values because of changes in
ACCOUNT Titles interest rates.
Account Titles Petty Cash Fund
are identification of brief description - An account title got money
of items that fall to the same kind, that is separately placed
class, or nature inside the box and set aside
for petty or small expenses
ASSETS
These are defined as “resources
controlled by the enterprises as a Notes Receivables
result of past transactions and events - This is a promissory note
and from which future economic that is received by the
benefits are expected to flow to the business from the customer
enterprises.” In Layman’s term, assets arising from rendering of
are defined as things of value that are services, sale merchandise,
owed and used by the enterprises in etc. This can either be an
its operations. interest bearing or non-
interest bearing.
CURRENT ASSETS Accounts Receivables
Refers to all assets that are expected - The account title for
to be realized, sold, or consumed amounts collectible arising
within the enterprise’s normal from services rendered to a
operating cycle. customer or client on credit
Operating Cycle- is the interval of or sales of goods to
time from the date of acquisition of customers on accounts. This
merchandise inventory. constitutes an oral or verbal
Cash promise to pay by a
- The account title to describe customer or client.
money either in paper or Estimated Uncountable
coins and money substitute Account
like checks, postal money - Is an asset-offset or a
orders, bank drafts, and contra-asset account. It
treasury warrants. provides for possible losses
Cash Equivalents from uncollectible accounts.
- Defines as a short term, Although this is not actually
highly liquid investment that an asset, it is classified as
are readily convertible to such because it is shown as
known amount of cash a deduction from the
which are subject to an Accounts Receivables which
insignificant risk changes in is a Current Asset account.
Advance to Employees title however is “Accrued
- The account title for Rental Income.”
amounts collectible from Supplies Inventory or Unused
employees for allowing Supplies
them to make cash advances - An account title for cost of
which are deductible against stationery and other supplies
their salaries or wages. purchased for use but are
Inventories left on hand and still unused.
- These are assets which are The account title should be
(1) held for sale in the specified as to Unused
ordinary course of business; Office Supplies if intended
(2) in the process of for office, Unused Shop
production for sale; (3) in Supplies if intended for the
the form of materials or shop, etc.
supplies to be consumed in NON-CURRENT ASSETS
the production process or in
the rendering of services. Property, Plant, and
Prepaid Expenses Equipment
- Account title for expenses - Defines as tangible assets
that are paid in advance but which are held by an
are not yet incurred or have enterprise for use in
not yet expired such as production or supply of
Prepaid Rental, Prepaid goods and services, for
Insurance, etc. rental to others, or for
Accrued Income administrative purposes, and
which are expected to be
- Account title for income that
used during one period such
is already earned but it has
as: land- an account title for
not yet been collected. In
the site where the building
other words, it has
used as office or store is
semblance of a “receivable”
constructed; building- an
account. For example, a
account title for a finished
tenant is renting our
construction owned by the
building for 10,000 a month.
business where operations
His rental for the month of
and transactions took place;
January will be paid in
equipment- include
February. So at the end of
calculators, typewriters,
January, we have a Rental
computers, steel filling
Income Receivable from our
cabinets, etc.; furniture and
tenant. The correct account
fixtures
Accumulated Depreciation
- This is an asset-offset or - This is an account title for
contra-asset account. This is an income collected or
shown as deduction from received in advance but
property and equipment. services have not yet been
rendered.
LIABILITIES
These are defined as “financial
obligations of the business to its NON-CURRENT LIABILITIES
creditors. It represents the claim Notes Payable (long-term)
of the creditors over the assets of - Same nature with that of
the enterprise.” notes payable (short term)
but only, this requires
CURRENT LIABILITIES payment for more than a
Are financial obligations of the year.
enterprise which are (a) expected to Mortgage Payable
be settled in the normal course of the - A financial obligation of the
operating cycle; (b) due to be settled enterprise which requires a
within one year from the Statement of fixed or tangible property to
Financial Position date. be pledged as a collateral to
Accounts Payable ensure payment.
- An account title for a OWNER’S EQUITY OR CAPITAL
financial obligation of an
enterprise that constitutes an This is the amount of money or value
oral or verbal promise to of property put by the proprietorship
pay. into the business to start with the
Notes Payable (short-term) operation which is referred to as
- Same as account payable in initial investment or initial capital.
nature but only the Withdrawal
obligation is evidenced by a - The owner’s withdrawal is
promissory note. likewise indicated by the use
Accrued Expense of the owner’s name with
- These are expenses incurred the word drawing or
by the enterprise but are not withdrawal
yet paid. INCOME AND EXPENSE
- Rent payables, salaries SUMMARY
payable, interest payable,
taxes payable etc. This is a temporary account created at
Unearned Income the end of the accounting period
where income and expenses are activity and could not be clearly
temporarily closed to this account. classified
INCOME OR REVENUE EXPENSES
This refers to the “proceeds from these are the “gross outflow of the
services rendered by a servicing firm, economic benefits during the period
income from use by other entities of arising in the course of ordinary
the resources of the enterprise. activities of an enterprise when those
outflow results in decrease in equity,
SERVICE INCOME
other than those to distribution to
this is the account title used for all owners.’
types or income derived from
SUPPLIES EXPENSE
rendering services, sometimes the
account title used in service revenue this represents cost of supplies that
were used and consumed that bears
PROFESSIONAL INCOME
the specific title as office supplies
generally used by professionals for expenses, store supplies expenses etc.
income earned from the practice of
RENT EXPENSE
their profession or may be specified
as Accounting or Auditing Fees for the amount paid or incurred for
income from accountant, Legal fees use of property, usually premises.
income for lawyers, etc.
REPAIR AND MAINTENANCE
RENT INCOME
for expenses incurred in repairing or
fSor income earned in building, space servicing the building, machineries,
or other properties owned and rented vehicles equipment, etc., which are
out by the business as the main line of owned by the business.
activities,
SALARIES EXPENSE
INTEREST INCOME
for compensation given to the
for income received by the business employees of a business. It may be
arising from and amount of money specified as office salaries, salesmen’s
borrowed by a customer and usually salaries, etc.
covered by a promissory note, This is
a typical in lending institutions. UNCOLLECTIBLE ACCOUNTS
MISCELLANEOUS INCOME for the anticipated loss that the
business may incur arising from
for income earned by the business uncollectible accounts
which is not the main line of its
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.
INSURANCE EXPENSE
account title for the expired portion of
the insurance premium paid
UTILITIES EXPENSES
the account title for telephone, light,
and water bills
INTEREST EXPENSE
an expense incurred from borrowed
money. This is separately shown as
deduction from profit before finance
charges arrive at profit
MISCELLANEOUS EXPENSE
any amount paid as expense which is
not significant enough to warrant a
particular classification.