ACCOUNT TITLES

Account titles are the term used to identify the specific elements of accounting to be used in the recording process.

ASSETS:
1. Cash – currency (bills or coins), checks, postal money, orders, and treasury warrants received by the business 2. Accounts Receivable – amounts collectible from customers, or clients (for goods sold and services rendered). 3. Merchandise Inventory – goods acquire for sale and are still unsold. 4. Notes Receivable – amounts collectible that are covered by promissory notes. 5. Interest Receivable – interest earned on notes receivable but not yet received in cash. 6. Prepaid Expense – expenses to be incurred yet in the future but already paid. 7. Unused Supplies – supplies that are still unused as of the end of the accounting period. 8. Land – land acquired by the business for its use. 9. Building – structure or edifices acquired for use of the business. 10. Machinery and Equipment – heavy, metallic and movable items that are capable of performing certain functions or used to perform certain functions. 11. Delivery Equipment – wheeled items used in making deliveries to customers or clients. 12. Furniture and Fixtures – refers to movable items of significant value and acquired to improve the workable condition of a place. 13. Office Equipment – heavy, metallic and movable items used in an office to perform certain functions or are capable of performing certain functions.

LIABILITIES:
1. Accounts Payable – obligations to suppliers for items bought and are not supported by promissory notes. 2. Notes Payable – obligations covered by promissory notes. 3. Loans Payable – obligations arising from loans obtained. 4. Taxes Payable – amount of levies on property or income due to the government. 5. Mortgage Payable – this is a long-term debt of the business for which property has been give as collateral or security.

OWNER’S EQUITY
1. Owner, Capital – capital of the sole proprietor on his business. If the owner is Ric D. Generoso, the account becomes Ric D. Generoso, Capital.

Generoso. Bad Debts – provision for uncollectible receivables. . 12. Drawing – this account title is used for withdrawals used by the owner.refers to revenue realized by providing professional services to customers. 5. 3. Personal. Rent Expense – the amount of rentals incurred based on occupancy of space or usage of property and equipment. Fees Income . If the owner’s name is Ric. Generoso. Sales – this account title is used to refer to revenue from sell of goods that were previously acquired for sale. D. Service Income – this refers to revenue realized by providing services to the customers. Supplies Expense – cost of supplies already used. 4. 2. 2. Telephone and Telegram – telephone and telegram charges as indicated on bills presented by telecommunication companies. 8. 10. Drawing or Ric D. 5. Power and Water – cost of light power and water consumption as indicated on bills presented by utility companies. Rent Income – this account absorbs the amounts of rental earned on the properties of the business. Light. Insurance Expense – insurance premiums related to current period. 3. Depreciation Expense – the portion of property cost allocated to an accounting period.2. the account title is Ric D. Tools Expense – cost of tools treated as expense. 4. 11. Owner. 9. Miscellaneous Expenses – the different minor expenses incurred and for which no specific account title has been adopted. Taxes and Licenses – cost of permits and taxes incurred. Generoso. EXPENSES 1. 7. Salaries and Wages – the compensation earned by the employees for services rendered for the business. Advertising Expense – incurred in making the public aware of the good or services being offered by the business. Interest Income – amount earned for the lending of money. 6. REVENUE 1.

Post general journal entries to the ledger accounts. gains. Because this process is repeated each reporting period. o omitting a posting. expenses. . balanced columns do not guarantee that there are no errors. The following steps are performed at the end of the accounting period: 6. dollars and cents). and losses. Prepare the financial statements. look for math errors. liabilities. o Balance sheet: prepared from the assets. __________________ The above steps are performed throughout the accounting period as transactions occur or in periodic batch processes. Posting errors include: o posting of the wrong amount. or o posting more than once. purchase journal. or the general journal. The actual sum of each column is not meaningful. 13. but this time the adjusting entries are included. 5. Identify the transaction or other recognizable event. identifying the accounts that are affected and whether those accounts are to be debited or credited. 7. deferred. Prepare the adjusted trial balance. Such entries are made in chronological order. 11.g. and recording errors. posting errors. Post closing entries to the ledger accounts. Any dividend or withdrawal accounts also are closed to capital. Analyze and classify the transaction. such as the sales journal. not recording a transaction or recording it in the wrong account would not cause an imbalance. gains. Correct any errors that may be found. o Income statement: prepared from the revenue. At this point no adjusting entries have been made. Prepare closing journal entries that close temporary accounts such as revenues. If the columns are not in balance. 12. These accounts are closed to a temporary income summary account. what is important is that the sums be equal. from which the balance is transferred to the retained earnings account (capital). For example. This step involves quantifying the transaction in monetary terms (e. it is referred to as the accounting cycle and includes these major steps: 1. 9. Note that while out-of-balance columns indicate a recording error. The trial balance is a listing of all of the ledger accounts. with debits in the left column and credits in the right column. o Statement of retained earnings: prepared from net income and dividend information. 10. expenses. Prepare the transaction's source document such as a purchase order or invoice. Record the transaction by making entries in the appropriate journal. and estimated amounts. Prepare adjusting entries to record accrued. and losses. Correct any discrepancies in the trial balance. o posting in the wrong column. 4. o Cash flow statement: derived from the other financial statements using either the direct or indirect method. 2.The accounting process is a series of activities that begins with a transaction and ends with the closing of the books. and equity accounts. Post adjusting entries to the ledger accounts. 8. 3. Prepare the trial balance to make sure that debits equal credits. cash receipt or disbursement journal. This step is similar to the preparation of the unadjusted trial balance.

only the permanent accounts appear since the temporary ones have been closed. Prepare the after-closing trial balance to make sure that debits equal credits. At this point. . one avoids double counting the amount when the transaction occurs in the next period.14. Correct any errors. By reversing the adjusting entry. Prepare reversing journal entries (optional). 15. Reversing journal entries often are used when there has been an accrual or deferral that was recorded as an adjusting entry on the last day of the accounting period. A reversing journal entry is recorded on the first day of the new period.