TYPES OF MAJOR ACCOUNTS

1. Assets – are defined as resources controlled by the entity as a result of past transactions
or events and from which future economic benefits are expected to flow to the entity.

Tangible assets are physical; they include cash, inventory, vehicles, equipment, buildings
and investments.

Intangible assets do not exist in physical form and include things like accounts
receivable, prepaid expenses, and patents and goodwill.

Current assets are short-term assets that are typically used up in less than one year.
Current assets are used in the day-to-day operations of a business to keep it running.

 Cash - is the most liquid asset a company can own. A company’s cash account in
its chart of accounts includes all currency and coins owned by the company as well
as all deposits in the bank including checking accounts and savings accounts.
Cash also includes instruments or contracts that can be deposited in a bank
account like vendee checks, customer checks, cashier’s checks, certified checks,
as well as money orders.

 Accounts Receivable - often abbreviated A/R, is the amount of money that

customers currently owe to the company for goods or services that were
purchased on credit.

 Notes Receivable - a note receivable is a written promise to receive a specific

amount of money at a designated future date or on demand of the holder. In other
words, a note receivable is lender’s contract with the borrower.

 Office Supplies - encompass a wide range of materials that are used on a regular,
daily basis by businesses of all sizes

 Short term investments - are the investments made by the company that are
intended to be sold immediately

 Prepaid Expenses – advance payment made by the company. Examples of this

are: prepaid rent, prepaid advertising, prepaid insurance, unused office supplies
or unused store supplies.

 Accrued Income - is money that's been earned but has yet to be received

Non-current/Fixed assets are long-term, physical assets such as plant and equipment.
Fixed assets have a useful life of more than one year.
  Land – the land owned by the company that is being used in business. It is
classified as investment.

 Building – the infrastructure owned by the company issued in business.

 Vehicle - any cars, truck or other vehicles owned by the business

 Office Equipment - is a type of fixed asset used by a company in its business

operations and reported on the long-term assets section of the balance sheet
under the line item property, plant, and equipment. It includes computer, calculator,
typewriter, fax machine, photocopier, telephone units, store equipment, etc.

 Furniture and Fixtures - are tangible assets used by a business to carry out it’s
the core operations and generate profits. Represents the following: chairs and
tables, air conditioners, cabinets, electric fans.

 Long Term Investments - are the investments made by the company for long-
term purposes

 Intangible Assets - brand name, trademark, patent, licenses, franchise, copyright

2. Liabilities – are present obligation of the entity arising from past transactions or events
the settlement of which is expected to result in an outflow from the entity of resources
embodying economic benefits.

Current Liabilities are those which are due for payment within a short period of time or
within one year from the balance sheet date. These obligations require a current asset for
payment.

 Accounts Payable - also called trade payables, is a short-term liability account

used to record debts from purchasing goods or services on credit.

 Notes Payable - is a liability in writing that promises to pay a specific amount of

money at future date or on demand. In other words, a note payable is a loan
between two entities.

 Accrued Expenses - expenses already incurred but not yet paid. Accrued
expense accounts include: Salaries payable, Rent payable, Utilities payable,
interest payable, tax payable, withholding tax payable

 Unearned Income – is money received by an individual or company for a service

or product that has yet to be provided or delivered.
Non-current/Fixed Liabilities are those which mature beyond one year from the balance
sheet.

 Notes Payable - a loan that is due beyond one year.

 Mortgage Payable – is also a long-term debt of a business for which the business
has pledge certain assets as security to the creditor.

 Bonds Payable - is a liability account contains the amount owed to bond holders
by the issuer.

3. Capital – is the residual interest in the assets of the entity after deducting all of its liabilities.

 Owner’s, Capital – refers to the capital account of the owner.

 Owner’s, Withdrawal – refers to the withdrawal made by the owner.

4. Revenues – increase in economic benefit during the accounting period in the form of
inflow or increase in assets or decrease in liability that increase in equity, other than
contribution from equity participants.

 Service Income – can be used for companies, which render services in order to
earn an income like the services rendered by barbershop, repair shop, beauty
parlor.

 Professional Fees - are prices charged by individuals specially trained in specific

fields of arts and sciences, such as doctors, architects, lawyers, and accountants.
It is usually an income account used by a professional firm in recording its
revenues.

5. Expenses – decrease in economic benefit during the accounting period in the form of an
outflow or decrease in asset or increase in liability that results in decrease in equity other
than distribution to equity participants. This will decrease capital.

 Salaries and Wages – represent the labor payments to employees of the

company.

 Employee benefits – represent the labor payments to the employees other than
the basic payment that are highly discretionary on the part of the employer.
Examples are bonuses, uniforms, meal allowances, 13th month pay, vacation and
sick leave benefits.

 Supplies Expense – represents various office supplies used by the office like
coupon bonds, pencils, ballpoint pen, papers, paper clips, etc.
 Utilities Expense – expenses arising from light, water, and telephone expenses.

 Rent Expense – the rental expenses of the business

 Advertising Expense – the cost of promotion and advertising the products of the
business for the purpose of improving its sales performance.

 Insurance expense – represents fire and burglary insurance of the various assets
of the business.
REFERENCES:

Aliling L. E. (2019). Fundamentals of Basic Accountancy, First Edition, Manila, Philippines: Rex
Bookstore.

Arganda, et al (2012) Accounting Principles 1, Fourth Edition, Mandaluyong City, Philippines:

National Book Store

Haddock, M., Price, J., & Farina, M. (2012). College Accounting: A Contemporary Approach, 2nd
ed. New York: McGraw-Hill/Irvin

Valencia, E.G.& Roxas, G.F. (2010). Basic Accounting 3rd ed., Mandaluyong City, Philippines:
Valencia Educational Supply.

Wild, J. (2009). Principles of Accounting 19th ed. McGraw Hill Publishing

https://www.myaccountingcourse.com/?s=note+receivable

https://www.myaccountingcourse.com/?s=accounts+receivables

https://www.myaccountingcourse.com/accounting-dictionary/cash

https://definitions.uslegal.com/o/office-supplies/

https://www.myaccountingcourse.com/accounting-dictionary/equipment

https://www.myaccountingcourse.com/accounting-dictionary/ffe

https://www.investopedia.com/ask/answers/032415/what-difference-between-current-assets-
and-fixed-assets.asp

https://www.investopedia.com/terms/a/accruedincome.asp

https://www.investopedia.com/terms/u/unearnedrevenue.asp