THE

FIVE
MAJOR ACCOUNTS
THE ACCOUNT

-an individual accounting record of the movement

(increases and decreases) in a specific account.
-the movement of these specific accounts are
recorded in journals and Ledgers
- these specific accounts has two sides as illustrated
below:

Account Title
Left side for Debit Right side for Credit
 THE ACCOUNT

-an individual accounting record of the movement

(increases and decreases) in a specific account.

FIVE MAJOR ACCOUNTS

1. ASSETS
2. LIABILITIES
3. CAPITAL/OWNER’S EQUITY
4. REVENUE
5.EXPENSES
FIVE MAJOR ACCOUNTS

1. ASSETS
2. LIABILITIES
3. CAPITAL/OWNER’S EQUITY
4. REVENUE
5.EXPENSES
ASSETS
-are resources controlled by the business
as a result of past transactions and
events and from which future economic
benefits are expected to flow to the
business.
TWO TYPES OF ASSETS

1. CURRENT ASSETS

2.NON-CURRENT /FIXED ASSETS

 CURRENT ASSETS
-are those reasonably expected to
be realized in cash within one year
from the reporting date or the
normal operating cycle whichever
is longer.
CURRENT ASSETS
Cash Cash Inventories

Accounts Receivable Unused Supplies

Notes Receivable Prepaid Rent

 CASH
this includes cash on hand (bills, coins,
checks, money orders or bank drafts, cash
deposited in the bank,( savings account or
checking account), and cash fund (petty cash
fund or payroll fund- assets are a
company's long-term investments
that are not easily converted to cash
or are not expected to become cash
within an accounting year.
 ACCOUNTS RECEIVABLE
-this refers to open accounts
which represent the amount of
money owed by the customer to
the business.
 NOTES RECEIVABLE
-this represents th amount of
money owed by the debtor to the
business evidenced by a
promissory notes.
 Inventories
-this represents assets held for sale in the
ordinary course of business, in the process
of production for sale or in the form of
materials or supplies to be consumed in the
productionprocessor in renderingof
services.
 Unused Supplies

-this represents supplies which remain

unused at the end of the accounting period.
 Prepaid Rent

-this refers to an advance

payment made by the business
to cover for future rental.
 NON-CURRENT ASSETS

-refers to assets that the future

economic benefits exceed one
year.
NON-CURRENT ASSETS
Cash
Equipment Building

Furniture and Fixtures Land

 EQUIPMENT

-this represents manual or automated

machines used in the business and they
include photocopying machines, delivery
vehicles,computers, ring binders, and vans
among others.
 Furniture and Fixtures

-this represents assets such as

tables, chairs, filing cabinets
and display racks.
 Building

-this refers to the Physical

structures owned and used by the
business to conduct its business
operations.
 Land

-this refers to the Physical sites

owned by the business where the
building is situated. it is not
subject to depreciation.
LIABILITIES- are present obligations of
an entity arising from past transactions or
events, the settlement of which is expected to
result in an outflow from the business of
resources embodying economic benefits.
TWO TYPES OF LIABILITIES

1. CURRENT LIABILITES
2. NON-CURRENT
LIABILITIES
 CURRENT LIABILITES
-ARE THOSE REASONABLY EXPECTED
TO BE SETTLED BY PAYMENTS OF
CASH, DELIVERY OF GOODS OR
PERFORMNACE, OF SERVICE WITHIN
ITS NORMAL OPERATING CYCLE OR
WITHIN ONE YEAR FROM THE
REPORTING DATE, WHICH EVER IS
LONGER
EXAMPLE OF CURRENT LIABILITES
ACCOUNTS PAYABLE- THIS REFERS TO
OPEN ACCOUNTS WHICH REPRESENT THE
AMOUNT OF MONEY OWED BY THE BUSINESS
TO CREDITORS OR SUPPLIES.
NOTES PAYABLE- THIS REPRESENTS THE
AMOUNT OF MONEY OWED BY THE BUSINESS
TO THE SUPPLIER OR CREDITOR represented by
PROMISORY NOTE. UNEARNED REVENUES- THIS
REPRESENTS CASH COLLECTED BY THE
BUSINESS IN ADVANCE FOR A SERVICE OR
GOODS THAT IS YET TO BE RENDERED OR
 NON-CURRENT LIABILITES

-ARE OBLIGATIONS
REASONABLY EXPECTED TO BE
PAID IN CASH BEYOND ONE
YEAR
EXAMPLE OF NON-CURRENT LIABILITES
LOAN PAYABLE- THIS REFERS TO THE
AMOUNT OF MONEY BORROWED BY THE
BUSINESS FROM THE THIRD PARTY
CREDITORS
MORTGAGE PAYABLE- THIS REFERS THE
AMOUNT OF MONEY BORROWED BY THE
BUSINESS FROM A BANK OR LENDING
INSTITUTION WHICH IS SECURED BY
COLLATERAL.
 OWNER’S CAPITAL/EQUITY
-REPRESENT OWNERSHIP AND ITS
TERMINOLOGY CHANGES EPENDING ON
THE FORM OF BUSIUNESS.
EXAMPLE:
1. SOLE PROPRIETORSHIP- USE OWNER’S
CAPITAL
2. PARTNERSHIP-PARTNER’S CAPITAL.
3. CORPORATION- SHAREHOLDER,S EQUITY
 OWNER’S CAPITAL/EQUITY

- INCREASED BY ADDITIONAL
CONTRIBUTION AND RECOGNITION OF
NET INCOME.

-DECREASED BY WITHDRAWALS/LOSS.
 REVENUES

- ARE THE EARNINGS ARISING FROM

THE MAIN LINE OF OPERATIONS OF
THE BUSINESS.

-RESULT FROM RENDERING OF

SERVICES AND SELLING OF GOODS.
 EXAMPLES OF REVENUES
SERVICE REVENUES- THIS REFERS TO
THE EARNINGS MADE BY ANY
BUSINESS THAT IS RENDERING
SERVICES.
INTEREST INCOME-THIS REPRESENT
INTERESTS CREDITED BY THE BANK
TO THE ACCOUNT OF THE BUSINESS
ARISING FROM BANK DEPOSITS.
 EXAMPLES OF REVENUES
SALES- THIS REPRESENTS THE EARNINGS
MADE BY ANY BUSINESS THAT IS INTO
SELLING GOODS OR MERCHANDISE.

PROFESSIONAL FEES-THIS REPRESENTS

EARNINGS MADE BY PROFESSIONALS OR
EXPERTS FROM RENDERING SERVICES TO
THEIR CLIENTS.
 EXPENSES
-ARE THE COSTS BEING
INCURRED BY THE
BUISINESS IN GENERATING
REVENUES.
 EXAMPLES OF EXPENSES
UTILITIES EXPENSE- THIS REFERS TO COSTS
ASSOCIATED WITH THE USAGE OF
ELECTRICITY, WATER, AND COMMUNICATION
FOR A PARTICULAR ACCOUNTING PERIOD.
SALARIES EXPENSE-THIS REFERS TO COSTS
INCURRED ASSOCIATED WITH THE SERVICES
RENDERED NORMALLY BY PERMANENT AND FULL-
TIME EMPLOYEES WHO ARE PAID ON A REGULAR
BASIS, USUALLY MONTHLY
 EXAMPLES OF EXPENSES

WAGES EXPENSE- THIS REFERS TO COSTS INCURRED

ASSOCIATED WITH THE SERVICES RENDERED
NORMALLY BY CONTRACTUAL AND TEMPORARY
EM[PLOYEES AND WORKERS WHO ARE PAID ON
HOURLY RATE OR BASED ON OUTPUT.
TAXES AND LICENSES EXPENSE-THIS REFERS TO COSTS
INCURRED TO REGISTER THE BUSINESS, TO ACQUIRE THE
RIGHT TO OPERATE, AND SETTLE TAXES.
 EXAMPLES OF EXPENSES
COST OF SALES- THIS REFERS TO COST OF
MERCHANDISE OR GOODS THAT WERE
SOLD DURING A PARTICULAR
ACCOUNTING PERIOD.

SUPPLIES EXPENSE-THIS REFERS TO THE

AMOUNT OF SUPPLIES THAT WAS USED DURING
A PARTICULAR ACCOUNTING PERIOD.
 EXAMPLES OF EXPENSES
DOUBTFUL ACCOUNTS EXPENSE- THIS REFERS
TO THE ACCOUNTS RECEIVABLE THAT IS
ESTIMATED AS UNCOLLECTIBLE AND IS
RECOGNIZED AS AN EXPENSE IN THE CURRENT
ACCOUNTING PERIOD.
DEPRECIATION EXPENSE-THIS REFERS TOTHE
ALLOCATED PORTION OF THE COST OF PROPERTY
PLANT AND EQUIPMENT CHARGED TO EXPENSE IN
THE CURRENT ACCOUNTING PERIOD