TYPES OF ACCOUNTS

ASSETS = LIABILITIES + EQUITY

• Cash • Accounts Payable • ______, Capital
• Accounts • ______, Withdrawal
• Rent Payable
Receivable • Rent Expense
• Inventory
• Utilities Payable
• Utilities Expense
• Supplies • Salaries Payable • Salaries Expense
• Equipment • Notes Payable • Revenue
• Land • Cost of Goods Sold

BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet? Note: The order of accounts is important!
 TYPES OF ASSET ACCOUNTS
• Defining the different asset accounts
• Cash – currency, coins, and checks
• Accounts Receivable – the balance of money due to a
business for goods or services sold but not yet paid for by
customers
• Inventory – the goods produced by a business and are ready
for selling; used to keep track of stock (i.e. directly used in
the goods or services sold, such as ingredients)

BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?
 TYPES OF ASSET ACCOUNTS
• Cash
• + Cash ➡ inflow/increase of cash from any source
• – Cash ➡ outflow/decrease of cash to any recipient
• Accounts Receivable
• + Accounts Receivable ➡ transaction/sale made without payment yet
• – Accounts Receivable ➡ customer has paid a debt
• Inventory
• + Inventory ➡ increase of inventory (usually through purchase)
• – Inventory ➡ decrease of inventory (usually through sale)

BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?
 TYPES OF ASSET ACCOUNTS
• Defining the different asset accounts
• Supplies – assets that are used by the company for operations
and are not for sale; indirectly used in the goods or services
sold, such as tissue holder, soap, plates, chairs
• Equipment – bigger assets like machineries and fixtures that
are used by the company in their operations
• Land - the space itself where the business is located (if the
location is rented, then land is not an asset of the business)

BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?
 TYPES OF LIABILITY ACCOUNTS
• Defining the different liability accounts
• Accounts Payable – company’s debt to its creditors or suppliers
• Rent Payable – company’s debt to an owner of a rented place or a
rented mode of transportation
• Utilities Payable – company’s debt to utility providers such as
electricity, water, and telephone/internet connection
• Salaries Payable – company’s debt of unpaid salary to its employees
• Notes Payable – company’s debt to a banking institution; long term
loans

BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?
 TYPES OF LIABILITY ACCOUNTS
• For all liability accounts,
• + Liability Account ➡ an increase in the debt
• – Liability Account ➡ a decrease in the debt

BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?
 TYPES OF EQUITY ACCOUNTS
• Defining the different equity accounts
• ____, Capital – represents the investments of a particular owner of
the company
• Always positive, as it represents an increase of the value of
the business
• ____, Withdrawal – represents the drawings of a particular owner of
the company
• Always negative, as it represents a decrease of the value of
the business
BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?
 TYPES OF EQUITY ACCOUNTS
• Defining the different equity accounts
• Rent Expense – represents the cost of using another’s building or
another’s modes of transportation
• Utilities Expense – represents the cost of using utilities such as
electricity, water, and telephone/internet connection
• Salaries Expense – represents the cost of the services of the
people employed in the business
• All expenses are always negative, as they represent a decrease in
the value of the business as it pays for the expense
BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?
 TYPES OF EQUITY ACCOUNTS
• Defining the different equity accounts
• Revenue – the amount of money received from selling goods and
services
• Always positive, as it represents an increase of the value of
the business
• Cost of Goods Sold – an expense account, represents the cost of
inventory that is sold to a customer
• Always negative, as it represents a decrease of the value of
the business (in loss of inventory due to sale)
BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?
 EXPENSES VS PAYABLES
• Expenses – always recored when a rent/utilities/salaries
expense is incurred, regardless of when payment is made
• if the payment is made immediately, it is recorded with
a decrease in Cash (due to the payment being made in
cash)
• Payables – only recorded in partnership with the expense if
the payment was not made immediately

BUSINESS MANAGEMENT 12
Unit 1: What’s In Your Wallet?