CHAPTER 4

Types of
Major
Accounts
 5 MAJOR ACCOUNTS

ASSET EQUITY EXPENSE

LIABILIT INCOM
Y E
ASSET

It is a resource controlled by the entity

as a result of past events and expects an
economic benefit from such resource. It
can be categorized based on liquidity as
well as by its physical form.
 TYPES OF ASSETS

CURRENT NON-CURRENT TANGIBLE INTANGIBLE

ASSETS ASSETS ASSETS ASSETS

are assets that can are assets that cannot are physical assets are non-physical
be realized be realized (collected, such as cash, assets such as
(collected, sold, used sold, used up) one supplies, and patents and
up) one year after year after year-end furniture and trademarks
year-end date. date. fixtures.

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 Account Titles
CASH
is money and can be on hand or in banks
and considered as medium of exchange in
business transaction. OTHER RECEIVABLES
are amount due from other
entities such as refund from
suppliers or amount due
ACCOUNTS RECEIVABLE supported by a promisorry note.
is the amount due from the customers who
has not paid for the services or goods it
has received from the entity
INVENTORY
is the product held for sale.
 PROPERTY, PLANT & EQUIPMENT
are long-lived resources such as lands, buildings, and
machineries that have been acquired for use in the
operations of the entity

SUPPLIES
are resources that is commonly
used for daily activities of the
entity but not necessarily
related to the creation of
products. PREPAID EXPENSES
are expenses paid in advance
and became expenses through
passage of time such as rent and
insurance.
ACCRUED INCOME
is income that has been earned
but not yet billed and collected.
INTANGIBLE ASSETS
are resources that have no
physical substance such as
trademarks, copyrights and
patents.
INVESTMENTS
are assets bought by the
company to be held for a
certain period of time. It can
be short-term and intended to
be sold immediately. It can
also be long-term and held
for more than one year.
LIABILITY

It is an obligation by the entity arising

from past events and expects to lose
resources for its settlement.
 TYPES OF LIABILITIES

CURRENT NON-CURRENT
AUTHENTICITY
LIABILITIES LIABILITIES

Liabilities that fall are liabilities that do

Presentations are due (paid, not fall due (paid, Presentations are
communication tools that recognized as recognized as communication tools that
can be used as revenue) within one revenue) within one can be used as
demonstrations. demonstrations..
year after year-end year after year-end
date. ​ date.

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ACCOUNTS PAYABLE
are the amount due to its suppliers for
purchased of products or services received
that has not been paid.

ACCRUED EXPESES
are expenses incurred but not
yet paid such as salaries
payable, utilities payable and
OTHER PAYABLE taxes payable.
are amount due from other
entitites such as refund to
customers or amount due
supported by a promissory note.

BONDS PAYABLE
is a long term debt issued by
the entity and commonly
accompanied by payment of
interest annually or semi-
anually.
UNEARNED INCOME
is income that has been paid
but not yet earned. This
usually arises from time-
related services.
MORTGAGE PAYABLE
is an obligation that is secured by
a property. Security in context is
the right of the creditor on the
property, in case the debtor
defaults to its obligations
EQUITY

It is the residual interest in

assets after deducting all
liabilities. It is the reflection of
the owner's capital or
investments
OWNER, CAPITAL
is the account title used to
record the value of resources
that the owner has invested in
the business. COMMON STOCKS OR
ORDINARY SHARES
are shares of ownership of an
incorporated business
organization. This is also
OWNER, DRAWINGS considered as the legal capital of
is the account title used for corporation that cannot be
assets withdrawn from the distributed to its owner until
business by the owner. liquidation
 ADDITIONAL PAID-IN CAPITAL
is the account used to recognize the
excess value above the par of a
stock.
RETAINED EARNINGS
is the accumulated income the
corporation has and can be
distributed to its owners as
dividends.
DIVIDEND
is the distribution of profits to the
owners of a corporation. This can
be compared to the profit-sharing
scheme a partnership has.
INCOME

It is the increase in economic benefits

during the accounting period in the
form of inflows of cash or other assets
or decreases of liabilities that result in
increase in equity. Income includes
revenue and gains.​​
REVENUE 80

is the income earned in the

ordinary course of business
such as sales from selling 60

products, or service revenue

from providing service.
40

GAIN
is the income arising from the 20

core business of the entity, such

as gain of land or sale of
depreciated assets.
0
Item 1 Item 2 Item 3 Item 4
EXPENSES

These are decreases in economic

benefits during the accounting
period in the form of outflows of
assets or incidences of liabilities
that result in decreases in equity.​
ORDINARY EXPENSES
are the business expenses
incurred in the ordinary course
of the business such as cost of
goods sold, salaries expenses,
and rent expenses.

LOSSES
are outflow of resources that
did not come from the core
activity of the business such as
loss on sale of land or loss from
fire.
CHARTS OF ACCOUNTS
It is a listing of all account titles
used by the entity and a short
description of such titles.
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