TYPES OF MAJOR

ACCOUNTS/ACCOUNTING ELEMENTS
1. What are the Five major accounts or five accounting elements?
- Assets
- Liabilities
- Equity (Owner’s Equity or Capital)
- Income
- Expenses

2. What is Chart of Accounts?

- This list of accounts is a record of account titles and control numbers
used in the bookkeeper as a guide in recording business transactions. Assets,
liability, owner’s equity, income, and expenses are listed down to help the
bookkeeper in recording a particular transaction. No other account titles can
be used other than those found in the chart of accounts.

3. Give examples of assets, liabilities, equity, income and expenses account

titles?
- Examples for assets: cash, account receivables, inventories and
buildings.
- Examples for liability: bank overdrafts, accounts payables, tax, loan,
mortgage, rent payables.
- Examples for equity: capital account, withdrawal account, common
stocks, retained earnings.
- Examples for income: sales of goods, sales of other assets, payment for
services, rent for use of property.
- Examples for expenses: cost of goods sold, utilities expense, insurance
expense, salaries and wages.

4. What is the difference between current and non-current assets/liabilities?

- Current assets it is considered current if they are held for the purpose of
being traded, expected to be realized or consumed within twelve months
after the end of the period or its normal operating cycle or if it is cash while
Non-current assets that do not meet the criteria to be classified as current.
They are long term in nature and are useful for a period longer than 12
months or the company’s normal operation cycle.
- Current liabilities are obligations or debts of the business expected to be
within 1 year/12 months which will be paid during the accounting cycle by
means of payment of current assets or a creation of another current liability
while Non-current liabilities are obligations or debts of the business that
will be due and payable beyond one year.