.
Repairs and Maintenance - for expenses incurred in repairing or servicing the buildings,
machineries, vehicles, equipments, etc., which aer owned by the business.
Uncollectible Accounts - for the anticipated loss that the business may incur arising from
uncollectible accounts.
Depreciation Expense - for the portion of the cost of property and equipment or fixed
assets that has expired based on rational and systematic allocation procedure.
Taxes and Licenses - for the amount paid for business permits, licenses and other
government dues except the Income Tax paid which is not allowable by law as a
deduction.
Utilities Expense - the account title for telephone, light and water bills.
Interest Expense - an expense incurred from borrowed money. This is separately shown
as a deduction form Profit before finance charges to arrive at Profit.
Miscellaneous Expense - any amount paid as expense which is not significant enough to
warrant a particular classification.
Gas & Oil - the account title for gasoline, diesoline, lubricants, grease, fluids, lube oils,
etc.