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LESSON-5-TYPES-OF-ACCOUNTS

The document outlines the Chart of Accounts, which is a tailored listing of all accounts used in a business, categorized into major accounts such as assets, liabilities, owner's equity, revenues, and expenses. It details types of assets (current and non-current), liabilities (current and non-current), and components of owner's equity, as well as definitions of income and expenses. This framework serves as a fundamental aspect of accountancy in business management.

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18 views18 pages

LESSON-5-TYPES-OF-ACCOUNTS

The document outlines the Chart of Accounts, which is a tailored listing of all accounts used in a business, categorized into major accounts such as assets, liabilities, owner's equity, revenues, and expenses. It details types of assets (current and non-current), liabilities (current and non-current), and components of owner's equity, as well as definitions of income and expenses. This framework serves as a fundamental aspect of accountancy in business management.

Uploaded by

parinazyro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CHART OF

ACCOUNTS
Fundamentals of Accountancy
Business and Management 1
CHART OF ACCOUNTS
A listing of all the
accounts and is
usually tailored to
the operations of
the business.
TYPES OF MAJOR ACCOUNTS
ASSETS
LIABILITIES
OWNER’S EQUITY
REVENUES
EXPENSES
ACCOUNTING
EQUATION
ASSETS
LIABILITIES
EQUITY
ASSETS
The the resources owned and
controlled by the firm.
TYPES OF ASSETS
• CURRENT ASSETS
Assets that can be realized (collected, sold, used up) one year after year-
end date.
▪ CASH
Money on hand, or in banks, and other items considered as medium of exchange in business
transactions.
▪ ACCOUNTS RECEIVABLE
Amounts due from customers arising from credit sales or credit services.
▪ NOTES RECEIVABLE
Amounts due from clients supported by promissory notes.
▪ INVENTORIES
Assets held for resale
▪ UNUSED SUPPLIES
Items purchased by an enterprise which are unused as of the reporting date.
▪ PREPAID EXPENSES
Expenses paid in advance. They are assets at the time of payment and become expenses through the
passage of time.
• CURRENT ASSETS
▪ ACCRUED INCOME
Revenue earned but not yet collected.
▪ SHORT TERM INVESTMENTS
The investments made by the company that are intended to be sold immediately.
• NON-CURRENT ASSETS
Assets that cannot be realized (collected, sold, used up) one year after
year-end date.
▪ Property, Plant and Equipment
Long-lived assets which have been acquired for use in operations.
▪ Long term Investments
The investments made by the company for long-term purposes.
▪ Intangible Assets
Assets without a physical substance. Examples include franchise and copyright.
• TANGIBLE ASSETS
Physical assets such as cash, supplies, and furniture and fixtures.

• INTANGIBLE ASSETS
Non-physical assets such as patents and trademarks.
LIABILITIES
The debts and obligations of the
company to another entity.
TYPES OF LIABILITIES
• CURRENT LIABILITIES
Liabilities that fall due (paid, recognized as revenue) within one year
after year-end date.
▪ Accounts Payable
Amounts due, or payable to, suppliers for goods purchased on account or for services received on
account.
▪ Notes Payable
Amounts due to third parties supported by promissory notes.
▪ Accrued Expenses
Expenses that are incurred but not yet paid (examples: salaries payable, taxes payable)
▪ Unearned Revenue
Cash collected in advance; the liability is the services to be performed or goods to be delivered in the
future.
• NON-CURRENT LIABILITIES
Liabilities that do not fall due (paid, recognized as revenue) within one
year after year-end date.
▪ Loans Payable
Liability on a company's balance sheet that represents the amounts the company owes to lenders as a
result of borrowing money
▪ Mortgage Payable
The amount of money borrowed by the business from a bank or lending institution which is secured by
a collateral
OWNERS EQUITY
The owner’s claims in the business. It
is the residual interest in the assets
of the enterprise after
deducting all its liabilities.
ACCOUNT TITLES FOR EQUITY
▪ CAPITAL
The value of cash and other assets invested in the business by the owner of the business.

▪ DRAWING
An account debited for assets withdrawn by the owner for personal use from the business.

▪ SERVICE REVENUE
Earnings made by any business that is into rendering services.

▪ SALES
Earnings made by the business that is into selling goods.
▪ INTEREST INCOME
Interest credited by banks to the account of the business arising from deposits.
INCOME
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.
• Service Revenue
• Sales
EXPENSE
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.
• Salaries Expense
• Interest Expense
• Utilities Expense
• Wages Expense
• Taxes & Licenses Expense
• Supplies Expense

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