AS SET ACCOUNTS

Cash – Cash includes: currency and coins, checks, money orders, bank drafts and demand deposit
accounts.

Held for Trading Securities – Temporary investments of excess cash which are primarily held for short
term gain.

Loans and Receivables – include trade receivables and non trade receivables. Trade Receivables are
claims against others which arise in the ordinary course of doing business. Examples are: Trade accounts
receivable- these are claims against customers arising from the provision of services or delivery of goods
on credit.

Trade Notes Receivable – A note receivables is a written promise from the customer to pay a fixed
amount of money on a certain future date. Being a formal and written document. It offers more security
than accounts receivable.

Non Trade Receivables – represent all other claims which are not trade. They may be non-trade
accounts receivable or non-trade notes receivable.

Inventories – These are assets which are (a) held for sale in the ordinary course of business; (b) in the
process of production for such sale; (c) in the form of materials or supplies to be consumed in the
production process or in the rendering of services.

Prepaid Expenses – These are expenses paid for by the business in advance. Examples are Prepaid Rent
and Prepaid Insurance. Prepaid expenses are assets when they are paid for. Subsequently, they become
expenses.

Long-term Investments – An investment is an asset held by an enterprise for the accretion of wealth
through capital distribution, such as interest, royalties, dividends and rentals, for capital appreciation or
for other benefits to the investing enterprise such as those obtained through trading relationships.
Investments are classified as long term when they are intended to be held for long periods of time.
Property, Plant and Equipment – These are tangible assets held by an enterprise for use in the
production or supply of goods or services, or for rental to others, or for administrative purposes and
which are expected to be used during more than one accounting period. Examples are land, building,
transportation and delivery vehicles, furniture and fixtures, machinery and equipment.

Intangible Assets – These assets are identifiable, non monetary assets without physical substance. These
include patents, copyrights, licenses, franchises and trademarks.

LIABILITY ACCOUNTS

Accounts Payable – This account is the opposite of accounts receivable. Examples include purchasing
goods or receiving services for which the buyer agrees to pay in the near future.

Notes Payable – A note payable is like a note receivable, except that this time the enterprise is the one
who promises to pay (not the one who receives the promise)

Accrued Liabilities – These are amounts owed to others for unpaid expenses. They are similar to
accounts payable, except that accounts payable are for items which have already been consummated
(such as the purchase of goods), while accrued expenses are for items which are continuing in nature
(such as utility services like electricity and water). Examples are salaries payable, interest payable, taxes
payable and accruals for utility expenses.

Unearned Revenues – Sometimes the enterprise receives payment before providing its customers with
goods or services. This creates an obligation on the part of the enterprise to deliver goods or provide
services. Once the enterprise complies with what is required of it, the advance collections from
customers are already earned and become part of income.

Mortgage Payable – This account is used for recording long-term debt(s) of an enterprise for which the
company has pledged certain assets as security for the debt (collateral).

Bonds Payable – A bond is a contract between the issuer and the lender specifying the terms of
repayment as well as the interest to be p aid.

EQUITY ACCOUNTS
Equity – or Capital is used to record the original and additional investments of the owner of the business
entity. Capital is increased by net income earned during the year. Conversely, a net loss decreases
capital.

Withdrawals – When the proprietor (or a partner in a partnership) withdraws cash or others assets for
non business use, such withdrawals are reflected in the “withdrawals” account. Some accounting
references use the term “drawings” or “personal” instead of “withdrawals”

Income Summary – It is temporary account used to summarize all income and expenses for a given
period. If total income is greater than total expenses, a net income results. If the opposite happens, a
net loss was sustained by the business. Some accounting references use the term “Profit or Loss
Summary” instead of “Income Summary”.

INCOME ACCOUNTS

Service Income or Fees Income – Revenues earned by performing services for customers.

Sales – Revenues earned as a result of sale of merchandise.

EXPENSE ACCOUNTS

Cost of Sales – the cost incurred to purchase or to produce the products sold to customers during the
period. For a service business, any expense which could be directly attributed to the provision of
services is called cost of services.

Salaries and Wages Expense – Includes all payments as a result of an employer-employee relationship
such as salaries and wages, 13th mo. pay and other related employee benefits.

Utilities Expense (Telephone, Electricity, Fuel and Water Expenses) – Expenses related to use of
communication facilities, the consumption of electricity and water.

Rent Expense – Expense for leased office space,, equipment, or other assets rented from others.
Supplies Expense – The account used for recording the usage of supplies (e.g. office supplies) in the
normal course of business.

Insurance Expense – Portions of premiums paid on insurance coverage which has expired.

Depreciation Expense – The portion of the cost of a tangible asset allocated or charged as expense
during the accounting period.

Bad Debts Expense – The amount of receivables estimated to be uncollectible and charged as expense
during an accounting period. Also known as “Uncollectible Accounts Expense”.

Interest Expense – An expense related to use of borrowed funds. Also known as finance cost.

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