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Act 110 Activity 8
Act 110 Activity 8
This activity is designed to prepare you for the next modules to be uploaded any time this week.
1. Following the format below, list as many accounts as you can that are peculiar to service concern.
ACCOUNT DESCRIPTION
Cash Cash is bills, coins, bank balances, money orders, and checks. Cash is used to acquire goods and services or to
eliminate obligations
Accounts Receivable Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not
yet paid for by customers
Notes Receivable Notes Receivable is an account on the balance sheet usually under the current assets section if its life is less than
a year. Specifically, a note receivable is a written promise to receive money at a future date
Prepaid Expense A prepaid expense is a type of asset on the balance sheet that results from a business making advanced payments
for goods or services to be received in the future. Prepaid expenses are initially recorded as assets, but their value
is expensed over time onto the income statement
Land Land is defined as the ground occupied by a business’ operations. This can include a company’s headquarters,
outside storage space or the company’s parking lot. Land is a type of fixed asset, but unlike a majority of fixed
assets, it is not subject to depreciation.
Building Buildings is a fixed asset account that contains the carrying amount of the buildings owned by an entity.
Furnitures and Fixtures Furniture, fixtures, and equipment is an accounting term used in valuing, selling, or liquidating a company or a
building. FF&E are movable furniture, fixtures, or other equipment that have no permanent connection to the
structure of a building or utilities.
Equipment Equipment is a noncurrent or long-term asset account which reports the cost of the equipment. Furniture, fixtures,
and equipment (or FF&E) (sometimes Furniture, furnishings, and equipment) is an accounting term used in
valuing, selling, or liquidating a company or a building.
Allowance for Doubtful Accounts An allowance for doubtful accounts is a contra account that nets against the total receivables presented on the
balance sheet to reflect only the amounts expected to be paid. The allowance for doubtful accounts estimates the
percentage of accounts receivable that are expected to be uncollectible.
Accounts Payable Accounts payable is the money a company owes its vendors, while accounts receivable is the money that is owed
to the company, typically by customers.
Notes Payable Notes payable is a liability account where a borrower records a written promise to repay the lender. When carrying
out and accounting for notes payable, "the maker" of the note creates liability by borrowing from another entity,
promising to repay the payee with interest.
Mortgage Payable A mortgage payable is the liability of a property owner to pay a loan that is secured by property. From the
perspective of the borrower, the mortgage is considered a long-term liability.
Bonds Payable Bonds Payable is a liability account that contains the amount owed to bond holders by the issuer. This account
typically appears within the long-term liabilities section of the balance sheet, since bonds typically mature in more
than one year.
Capital Capital means the assets and cash in a business. Capital may either be cash, machinery, receivable accounts,
property, or houses. Capital may also reflect the capital gained in a business or the assets of the owner in a
company.
Drawing Drawing in accounts is the record kept by a business owner or accountant that shows how much money has been
withdrawn by business owners. These are withdrawals made for personal use rather than company use – although
they're treated slightly differently to employee wages
Professional Fee Professional fees are prices charged by individuals specially trained in specific fields of arts and sciences, such as
doctors, architects, lawyers, and accountants. "Professional Fees" is usually an income account used by a
professional firm in recording its revenues.
Service Income Service Revenue is income a company receives for performing a requested activity. The charges for such revenue
are recorded under the accrual method of accounting
Salaries and Wages A wage expense is the cost incurred by companies to pay hourly employees. This line item may also include
payroll taxes and benefits paid to employees. A wage expense may be recorded as a line item in the expense
portion of the income statement.
Utilities Expense Utilities expense is the cost incurred by using utilities such as electricity, water, waste disposal, heating, and
sewage. The expenses are incurred over the course of the reporting period, calculated, and accrued for, or payment
is rendered.
Supplies Expense Supplies expense refers to the cost of consumables used during a reporting period. These supplies include such
items as paper, toner cartridges, and writing instruments. They are typically of such low cost that they are charged
to expense as incurred
Rent Expense Rent expense is an account that lists the cost of occupying rental property during a reporting period.
Depreciation Expense Depreciation expense is the amount you deduct on your tax return. Since it's an expense, you record it as a debit.
Accumulated depreciation is the total amount you've subtracted from the value of the asset.
Interest Expense An interest expense is the cost incurred by an entity for borrowed funds. Interest expense is a non-operating
expense shown on the income statement. It is essentially calculated as the interest rate times the outstanding
principal amount of the debt.
Accrued Revenue Accrued revenue is revenue that has been earned by providing a good or service, but for which no cash has been
received
2. For each of the following transactions
- - - - - - - -
Purchased P1,000 of shop supplies on B Accounts Payable L P INC CR Shop Supplies 1,000
credit from A. Fuentes.
Shop Supplies A P INC DR Accounts Payable 1,000