FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 1

Name of Learner: __________________________________ Grade Level: _______________

Section: ________________________________________ Date:______________________

LEARNING ACTIVITY SHEET

Preparing a Chart of Accounts

I. Background Information for Learners

Since we have already learned the basic accounting equation and the five major accounts, the
next important thing that we have to know is to prepare the chart of accounts. A chart of accounts
is a listing of all the accounts and is usually tailored to the operation of the business. It functions as
a guide to the accountant or the bookkeeper in ensuring uniformity and consistency in the use of all
the accounts in recording business transactions. Most of the time, it is prepared in such way that
the five main or major accounts are grouped and organized. As such, at the earliest possible time,
the business should anticipate all specific accounts it may use in its lifetime that will be included in
the list. Account titles are arranged in financial statement order: assets, liabilities, owner’s equity,
revenues, and expenses. Assets are always ordered by liquidity with the most liquid assets on top.
Liquidity means how quickly an asset can be converted to cash or traded. Cash is always the most
liquid asset followed by accounts receivable and short-term assets like supplies. Property, plant, and
equipment go last because they are held longer and are harder to convert to cash. For liabilities,
short-term debts (paid in less than one year) first, followed by long-term-liabilities arranged in
alphabetical order. For owner’s equity, capital goes first, then drawing. Revenues and expenses are
always in alphabetical order. The accounts are so numbered or coded for purpose of indexing and
cross-referencing. No specific rules for account code or numbers, but most businesses follow the
same pattern where asset accounts start in number 1, liabilities in 2, owner’s equity in 3, revenues in
4, and expenses in 5 to 9. Normally each account number consists of two or more digits that tell
something about the account.
For example:
1 => The account is an “Asset Account”
11 => The account is a “Current Asset Account”
110 => The account is “Cash Account”

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 2 => The account is a “Liability Account”
21 => is a “Current Liability Account”
210 => The account is “Accounts Payable Account”

For this lesson, let us agree to follow the table below.

Category Numbering Order
Assets 1 Liquidity
Liabilities 2 Short-term, alphabetical
Equity 3 Capital, Drawing
Revenues 4 Alphabetical
Expenses 5 Alphabetical

Enumerated below are the commonly used account titles with their corresponding
definitions.
ACCOUNTS DESCRIPTION

ASSETS

1. Cash
2. Accounts Receivable
3. Notes Receivable
4. Allowance for Bad
Debts/Doubtful Account
5. Supplies or Unused
Supplies
6. Prepaid Expenses
7. Land
8. Building
Includes coins, currencies, checks, bank deposits, and other cash
items readily available for use in the operations of business
Amount collectible from the customer to whom sales have been
made or services have been rendered on account or credit
Promissory note issued by the client or the customer in exchange
for services or goods received as evidence of his/her obligation to
pay
Losses due to uncollectible account. This is a contra-asset or a
deduction from the accounts
Supplies which remain unused at the end of the accounting period
Include supplies bought for use in the business or services and
benefits to be received by the business in the future paid in
advance
Lot or real estate owned by the enterprise on which a building can
be constructed for business purposes
Edifice or structure used to accommodate the office, store, or
factory of a business enterprise in the conduct of its operation

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9. Equipment Includes typewriter, air-conditioner, calculator, filing cabinet,
computer, electric fan, trucks, and cars used by the business in its
office, store, or factory
10. Furniture and Includes tables, chairs, carpets, curtains, lamp and lighting fixtures,
Fixtures and wall decors
11. Accumulated Represent the expired or the aggregate portion of the total cost of
Depreciation property, plant, and equipment as a result of usage and passage of
time
LIABILITIES

1. Accounts Payable Includes debts arising from the purchase of an asset or the
acquisition of services on account
2. Notes Payable Includes debts arising from the purchase of an asset or the
acquisition of services on account evidenced by a promissory note
3. Unearned Revenues Represent obligations of the business arising from advance
payments received before goods or services are provided to the
customer
4. Utilities Payable An obligation to pay utility companies for services received like
telephone, electricity and water services
5. Loan Payable This represents the amount of money borrowed by the business
from third party creditors
6. Mortgage Payable A long-term debt of the business with security or collateral in the
form of real properties
OWNER’S EQUITY

1. Capital Represents ownership

2. Drawing Represents withdrawal of owner/s

REVENUES

1. Interest Income An interest earned from bank deposits

2. Professional Fees Earnings made by professionals or experts from rendering services

to their clients
3. Service Revenue Includes revenues earned or generated by the business in
performing services for a customer or client
EXPENSES

1. Depreciation Expense This pertains to the expense allotted for the wear and tear of

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 property, plant, and equipment due to passage of time.

2. Doubtful Accounts
Expense
3. Salaries Expense
4. Supplies Expense
5. Taxes and Licenses
Expense
6. Utilities Expense
7. Wages Expense
This refers to the amount of accounts receivable that is estimated
as uncollectible and this is recognized as an expense in the current
accounting period.
This refers to the cost incurred associated with the services
rendered normally by permanent and full-time employees who are
paid with a regular basis, usually monthly.
This refers to the amount of supplies that was used during a
particular accounting period.
This represents cost incurred to register the business, to acquire
the right to operate, and to settle taxes.
This refers to the costs associated with the usage of electricity,
water, and other communication for a particular accounting period.
This refers to the costs incurred associated with services rendered
normally by contractual and temporary employees and workers
who are paid on an hourly rate or based on output.

I do hope that this activity sheet will help and guide you to meet the expected competency.
Good luck and happy learning!

of Chart of Accounts
To illustrate, Jose Mercado’s photocopying business would have the following chart of accounts
which reflects the major accounts.
JM Photocopying Center
CHART OF ACCOUNTS
Code ASSETS Code OWNER’S EQUITY
Current Assets
110 Cash 310 Mercado , Capital
111 Notes Receivable 311 Mercado, Drawing
112 Accounts Receivable 399 Income Summary
113 Allowance for Doubtful Accounts
114 Interest Receivable

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 115 Unused Supplies
116 Prepaid Rent
Non-Current Assets REVENUES
120 Land 410 Interest Income
121 Photocopying Equipment 411 Photocopying Revenues
122 Accumulated Depreciation- 499 Other Income
Photocopying Equipment
123 Furniture and Fixtures
124 Accumulated Depreciation-
Furniture and Fixtures
199 Other Assets EXPENSES
LIABILITIES 510 Depreciation Expense
Current Liabilities 511 Doubtful Accounts Expense
210 Accounts Payable 512 Interest Expense
211 Salaries Payable 513 Rent Expense
212 Interest Payable 514 Salaries Expense
213 Unearned Photocopying Revenues 515 Supplies Expense
214 Income Tax Payable 516 Taxes and Licenses Expense
215 Notes Payable 517 Utilities Expense
Non-Current Liabilities 599 Other Expense
220 Loan Payable
221 Mortgage Payable
299 Other Liabilities

II. Learning Competency with code:

Prepare a Chart of Accounts (ABM_FABM11-III-e-21)

This III. Activities

General Instruction: Answer the following exercises on a separate sheet of paper.

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 # 1. Your wish is my command.

Directions: Give two account titles under the following accounts.

a. Current Assets e. Owner’s Equity
b. Non-Current Assets f. Revenues
c. Current Liabilities g. Expenses
d. Non-Current Liabilities

# 2. Tell me who your friends are and I will tell you who you are.

Directions: List down the similarities and differences of the given elements below.

ELEMENTS SIMILARITIES DIFFERENCES

Accounts Payable

Accounts Receivable

Loan Payable

Mortgage Payable

Salaries Expense

Wages Expense

# 3 . I Can Do It.
Directions: Prepare a chart of accounts of Bataller General Services using the accounts given below.
Please follow the account code of JM Photocopying Center. Given, 110 cash, as an example.

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 Code Account Title

Unearned Service Revenue

Bataller, Drawings

Allowance for Doubtful Accounts

Supplies

Accounts Payable

Office Equipment

Supplies Expense

Accounts Receivable

Utilities Expense

110 Cash

Depreciation Expense-Office Equipment

Prepaid Insurance

Salaries Expense

Rent Expense

Bataller, Capital

Accumulated Depreciation-Office Equipment

Doubtful Accounts Expense

Interest Expense

Service Revenue

IV. Guide Questions:

1. Define the given elements.

2. Compare and give its similarities to the other given element.
3. Compare and give its differences to the other given element.

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 V. Rubric for Scoring

Criteria Good (2 points) Better (4 Points) Best (6 Points)

Completeness and Able to give the Able to give the Able to give the
Accuracy similarities of both difference of only one difference of both
elements correctly element correctly elements correctly

IV. Reflections
1. How do you find the lesson?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

2. Which activity did you find challenging? Why?

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

V. References

Textbook: Fundamentals of Accountancy, Business, and Management 1.

Florenz C. Tugas et. Al (2016)
Textbook: Fundamentals of Accountancy, Business, and Management 1 for Senior High School
Flocer Lao Ong
https://www.youtube.com/watch?v=Pht5sztAuP0

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 Learning Activity Sheet
Answer Key
Exercise 1.
Select any two accounts from the five
major accounts.
ASSETS OWNER’S EQUITY
Cash Capital
Accounts Receivable Drawing
Notes Receivable
Interest Receivable REVENUES
Unused Supplies Service Revenues
Prepaid Rent Interest Income
Equipment Other Income
Furniture and Fixtures
Other Assets

LIABILITIES EXPENSES
Accounts Payable Depreciation Expense
Notes Payable Doubtful Accounts Expense
Salaries Payable Interest Expense
Income Tax Payable Rent Expense
Interest Payable Salaries Expense
Unearned Revenues Supplies Expense
Loan Payable Taxes and Licenses Expense
Mortgage Payable Utilities Expense

Other Payables Other Expense

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 Exercise 2.

ELEMENTS SIMILARITIES DIFFERENCES

Accounts Payable Both accounts are current Accounts Payable is a liability
Accounts Receivable accounts account, while Accounts
Receivable is an asset account.
Loan Payable Both accounts are non-current Loan Payable is a debt without
Mortgage Payable liability accounts. collateral. On the other hand,
Mortgage Payable is a debt with
security or collateral in the form
of real properties.
Salaries Expense Both are expense account Salaries expense is the cost
Wages Expense incurred associated with the
services rendered normally by
permanent and full-time
employees who are paid with a
regular basis, usually monthly.
While, wages expense is the
costs incurred associated with
services rendered normally by
contractual and temporary
employees and workers who
are paid on an hourly rate or
based on output.

Exercise 3 (20 points)

Bataller General Services

Chart of Accounts

Code Account Title

110 Cash

112 Accounts Receivable

113 Allowance for Doubtful Accounts

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115 Supplies

116 Prepaid Insurance

121 Office Equipment

122 Accumulated Depreciation-Office Equipment

210 Accounts Payable

213 Unearned Service Revenue

310 Bataller, Capital

311 Bataller, Drawings

411 Service Revenue

510 Depreciation Expense for Office Equipment

511 Doubtful Accounts Expense

512 Interest Expense

513 Rent Expense

514 Salaries Expense

515 Supplies Expense

517 Utilities Expense

Prepared by:

LOURDES M. BATALLER
LAS Writer

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