Fundamentals of Accounting

 Balance Sheet Accounts

Current Assets

Cash on Hand Coins, currency, checks, postal money orders and express money orders. Cash
that is intended to be deposited with the bank when a petty cash fund is
maintained.
Petty Cash Fund Coins, currency and replenishment checks. These are to be used for petty or
small payments that cannot be conveniently made with checks.
Cash in Bank Cash deposited in savings and/or checking accounts. The payments are made by
checks.
Accounts Receivable Amounts due from customers arising from credit sales or credit
Services.
Notes Receivable Amounts due from others supported by promissory notes.
Unused Supplies Laboratory supplies, medical supplies, office supplies bought but not yet used.
Prepayments (like Prepaid Expenses paid in advance. They are assets at the time of payment. They become
Rent and Prepaid Insurance) expenses through the passage of time.

Noncurrent Assets

Land Real property owned and in use in the normal operation of business.
Buildings Physical structure on land. These are used in business.
Accumulated Depreciation – Cumulative part of the cost of the building that has been recognized as expense.
Building
Equipment Equipment used by the business for it to be able to perform its main function or
Laboratory Equipment objective.
Medical Equipment
Office Equipment
Accumulated Depreciation Cumulative portion of the cost of the equipment that has been recognized as
Equipment expense.
Laboratory Equipment
Medical Equipment
Office Equipment

Current Liabilities

Accounts Payable Amounts due to third parties for purchases on credit.

Notes Payable Amounts due to third parties supported by promissory notes.
Unearned Income Income received in cash now but to be earned in the future.
Expenses Payable Payables for expenses already incurred or used up but not yet paid for.
Salaries Payable
Rent Payable
Taxes Payable
Utilities Payable

Non current Liability

Mortgage Payable Loans payable secured but the entity’s real estate property.
Equity

Owner’s Capital Value of cash and other assets contributed to the business by the owner of the
business. This account is increased by the profits not taken out of the business
and decreased by the losses of the business.
Owner’s Drawings This account is credited (increased) for business’ net profit and debited
(decreased) for the net loss.

 Income Statement Account

Revenue

Sales or Service Income Revenues or gross income from sale of company products and services.

Cost and Expenses

Cost of Sales / Cost of The direct cost of the products sold or the services rendered.
Services
Salaries Expense Salaries for service rendered by employees.
Utilities Expense Telephone, water, electricity used.
Rent Expense Rental for the use of equipment, office building, and land spaces owned by
others.
Supplies Expense Laboratory, medical, office supplies used.
Transportation Expense Fare for trips and travels. Cost of gasoline and oil used for the company
vehicles.
Depreciation Expense That portion of the cost of building and equipment allocated to one accounting
period.
Representation Expense Amount paid to restaurants, hotel for treating customers and others.
Interest Expense Interest on debts or monetary obligations.