Account Titles

Current Assets
Cash any medium of exchange that a bank will

accept at face value. It includes coins, currency,

checks, money orders, bank deposits and drafts.
Accounts Receivable these are claims against
customers arising from sale of services or goods on
credit. This type of receivable offers less security than
a promissory note.
Note Receivable a written pledge that the customer
will pay the business a fixed amount of money on a
certain date.
Prepaid Expenses expenses paid for the business in
advance. It is an asset because the business avoids
having to pay cash in the future for a specific expense.

Current Assets
Supplies Unused refers to supplies that are

currently available for use by the business for

its operations.
Inventory constitute items of tangible
personal property which are held
for sale in the ordinary course of business
In the process of production for such sale
To be currently consumed in the production
of goods or services to be available for sale.

Non-current Assets
Land parcel of lot owned and used by the

business entity. No depreciation is recorded.

Equipment this account records the
acquisition and disposition of office machines,
cars, trucks, and similar items.
Example of account titles:
Office Equipment (computers, adding
machines, xerox copiers, etc)
Delivery Equipment (vans, trucks, cars)
Production Equipment

Non-current Assets
Furniture and Fixtures account that records the

acquisition and disposition of office chairs, tables, cabinets,

and the like.
Building included in this account are factories,
warehouses, and office buildings. These long-lived
structures are subject to depreciation over a number of
years.
Intangibles these are relatively long-lived assets without
physical characteristics, which value lies in rights,
privileges, and competitive advantages, which they give
the owner. These include patents, copyrights, licenses,
fanchises, goodwill, trademarks, secret processes,
subscription lists, and non-competition agreements.

Current Liabilities
Notes Payable It is like a note receivable

but in a reverse sense. The business

entity is the party who promises to pay
the other party a specified amount of
money on a specified future date.
Accounts Payable this represents the
reverse relationship of the accounts
receivable. By accepting the goods or
services, the other party agrees to receive
the payment in the near future.

Current Liabilities
Accrued Liabilities amount owed by

the business for unpaid expenses. This

include salaries payable, utilities
payable, interest payable and taxes
payable.
Unearned Revenues this include the
acceptance of payment in advance for a
service that is not yet rendered or goods
not yet delivered.

Long-term Liabilities
Mortgage Payable this account records long-

term debt of the business entity for which the

business entity has pledged certain assets as
security for creditor. In the event that the debt
payments are not made, the creditor can
foreclose or cause the mortgaged asset to be sold
to enable the entity to settle the claim.
Bonds Payable business organizations often
obtain substantial sums of money from the
lenders to finance the acquisition of equipment
and other needed assets. They obtain these funds
by issuing bonds. The bond is a contract between
the issuer and the lender specifying the terms of
repayment and the interest to be charged.

Owners Equity
Capital This account is used to record the original

and additional investments of the owner of the

business entity. It is increased by the amount of
net income earned during the period or is
decreased by a net loss.
Withdrawals When the owner of a business entity
withdraws cash or other assets, such are recorded
in the drawing or withdrawal account rather than
directly reducing the owners equity account.
Income summary It is a temporary account used
at the end of the accounting period to close
revenues and expenses. This account shows the
net income or net loss for the period before closing
to the capital account.

Income Statement
Service Revenues earned by

performing services for a customer or

client. (e.i. accounting services by a CPA
firm, laundry services by a laundry shop)
Sales Revenues revenues earned as a
result of sale of merchandise (e.i. sale of
construction materials by a construction
supplies firm.

Expenses
Salaries or Wages Expenses includes all payments

as a result of an employer-employee relationship

such as salaries or wages, 13th month pay, cost of
living allowances and other related fringe benefits.
Electricity, Fuel and Water Expenses expenses
related to use of consumption of electricity, fuel
and water.
Rent Expense expense for space, equipment or
other asset rentals.
Supplies Expense expense of using supplies in the
conduct of daily business.
Insurance Expense portion of premiums paid on
insurance coverage.

Expenses
Depreciation Expense the portion of the

cost of a tangible asset allocated or

charged as expense during an accounting
period.
Uncollectible Accounts Expense the
amount of receivables estimated to be
doubtful of collection and charged as
expense during an accounting period.
Interest Expense An expense related to
the use of borrowed funds.