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ACCOUNT TITLES

ASSETS

CASH
Ø 
Currency (bills and coins), checks, postal money
orders, and treasury warrants received by the business.

Ø 
Current asset

The following are examples of Cash:

1.  PETTY CASH FUND

Ø 
Cash used to pay petty or small amounts.

Ø 
Current asset

2. CASH ON HAND
Ø 
Cash in the possession and custody of the
business.

Ø 
Current asset.

3. CASH IN BANK
Ø 
Cash that is deposited in the banks.

Ø 
Current Asset

Investment in Trading
Securities

This refers to short-term, highly liquid investment in

securities such as shares and bonds.

Trade and Other

Receivables

This refers to the amount collected from a person or a

company.
The following are examples of Trade and
other Receivables:

1. ACCOUNTS RECEIVABLE

Ø 
Amount collectible from clients or customers’
services rendered or sale of goods.

Ø 
Current asset

In general, this account is not

supported by promissory notes so that it is often referred to as arising from
sales “on open account”. (Notes: When a business does not expect to collect all
its receivables, bad debts are provided and the accumulated amount thereof in
“allowance for bad debts” is treated as a deduction from receivables.)

2.  ALLOWANCE FOR DOUBTFUL ACCOUNTS

Ø 
A contra-asset account that represents the
estimated amount of trade receivables that are doubtful of collection.

3. NOTES RECEIVABLE
Ø 
Amounts collectible that is covered by
promissory notes.

Ø 
Represents the principal amount or the face
value of the promissory notes which is held by the payee.

4. COMMISSION RECEIVABLE
Ø 
Represents the amount collectible from the party
who is obliged to give a commission.

Ø 
Current Asset

5. INTEREST RECEIVABLE
Ø 
Amount collectible in a loan transaction.

Ø 
Current asset
6. RENT RECEIVABLE
Ø 
Represents the amount collected from the
tenant or the lessee.

Ø 
Current Asset

7. ADVANCE TO EMPLOYEES
Ø 
Cash advance to be deducted from the gross
salary of the employee.

Ø 
Current asset

8. MERCHANDISE INVENTORY
Ø 
Goods acquired for sale and are still unsold.

Ø 
Current asset

9. PREPAID EXPENSES
Ø 
Expenses to be incurred yet in the future but
are already paid.

Ø 
Current asset

Examples: Prepaid
Rent, Prepaid Interest, and Prepaid Insurance.

Ø 
Expenses of the future accounting period(s) that are
paid in advance.

Examples:
Unexpired portion of insurance premiums (prepaid insurance) and advertisements
paid in advance (prepaid advertising)

The following
are the examples of Prepaid Expenses:
PREPAID ADVERTISING
Ø 
Advance payment of advertising in all media
types and promotional campaigns.

Ø 
Current Asset

PREPAID INSURANCE
Ø 
Advance payment of insurance whether it is life
insurance or non-life insurance.

Ø 
Current Asset

PREPAID RENT
Ø 
Advance payment of rent by the tenant.

Ø 
Current asset

PREPAID SUBSCRIPTION
Ø 
Advance payment to print materials or non-print
materials.

Ø 
Current asset

10. OFFICE SUPPLIES

Ø 
Stationery used in the offices.

Ø 
Current asset

11. STORE SUPPLIES

Ø 
Stationery or items used directly in selling
activities.

Ø 
Current asset
12. UNUSED SUPPLIES
Ø 
Supplies that are still unused as of the end o an accounting period.
Ø 
Current Asset

13. PROPERTY, PLANT, AND

EQUIPMENT

These refer to items that are useful for more than one year.

The following are the examples of Property, Plant, and Equipment:

LAND
Ø 
Refers to the surface of the earth that is not
covered by a body of water.

Ø 
Land acquired by the business for its use.

Ø 
Non-current assets

BUILDING
Ø 
Structures or edifices acquired for use of the
business.

Ø 
Refers to a structure with roof and walls that
are constructed on the land. Examples are office buildings, factory plants, and
similar structures.

Ø 
Non-current assets

MACHINERY
Ø 
Refers to equipment that has the power to produce
movements or forces.

Ø 
Non-current assets

MACHINERY AND EQUIPMENT

Ø 
Heavy, metallic, and movable items that are
capable of performing certain functions or used to perform certain functions.
Examples are sewing machines, lathe machines, cutting machines, and
tractors.
Ø 
Non-current asset
FURNITURES AND FIXTURES
Ø 
This account title is used in referring to
movable items of significant value and acquired to improve the workable
condition of a place such as tables, chairs, cabinets, electric fans, and
air-conditioners.

Ø 
Furniture refers to movable things that are the result of design.

Examples are sofa, tables, and chairs

Ø 
Fixture, on the other hand, refers to something
attached to a property such as walls.

Examples are cabinets, lightings, toilet fixtures.

OFFICE EQUIPMENT
Ø 
Refers to business machines used in workplaces.
Examples are computers, copier machines.

Ø 
Heavy, metallic and movable items used in an
office to perform certain functions or are capable of performing certain
functions.

Examples are typewriters, posting machines, and computers.

Ø 
Non-current assets

STORE EQUIPMENT
Ø 
Refers to business machines used in
point-of-sale transactions. An example is a Cash Register.

Ø 
Non-current assets

DELIVERY EQUIPMENT
Ø 
Wheeled items used in making deliveries to
customers or clients. Examples are vans and trucks.

Ø 
Non-current assets

ACCUMULATED DEPRECIATION
Ø 
A contra-asset account that represents the
cumulative depreciation of a fixed asset from the date it was purchased up to
the date of the financial statements.

TOOLS
Ø 
Handy, small, and usually metallic items used in
performing certain functions such as saws, hammers, pliers, scissors, screws,
drivers, and jacks. Tools in general have a long useful life but do not have
significant peso value.

NOTE: The cost of assets with relatively permanent life (such as

buildings, machinery and equipment, and furniture) is allocated based on useful
(or economic) life. The allocated portion to each accounting period is charged
to Depreciation Expenses. The reduction in the asset value is accumulated in
the Accumulated Depreciation account, a deduction from the corresponding asset
account. In the case of tools, a portion of their cost may be written off by
charges to Tools Expense.

Ø 
Non-current assets.

LIABILITIES

Trade and Other Payables

This refers to the amounts payable to a person or a
company.
 
The following are the examples of Trade and Other Payables:

1.      ACCOUNTS PAYABLE

Ø 
Amount payable to suppliers or creditors for
services, supplies, goods, or property.

Ø 
Obligations to suppliers for items brought and
are not supported by promissory notes. It is often referred to as arising from
purchases “on open account”.

2.      NOTES PAYABLE

Ø 
Obligations covered by promissory notes.

Ø 
Represents the principal amount or the face
value of the promissory note which is issued by the maker.
Ø
Current liability

3.      COMMISSION PAYABLE

Ø
Unpaid commissions.

Ø 
Current liability

4.      UTILITIES PAYABLE

Ø 
Unpaid communication, light, and water bills.

Ø 
Current liability

5.      INTEREST PAYABLE

Ø 
Unpaid interest in a loan transaction.

Ø 
Current liability

6.      RENT PAYABLE

Ø 
Unpaid rent

Ø 
Current liability

7.      SALARIES AND WAGES PAYABLE

Ø 
Unpaid salaries and wages of the employees.

Ø 
Current liability

8.      EXPENSES PAYABLE

Ø 
Obligation for expenses already incurred but not
yet paid.

Examples are Taxes payable, Salaries and Wages Payable, and Accrued Advertising

Ø 
Advance Current liability
9.      UNEARNED INCOME
Ø 
receipt of cash representing the payment for
future advertising services.

10.  UNEARNED COMMISSION

Ø 
Advance receipt of cash representing the payment
for future services of an agent.

11.  UNEARNED RENT

Ø 
Advance receipt of cash representing the payment
of future rent.

12.  UNEARNED SUBSCRIPTION

Ø 
Advance receipt of cash representing the payment
for future subscriptions to print materials and non-print materials.

13.  LOANS PAYABLE

Ø 
Obligation arising from loans obtained.

Ø 
Non-current liability

14.  MORTAGE PAYABLE

Ø 
This refers to a bank loan with collateral
assets such as a house and lot or vehicle.

Ø 
Non-current liability

15.  BONDS PAYABLE

Ø 

This refers to a loan that is evidenced by a

bond certificate and a bond indenture. Bon indenture refers to the agreement
between the borrower and the lender. The borrower is normally the government and
the lender is normally the public or a financial institution.

Ø 
Non-current liability
 

OWNERS EQUITY 

OWNER, CAPITAL
Ø  Capital of the sole proprietor in his business. If the owner is Jose P. Golez, the
account becomes Jose P. Golez, Capital. At the end of the accounting period, it
is adjusted for withdrawals and net income (net loss).

OWNER, DRAWING
Ø  This account title is used for withdrawals made by the owner. If the owner’s name is
Jose P. Golez, the account title is Jose P. Golez, Drawing or Jose P. Golez,
Personal.

REVENUE/
INCOME

SERVICE INCOME
Ø  This refers to revenue realized by providing services to customers.

Ø  This refers to the income derived from the rendering of services and is the primary
income for a service business.

COMMISSION INCOME
Ø  Income derived by an agent for the performance of services such as product
distribution, disintermediation services, and others.

DIVIDEND INCOME
Ø  Income from share investments.

INTEREST INCOME
Ø  Income from loan transactions.

RENT INCOME
Ø  Income from the use of the land or unit space.

GAIN ON SALE OF FIXED ASSETS

Ø  Excess of the Selling price of a fixed asset over its Net Carrying Value (NCV).

Ø  NCV
is the difference between the cost of the asset and its accumulated
depreciation.

FEES INCOME
Ø  This refers to revenue realized by providing professional services to clients.
Examples are legal, dental, and medical fees.

SALES
Ø  This account title is used to refer to revenue from the sale of goods that when
previously acquired for sale.

  EXPENSES

TAXES AND LICENSES

Ø  Cost
of permits and taxes incurred.

ADVERTISING EXPENSES
Ø  Incurred in making the public aware of the goods and services being offered by the
business.

Ø  Examples are the cost of or rentals for signboards and neon signs and advertisements in the
newspapers and through radio and television.

SALARIES AND WAGES

Ø  The compensation earned by employees for services rendered to the business.

Ø  Examples are the salaries of sales and office employees and wages of employees holding
blue-collar jobs (factory and shop workers, maintenance men, drivers, and
mechanics).

SUPPLIES EXPENSES
Ø  Cost of supplies already used.

Ø  Examples are factory and shop supplies (rags, brooms, and lubricants), office supplies
(paper, pencils, adding machine tapes, and erasers), and dental supplies
(cotton, dental floss, and facial tissue paper).

LIGHT, POWER, AND WATER

Ø  Cost of light, power, and water consumption as indicated on bills presented by
utility companies (MERALCO and Manila Water Co., Inc.)

TELEPHONE AND TELEGRAM

Ø  Telephone and telegram charges as indicated on bills presented by telecommunication
companies (PLDT, PT&T, RCPE, etc.)

TOOLS EXPENSE
Ø  Cost of tools treated as an expense

DEPRECIATION EXPENSE
Ø  The portion of property cost allocated to an accounting period.

Ø  Non-cash expense that represents the total depreciation of the fixed assets for the
year.

Example: A machine costing P20,000 has an estimated useful life of 5 years. Annual depreciation
expense may be P4,000(or P20,000/5 years).

INSURANCE EXPENSE
Ø  Insurance premiums related to the current period

BAD DEBTS
Ø  Provision for uncollectible receivables

RENT EXPENSE
Ø  Payment made by a tenant lessee for the use of the land or unit space.

Ø  The number of rentals incurred based on occupancy space or usage of property and
equipment

UTILITY EXPENSE
Ø  Utilities such as light, water, and communication facilities such as phones, the internet,
and others.

INTEREST EXPENSE
Ø  Expense from loan transactions.

ADVERTISING & PROMOTION EXPENSE

Ø  Advertising in all media types and promotional campaigns.

AGENCY SERVICES EXPENSE

Ø  Payments to the agencies for providing janitorial, messenger, and securities
services.

COMMISSION EXPENSE
Ø  Payments made to agents for the performance of services such as product distribution,
intermediation services, and others.
DONATION EXPENSE
Ø  Charitable
contributions to a person, group of persons, or organization.
FRINGE BENEFIT EXPENSE
Ø  Benefits given to supervisory or managerial employees aside from the basic monthly
compensation.

FUEL & OIL EXPENSE

Ø  Refers to gasoline, oil, and lubricants used in operating a vehicle.

INSURANCE EXPENSE
Ø  Refers to life insurance and non-life insurance purchased for the purpose of
protecting an asset or a resource.

OFFICE SUPPLIES EXPENSE

Ø  Stationery used in the office.

STORE SUPPLIES EXPENSE

Ø  Stationery of items used directly in selling activities.

PAG-IBIG, PHILHEALTH, AND SSS CONTRIBUTION

Ø  Represents the following contributions of the employer:

1.     
PAG-IBIG housing benefit contribution

2.     
Philhealth health benefit contribution

3.     
SSS health benefit contribution

PROFESSIONAL FEE
Ø  Compensation given to persons rendering professional services to the business.

REPAIR AND MAINTENANCE EXPENSE

Ø  Payments made to fix a broken item or to ensure that an asset is working in good
condition.

REPRESENTATION & ENTERTAINMENT EXPENSE

Ø  Expense related to the cost of meetings/events with clients or customers such as meals
and other forms of entertainment. May also include recreational activities of
the management and employees.

SALARIES AND WAGES EXPENSE

Ø  Represents the total gross salary or wage of the employees.
SUBSCRIPTION EXPENSE
Ø  Subscriptions to print materials such as newspapers, magazines, and others & non-print
materials such as internet subscription

TAX AND LICENSE EXPENSE

Ø  Licenses or permits issued by a Local Government Unit (LGU) & taxes on the real state.

TOLL & PARKING EXPENSE

Ø  Read toll fees and parking fees.

TRAVEL EXPENSE
Ø  Commuting costs of using public transportation including airport fees and other fees.

DOUBTFUL ACCOUNTS EXPENSE

Ø  Non-cash expense that represents the estimated amount of Accounts Receivable (AR) which
may be uncollectable due to the risk of non-payment.

BAD DEBT EXPENSE

Ø  Non-cash expense that represents uncollectible customer accounts that were written-off
from the books.

MISCELLANEOUS EXPENSE
Ø  Expense which cannot be classified from the above expenses.

Ø  The different minor expenses incurred and for which no specific account title has
been adopted.

Ø  Examples are transportation expenses for P2.00 and bank charges for P10.00.