Fundamentals 0f

Accountancy 1
Prepared by: Ms. Nicole Marie A. Lumaad
 Objectives
At the end of the lesson, the learners will be able to:
a. identify the account as assets, liabilities, capital,
income or expenses;

b. cite an example of each type of account; and

c. prepare a chart of accounts.

 Our lesson for today:

We will tackle about the Types of

Major Accounts

• Assets
• Liabilities
• Capital
• Income
• Expenses
Before we learn about the types of major accounts, lets
review first our last topic.
Differentiate the
following:
What is the assets
Accounting liabilities
equation ?
equity
 Assets = Liabilities + Owner’s Equity

Assets is owned by the business, Liabilities is debt

.
owed by the business while equity is the residual
interest of the owners.
 Types of Major Accounts
 Assets- are the resources owned and controlled by
the firm
 Liabilities – are obligations of the firm arising from
past events which are to be settled in the future
 Equity – are the owner’s claims in the business. It
is the residual interest in the assets of the enterprise
after deducting all its liabilities.
 Income – 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 results in increase in equity. Income
includes revenue and gains.
 Expenses- are decreases in economic benefits
during the accounting period in the form of
outlaws of assets or incidences of liabilities that
results in decreases in equity.
Current vs. Non-current Assets, Tangible vs. Intangible Assets

• Current assets- are assets that can be realized (collected,

sold, used up) one year after year-end date.
• Non-current assets- are assets that cannot be realized.
• Tangible assets- are physical assets such as cash, supplies
and furniture and fixtures
• Intangible assets- are non-physical assets such as patents
and trademark
 Non-current Assets
Current Assets  Property, Plant and
 Cash Equipment
 Accounts receivable
 Notes receivable
 Long term investments
 Inventories
 Intangible Assets
 Supplies
 Prepaid Expenses
 Accrued Income
 Short term investments
Liabilities- are the debts and obligations of the company
Current Liabilities- liabilities that fall due

 Accounts Payable- are amounts due, or payable to

 Notes payable- are amounts due to third parties supported by promissory notes
 Acrrued Expenses- are expenses that are incurred but not yet paid
 Unearned Income- is cash collected in advance

Non-current Liabilities- are liabilities that do not fall due

• Loans Payable
• Mortgage payable
Owner’s Equity- is the residual interest of the owner from the business

• Capital- is the value of cash and other assets

invested in the business
• Drawings- is an account debited for assets
withdrawn by the owner
Income- is the increase in resources resulting from performance of
service or selling of goods

Expenses - is the decrease in resources resulting from the operation of

the business.
Directions: Identify if the account is an assets, liability,
equity, income or expense.
1. Accounts receivable 16. Office Supplies
2. Accounts Depreciation 17. Prepaid Expense
3. Advertising Expenses 18. Rent Expense
4. Bond Payable 19. Salaries Expense
5. Building 20. Salaries payable
6. Cash 21. Service Fees Income
7. De Jesus, Capital 22. Supplies Expense
8. De Jesus, Drawings 23. Trading Securities
9. Delivery truck 24. Unearned Income
10. Interest payable 25. Utilities Expense
11. Inventories
12. Land
13. Mortgage Loans
14. Notes Payable
15. Notes Receivable
Thank you!