ACCOUNT TITLES

Account Titles – are assigned name and titles for the accountant and used for the conversation
for ease of reference.

1. ASSETS

Current Assets

Current Assets is expected to be realized in or held for sale consumption in normal course of
sale consumption in normal course of enterprise’s operating cycle.

a. Cash - is any medium of exchange that a bank will accept at face value. It includes coins
and currencies, checks, money orders and bank drafts.
b. Accounts Receivable – are claims against debtors, customers or clients arising from
services rendered on account and the sale of merchandise on account.
c. Notes Receivables - are claims against debtors, customers, or client for the service
rendered evidence by written promise to pay issued by the debtor.
d. Merchandise Inventories – are goods on hand available for sale.
e. Supplies on hand - Are consumable goods used in the course of business. It represents
the cost of supplies on hand. It can be classified as office store supplies, paper, pencil,
pens, folders, and the like are examples.
f. Prepaid expenses - are expenses paid in advance. Example: six months rental paid in
advance (Prepaid Rent), one year insurance premium (Prepaid Insurance)

Noncurrent assets

The Accounting Standard Council (ASC) states that Noncurrent Assets are “all other assets not
classified as current should be classified as noncurrent.

a. Accumulated depreciation – is an account that contains the sum of periodic

depreciation charges. It is a contra-account that represents the whole amount from
depreciation expenses charged in the past and current periods.
b. Equipment - are tangible assets which are tools or instruments used in the operation of
the business. It includes computers, air-conditioning units, calculator, typewriter, cash
register and other similar assets.
c. Delivery Equipment – include assets used for transporting merchandise.
d. Machinery – is tangible assets that have its own system to work in order to produce
products and to provide services to customers.
e. Furniture and Fixtures - are properties owned by the business which are not part of the
building property. These quickly depreciate compare to other assets. This includes the
following: office tables, filing cabinets, chairs, and other similar items used in the
operation of the business.
f. Intangible assets - are the identifiable non-monetary assets without physical substance.
They provide future economic benefits to the company. They include franchise,
copyrights, patent trademarks and computer software.
2. LIABILITIES

These are the debts and obligation of the business to creditors which is not recognized unless
incurred. It can be settled through cash or promissory note.

a. Accounts Payable- amount due to creditors for assets acquired in account.

b. Notes Payable-the amount due to creditors supported by promissory note.
c. Salaries Payable- unpaid salaries to the employees at the end of the accounting period.
d. Taxes Payable- present obligation due to the government.
e. Interest Payable- interest incurred on the loan but they are not yet paid at the end of
the period.

3. CAPITAL/EQUITY

a. Owners Capital- is the account that represents the equity or claim of the owner on the
assets of the business. It is the difference of total assets and total liabilities.
b. Owner’s Drawing- account charge to the owner’s drawing are cash or other asset
withdrawn or taken by the owner form of business for personal use.

4. REVENUE OR INCOME

According to ASC, revenue is defined as “gross inflow of economic benefits during the period in
the form of inflows or enhancement on assets or decrease in liabilities that results in increase in
equity, other those relating to contributions from the owner or owners.”

a. Sales - are total sales of merchandise sold.

b. Professional Fee Income – is income earned after rendering professional services such
as CPA’s, doctors, lawyers.
c. Rent Income - is the amount of lease/rental earned for the period.
d. Service Income/Revenue - is the amount of income earned from services rendered from
service concern business.
e. Interest Income- is the amount earned for lending money.

5. EXPENSES

The ASC defined expenses as the “gross outflow of economic outflow result benefits during the
period in the course of ordinary activities when these results in decrease in equity other than
those relating to distribution owners.”

a. Advertising Expense - are expenses incurred to promote the product of the business.
b. Salesmen’s salaries- are the compensation given to sales agent.
c. Salesmen’s commission - is the incentive given to sales agents based on their total
amount of sales earned.
d. Salesmen’s travelling expenses - travelling allowances given to sales agents.
e. Office salaries - are compensation given to administrative employees.
f. Taxes - are governmental duties incurred in the current period.
 g. Utilities Expense - expenses incurred for the light and water consumer during the
operation of business.
h. Repairs and maintenance - are expenses paid for repairing the assets of the business.
i. Bad Debts - is the estimated amount of losses from uncontrolled accounts of the
business.
j. Depreciation Expense - is the allocated cost of fixed assets in the current period.

Reference:

Abitang, Philip T., el at., Basic Accounting (For Non Accountants), Mindshapers Co., Inc.,
Intramuros, Manila, pp. 10-14