Professional Documents
Culture Documents
ASSETS
CASH
Ø
Currency (bills and coins), checks, postal money
orders, and treasury warrants received by the business.
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
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
Ø
Stationery used in the offices.
Ø
Current asset
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 of
an accounting period.
Ø
Current Asset
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
Ø
Heavy, metallic, and movable items that are
capable of performing certain functions or used to perform certain functions.
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.
Ø
Fixture, on the other hand, refers to something
attached to a property such as walls.
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.
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.
Ø
Non-current assets.
LIABILITIES
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”.
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
Ø
Unpaid commissions.
Ø
Current liability
Ø
Current liability
Ø
Unpaid interest in a loan transaction.
Ø
Current liability
Ø
Unpaid rent
Ø
Current liability
Ø
Unpaid salaries and wages of the employees.
Ø
Current liability
Ø
Obligation for expenses already incurred but notyet paid.
Examples are Taxes payable, Salaries and Wages Payable, and Accrued Advertising
Ø
Advance Current liability
Ø
receipt of cash representing the payment for
future advertising services.
Ø
Advance receipt of cash representing the payment
for future services of an agent.
Ø
Advance receipt of cash representing the payment
of future rent.
Ø
Advance receipt of cash representing the payment
for future subscriptions to print materials and non-print materials.
Ø
Obligation arising from loans obtained.
Ø
Non-current liability
Ø
This refers to a bank loan with collateral
assets such as a house and lot or vehicle.
Ø
Non-current liability
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 becom es 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
COMMISSION INCOME
DIVIDEND INCOME
INTEREST INCOME
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
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.
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).
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.
Ø Advertising
in all media types and promotional campaigns.
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.
Ø Benefits
given to supervisory or managerial employees aside from the basic monthly
compensation.
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.
Ø Stationery
of items used directly in selling activities.
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.
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.
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
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.
Ø Non-cash
expense that represents the estimated amount of Accounts Receivable (AR) which
may be uncollectable due to the risk of non-payment.
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.