11

Fundamentals of
Accountancy,
Business and
Management 1
Quarter 3 – Module 3:
The Five Major Accounts and the
Chart of Accounts

SELF-LEARNING MODULE

DIVISION OF GENERAL SANTOS CITY

Subject Area – Grade 11
Self-Learning Module (SLM)
Quarter 2 – Module 4: The Five Major Accounts and the Chart of Accounts
First Edition, 2021

Republic Act 8293, section 176 states that: No copyright shall subsist in any work
of the Government of the Philippines. However, prior approval of the government agency or
office wherein the work is created shall be necessary for exploitation of such work for profit.
Such agency or office may, among other things, impose as a condition the payment of
royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
trademarks, etc.) included in this module are owned by their respective copyright holders.
Every effort has been exerted to locate and seek permission to use these materials from
their respective copyright owners. The publisher and authors do not represent nor claim
ownership over them.

Development Team of the Module

Writers: Jim Boy M. Pestaño
Editors: Hilda Emma D. Macaway
Reviewers: Luzviminda R. Loreno – SHS Coordinator
Illustrator:
Layout Artist: Jim Boy M. Pestaño
Cover Art Designer: Reggie D. Galindez
Management Team: Romelito G. Flores, CESO V – Schools Division Superintendent
Carlos G. Susarno, CESO VI – OIC Asst. Schools Division
Superintendent
Juliet F. Lastimosa, CID Chief
Sally A. Palomo, EPS - LRMS
Gregorio O. Ruales, EPS – ADM Coordinator
Luzviminda R. Loreno – Division Senior High School Coordinator
Gregorio O. Ruales - Division ADM Coordinator
Luzviminda R. Loreno – SHS Coordinator

Printed in the Philippines by Department of Education – General Santos City

Office Address: Tiongson St., Lagao, General Santos City

Telefax: (083) 552-8909
E-mail Address: depedgensan@deped.gov.ph
 11

Fundamentals of
Accountancy,
Business and
Management 1
Quarter 3 – Module 3:
The Five Major Accounts and the
Chart of Accounts

SELF-LEARNING MODULE

DIVISION OF GENERAL SANTOS CITY

Introductory Message
For the facilitator:

Welcome to Fundamentals of Accountancy, Business and Management 1 Self-

Learning Module (SLM) on The Five Major Accounts and the Chart of Accounts!

This module was collaboratively designed, developed and reviewed by educators

both from public and private institutions to assist you, the teacher or facilitator in
helping the learners meet the standards set by the K to 12 Curriculum while
overcoming their personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration
their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

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For the learner:

Welcome to Fundamentals of Accountancy, Business and Management 1 Self-

Learning Module (SLM) on The Five Major Accounts and the Chart of Accounts!

The hand is one of the most symbolized part of the human body. It is often used to
depict skill, action and purpose. Through our hands we may learn, create and
accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant
competencies and skills at your own pace and time. Your academic success lies in
your own hands!

This module was designed to provide you with fun and meaningful opportunities
for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning resource while being an active
learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in
the module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.

What is It This section provides a brief discussion of

the lesson. This aims to help you discover
and understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled in to process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or

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 skill into real life situations or concerns.

Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.

Additional Activities In this portion, another activity will be given

to you to enrich your knowledge or skill of
the lesson learned. This also tends retention
of learned concepts.

Answer Key This contains answers to all activities in the

module.

At the end of this module, you will also find:

References This is a list of all sources used in

developing this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

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 What I Need to Know

This module was designed and written with you in mind. It is here to help you
master the five major accounts namely: assets, liabilities, capital, income and
expenses and how to prepare a chart of accounts. The scope of this module
permits it to be used in many different learning situations. The language used
recognizes the diverse vocabulary level of students. The lessons are arranged to
follow the standard sequence of the course. But the order in which you read them
can be changed to correspond with the textbook you are now using.

In this module, you will learn to identify and discuss the five major accounts
namely: assets, liabilities, capital, income and expenses. You will also learn
how to prepare a chart of accounts.
Learning Code: ABM_FABM11-IIId-e-19
ABM_FABM11-IIId-e-21

After going through this module, you are expected to:

1. discuss the five major accounts; and
2. prepare a Chart of Accounts.

GENERAL INSTRUCTION: Write all your answers on the answer

sheet or in a separate paper/notebook as per advised by the
subject teacher.

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 What I Know

Instruction: Choose the correct answer on the following questions by writing the
letter of your choice on the answer sheet provided.

1. Account title for amounts collectible arising from services rendered to a

customer or client on credit.
a. Cash c. Accounts Receivable
b. Service Income d. Notes Receivable

2. These are “tangible assets which are held by an enterprise for use in
production or supply of goods and services.
a. Property and Equipment c. Building
b. Land d. Machine and Equipment

3. This is the center of the owner's concern because this may increase or
decrease at any time as a result of business operation.
a. Sales c. Income
b. Capital d. Liabilities

4. For the amount paid for business permits, licenses and other government
dues except the income Tax paid which is not allowable by law as a
deduction.
a. Prepaid Interest c. Taxes and Licenses
b. Rent Expense d. Miscellaneous Expense

5. Refers to the account title for merchandise sold either in cash or account.
a. Sales c. Accounts Receivable
b. Purchases d. Accounts Payable

6. These are expenses incurred by the enterprise but are not yet paid. This
normally occurs when the accounting period ended such as rent, salaries,
interest, taxes payable, etc.
a. Prepaid Interest c. Prepaid Income
b. Accrued Interest d. Accrued Income

7. This is an account title for an income collected or received in advance

and is not yet considered as "earned".
a. Accrued Income c. Unearned Income
b. Accounts Receivable d. Prepaid Income

8. It is defined as short-term, highly liquid instruments that are readily

convertible into cash and they present in significant risk of changes in
value because of changes in interest rates.
a. Cash c. Capital
b. Petty Cash Fund d. Cash Equivalents

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9. An account title for cost of stationery and other supplies purchased for
use but are left on hand and still unused.
a. Inventory c. Merchandise
b. Unused Supplies d. Office Supplies

10.An account title for the site where the building used as office, store or
shop, are constructed.
a. Land c. Building
b. Property d. Equipment

11.These are assets which are held for sale in the ordinary course of
business.
a. Supplies c. Inventories
b. Purchases d. Office Supplies

12.Account title for a finished construction owned by the business where

operations and transactions took place.
a. Equipment c. Furniture and Fixture
b. Land d. Building

13.The account title to describe money, either in paper or in coins and

money substitutes like check, postal money orders, bank drafts and
treasury warrants.
a. Petty Cash Fund c. Income
b. Cash d. Capital

14. Include chairs, tables, counters and display cases.

a. Equipment c. Building
b. Furniture and Fixtures d. Land

15.Account title for expenses that are paid in advance but are not yet
incurred or have not yet expired such as Prepaid Rental, Prepaid
Insurance, Prepaid Interest, and Prepaid Advertising.
a. Miscellaneous Expense c. Accrued Income
b. Prepaid Expense d. Accrued Interest

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Lesson
The Five Major Accounts
1 and Chart of Accounts

Good day students! In our previous lesson, we discussed the accounting equation.

Today, we will discuss the five major accounts namely: assets, liabilities, capital,
income and expenses and the chart of accounts.

In this lesson, we will discover how these five major accounts will be used in
recording business transactions. We will also learn on how to prepare a chart of
accounts which will be needed in recording transactions.

What’s In

In our previous lesson, we tackled about accounting equation. For us to connect it

in today’s lesson, let us review what we had learned by answering what is being
asked below. Write your answer on the answer sheet.

1. Illustrate the accounting equation and explain it briefly.

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

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 Notes to the Teacher
Teacher facilitates an activity that enables learners to use
previously taught lesson.

5
 What’s New

Activity 1: Who Am I?
Instruction: Group the following account titles based on the classification they
belong. Write your answer on the answer sheet following the table provided below.
Cash Accumulated Professional Income
Depreciation
Petty Cash Fund Rental Income
Intangible Assets
Cash Equivalents Shop Income or
Accounts Payable Income from Repairs
Notes Receivable
Notes Payable (short- Interest Income
Accounts Receivable
term)
Miscellaneous Income
Estimated
Accrued Expenses
Uncollectible Account Freight-Out
(Allowance for Bad Unearned Income
Supplies Expense
Debts)
Notes Payable (long -
Rent Expense
Inventories term)
Repairs and
Prepaid Expenses Capital
Maintenance
Unused Supplies Withdrawal
Salaries Expense
Property and Income & Expense
Uncollectible Accounts
Equipment Summary
Depreciation Expense
Land Sales
Taxes and Licenses
Building Sales Returns &
Allowances Insurance Expense
Machinery and
Equipment Sales Discounts Utilities Expense
Furniture & Fixtures Service Income Miscellaneous Expense
Cost of Sales or Cost of Purchases Purchase Discounts
Goods Sold
Purchase Returns and
Freight-In Allowances

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Assets

Liabilities

Capital

Income

Expenses

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 What is It

Great! I believe that you are now ready to learn the five major accounts and how to
prepare a chart of accounts. Our discussion deals with how these five major
accounts will be used in recording business transactions and how the account
titles were being utilized to record such.

WHAT IS AN ACCOUNT TITLE?

Account titles are identifications or brief descriptions of items that fall to same
kind, class or nature. In recording business transactions, the elements of financial
statements which are better known as “accounting elements” or “accounting values”
are to be assigned with their individual names called “accounting titles”.

These are the different account titles which we have classified into Balance Sheet
and Income Statement accounts.

BALANCE SHEET ACCOUNTS

(Permanent Accounts)
1. ASSETS

Assets are classified only into two, namely: current assets and non-
current assets.

Current Assets - refer to all assets that are expected to be realized, sold or
consumed within the enterprise's normal operating cycle. Operating cycle is
the interval of time from the date of acquisition of merchandise inventory,
sell the inventory to customers and the ultimate collection of cash from the
sale.

Cash - the account title to describe money, either in paper or in coins and
money substitutes like check, postal money orders, bank drafts and treasury
warrants. When cash is within the premise of the business, the account title
is "Cash on Hand" and "Cash in Bank" if deposited in the bank.

Petty Cash Fund - the account title for money placed and set aside for petty
or small expenses.

Cash Equivalents - cash equivalent is defined as short-term, highly liquid

instruments that are readily convertible into cash.

Notes Receivable - this is a promissory note that is received by the

business from the customer arising from rendering of service, and sale of
merchandise.

Accounts Receivable - account title for amounts collectible arising from

services rendered to a customer or client on credit. This constitutes an oral
or verbal promise to pay by a customer or client.

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Estimated Uncollectible Account - It provides for possible losses from
uncollected accounts. Although this is not actually an asset, it is classified
as such because it is shown as a deduction from the Accounts Receivable
which is a Current Asset account.

Inventories - these are assets which are held for sale in the ordinary course
of business, in the process of production for such sale or in the form of
materials or supplies to be consumed in the production process or in the
rendering of services.

Prepaid Expenses - account title for expenses that are paid in advance but
are not yet incurred or have not yet expired such as Prepaid Rental, Prepaid
Insurance, Prepaid Interest, and Prepaid Advertising.

Unused Supplies - an account title for cost of stationery and other supplies
purchased for use but are left on hand and still unused. The account title
should be specified as to "Unused Office Supplies" if intended for the office,
"Unused Shop Supplies" if intended for the shop.

Non-Current Assets – “all other assets are not classified as current should be
noncurrent assets".

Property and Equipment - these are "tangible assets which are held by an
enterprise for use in production or supply of goods and services, for rental to
others, or for administrative purposes, and are expected to be used during
more than one period".

Land - an account title for the site where the building used as office, store or
shop, are constructed.

Building - account title for a finished construction owned by the business

where operations and transactions took place.

Machinery and Equipment - includes welding machine, compressors,

equipment and tools, which are termed as "Shop equipment". Calculators,
adding machines, computers, cash registers, steel filling cabinets are termed
as "office equipment" while trucks, jeeps, vans and other motor vehicles are
called "transportation equipment" or "delivery equipment" when used in
delivering goods.

Furniture & Fixtures - include chairs, tables, counters, display and cases.
If these are used in the office, the account title is "Office Furniture and
Fixtures", if these are used in shop, the account title is "Shop Furniture &
Fixtures" and if used in store, the account title is "Store Furniture &
Fixtures”.

Accumulated Depreciation - this is an "asset offset" or "contra-asset"

account. This is called a "Valuation Account which is shown as a
deduction from property and equipment. The assets that are classified as
Property and Equipment are called Depreciable Assets and are subject to
depreciation except land. Land is not depreciated because it is expected to
be useful to the business enterprise for an indefinite period of time.

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Intangible Assets - these are identifiable non-monetary assets without
physical substance. Examples are patent, copyrights, franchise, goodwill, etc.

2. LIABILITIES

Current Liabilities - are financial obligations of the enterprise which are 1a)
expected to be settled in the normal course of the operating cycle; (b) due to
be settled within one year from the balance sheet date. Accounts Payable -
an account title for a financial obligation of an enterprise that constitutes an
oral or verbal promise to pay.

Notes Payable (short-term) - same as Accounts Payable in nature but only

the obligation is evidenced by a promissory note. The enterprise is the one
who issued the note.

Accrued Expenses - these are expenses incurred by the enterprise but are
not yet paid. This normally occurs when the accounting period ended such
as rent, salaries, interest, taxes payable, etc.

Unearned Income - this is an account title for an income collected or 3 –

received in advance and is not yet considered as "earned".

Non-current Liabilities - are financial long-term obligations of the

enterprise which are due and payable for more than one year. This usually
occurs in a corporate form of business organization.

Notes Payable (long - term) - same nature with that of Notes Payable
(short-term) but only, this requires payment for more than a year. Mortgage
Payable – a financial obligation of the enterprise which requires a fixed or
tangible property to be pledged as a collateral to ensure payment. This is
usually found in a corporate business organization.

3. OWNER'S EQUITY

Capital - This is the center of the owner's concern because this may
increase or decrease at any time as a result of business operation. In the
normal course of operation, Owner's Equity will be increased by "income"
and decrease by "expenses". The owner's capital investment is indicated by
the use of the owner's name with a word "capital" written after the name
which is separated by a "comma". Thus, if the owner Marfen Tan, the title for
his capital account is, "Marfen Tan, Capital"

Withdrawal - The owner's withdrawal is likewise indicated by the use of the

owner's name with the word "Drawing" or "Personal" written after the name
which is separated by a "comma". Thus, if the owner is Marfen Tan who
made withdrawal, the title for his drawing account is, "Marfen Tan,
Personal" or “Marfen Tan, Drawing"

Income & Expense Summary - this is a temporary account created at the

end of the accounting period where Income and Expenses are temporarily
closed to this account.

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 INCOME STATEMENT ACCOUNTS
(Temporary Accounts)

4. INCOME OR REVENUE

Sales - refers to the account title for merchandise sold either in cash or
account.

Sales Returns & Allowances - this is a reduction from sales account for
goods that were sold but were returned by the buyer or bad order or not
conforming with the order. This is a reduction from sales account.

Sales Discounts - refers to discounts given to buyers for early payment of

merchandise purchased on account or payment within the discount terms.
This is a reduction from sales account.

Service Income - In general, this is the account title used for all types of
income derived from rendering of services. Sometimes, the account title used
is "Service Revenue". Other specific income account titles used are:

Professional Income - the account title generally used by professionals for

income earned from the practice of their profession or maybe specified as;
"Accounting and Auditing Fees Income" for Accountants, "Legal Fees Income"
for Lawyers, “Dental Fees Income" for Dentists, "Medical Fees Income" for
Doctors, etc.

Rental Income - for income earned on buildings, space or other properties

owned and rented out by the business as the main line of its activity.

Shop Income or Income from Repairs - income derived from repair of cars
and other vehicles.

Interest Income - for income received by the business arising from an

amount of money borrowed by a customer and is usually covered by a
promissory note. This is typical in a lending institution.

Miscellaneous Income - for income earned by the business which is not the
main line of its activity and could not be clearly classified.

COSTS AND EXPENSES COSTS

Cost of Sales or Cost of Goods Sold - refers to cost to produce and sell the
merchandise.

Freight-In - refers to transportation cost incurred in buying goods.

Purchases - the account title for "merchandise" purchased under the

periodic inventory system. Under perpetual inventory system, the account
title is "merchandise inventory".

Purchase Returns and Allowances - refers to cost of merchandise that were

purchased but returned to the suppliers for bad order or does not conform
to the specification. This is reduction from purchases account.

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Purchase Discounts - refers to discount availed for early payment of
merchandise purchased. This is a reduction from purchases account.

5. EXPENSES

Freight-Out - refers to transportation cost of merchandise sold.

Supplies Expense - this represents cost of supplies that were used and
consumed that bears specific titles as office supplies expense, store supplies
expense and shop supplies expense.

Rent Expense - for the amount paid or incurred for use of property, usually
premises.
Repairs and Maintenance - for expenses incurred in repairing or servicing
the buildings, machineries, vehicles and equipment which are owned by the
business.

Salaries Expense - for compensation given to employees of a business. It

may be specified as "Office Salaries" or "Salesmen's Salaries”.

Uncollectible Accounts - for the anticipated loss that the business may
incur arising from uncollectible accounts.

Depreciation Expense - for the allocated portion of the cost of property and
equipment or fixed assets.

Taxes and Licenses - for the amount paid for business permits, licenses
and other government dues except the income Tax paid which is not
allowable by law as a deduction.

Insurance Expense - account title for the expired portion of the insurance
premium paid.

Utilities Expense – the account title for telephone, light and water bills.
Also included is gasoline, lubricants and oil.

Miscellaneous Expense - any amount paid as expense which is not

significant enough to warrant a particular classification.

CHART OF ACCOUNTS

A chart of accounts is a listing of all the accounts and is usually tailored to

the operations of the business. It functions as a guide to the accountant or
the bookkeeper in ensuring uniformity of and consistency in the use of all
accounts in recording business transactions. Most of the time, it is prepared
in a manner such 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. Moreover, business also just assign a range of numbers to major
accounts to accommodate additional specific accounts that may be created
or might arise in the future.

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Accordingly, the specific accounts may also be coded numerically to facilitate
a more efficient posting of the entries to the ledger or in preparation for the
transition to a computerized accounting system once the business decides to
acquire a computerized accounting system in the future.

Illustrative Example: 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
Assets Owner’s Equity
101 Cash 301 Mercado, Capital
112 Accounts Receivable 302 Mercado, Drawing
113 Allowance for Doubtful 399 Income Summary
Accounts
114 Notes Receivable
115 Interest Receivable
122 Unused Supplies Revenues
123 Prepaid Rent 401 Photocopying Revenues
151 Photocopying Equipment 402 Interest Income
152 Accumulated Depreciation – 499 Other Income
Photocopying Equipment
153 Furniture and Fixtures
154 Accumulated Depreciation –
Furniture and Fixtures
199 Other Assets
Liabilities Expenses
201 Accounts Payable 501 Taxes and Licenses
202 Notes Payable 502 Salaries Expenses
203 Salaries Payable 503 Supplies Expense
204 Income Tax Payable 504 Utilities Expense
205 Interest Payable 505 Rent Expense
208 Unearned Photocopying 506 Depreciation Expense
Revenues
212 Mortgage Payable 507 Doubtful Accounts Expense
215 Loan Payable 512 Interest Expense
299 Other Liabilities 599 Other Expense

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 What’s More

Activity 2: What’s your Title?

Instruction: With the following account titles, prepare a chart of accounts. Write
your answer on the answer sheet following the table provided below.

Accounts Payable Insurance Expense

Accounts Receivable Interest Income
Accrued Expenses Land
Accumulated Depreciation Machinery and Equipment
Building Notes Payable (short-term)
Capital Notes Receivable
Cash Prepaid Expenses
Depreciation Expense Professional Income
Furniture & Fixtures Property and Equipment
Income & Expense Summary Purchase Discounts
Rent Expense
Repairs and Maintenance
Salaries Expense
Sales
Supplies Expense
Taxes and Licenses
Uncollectible Accounts
Unearned Income
Unused Supplies
Utilities Expense
Withdrawal

9
 Atty. Jim Moreno Law Office
Chart of Accounts
Assets Owner’s Equity

Revenues

Liabilities Expenses

What I Have Learned

Now, let’s try this.

Instruction: Discuss the following based on what you have learned in our topic.
Write your answer on the answer sheet.
1. Assets
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. Liabilities
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

1
3. Owner’s Equity
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
4. Income
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
5. Expenses
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
6. Chart of Accounts
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Rubrics:
Content - 10 points
Coherence of Ideas - 10 points
Grammar and Sentence Structure - 5 points
Total - 25 points

2
 What I Can Do

Activity 3: Remember me this way!

Instruction: Following the table below, fill it up with different chart of accounts
and group them accordingly based on the five major accounts we discussed. Write
your answer on the answer sheet.

Assets Owner’s Equity

Income

Liabilities Expenses

3
 Assessment

Good job!

Now, let try this.

Instruction: Choose the correct answer on the following questions by writing the
letter of your choice on the answer sheet provided.
1. Account title for expenses that are paid in advance but are not yet
incurred or have not yet expired such as Prepaid Rental, Prepaid
Insurance, Prepaid Interest, and Prepaid Advertising.
a. Miscellaneous Expense c. Accrued Income
b. Prepaid Expense d. Accrued Interest

2. Include chairs, tables, counters and display cases.

a. Equipment c. Building
b. Furniture and Fixtures d. Land

3. The account title to describe money, either in paper or in coins and

money substitutes like check, postal money orders, bank drafts and
treasury warrants.
a. Petty Cash Fund c. Income
b. Cash d. Capital

4. Account title for a finished construction owned by the business where

operations and transactions took place.
c. Equipment c. Furniture and Fixture
d. Land d. Building

5. These are assets which are held for sale in the ordinary course of
business.
a. Supplies c. Inventories
b. Purchases d. Office Supplies

6. An account title for the site where the building used as office, store or
shop, are constructed.
a. Land c. Building
b. Property d. Equipment

7. An account title for cost of stationery and other supplies purchased for
use but are left on hand and still unused.
a. Inventory c. Merchandise
b. Unused Supplies d. Office Supplies

4
8. It is defined as short-term, highly liquid instruments that are readily
convertible into cash and they present in significant risk of changes in
value because of changes in interest rates.
a. Cash c. Capital
b. Petty Cash Fund d. Cash Equivalents

9. This is an account title for an income collected or received in advance

and is not yet considered as "earned".
a. Accrued Income c. Unearned Income
b. Accounts Receivable d. Prepaid Income

10.These are expenses incurred by the enterprise but are not yet paid. This
normally occurs when the accounting period ended such as rent, salaries,
interest, taxes payable, etc.
a. Prepaid Interest c. Prepaid Income
b. Accrued Interest d. Accrued Income

11.Account title for amounts collectible arising from services rendered to a

customer or client on credit.
a. Cash c. Accounts Receivable
b. Service Income d. Notes Receivable

12.These are tangible assets which are held by an enterprise for use in
production or supply of goods and services.
a. Property and Equipment c. Building
b. Land d. Machine and Equipment

13.This is the center of the owner's concern because this may increase or
decrease at any time as a result of business operation.
a. Sales c. Income
b. Capital d. Liabilities

14.For the amount paid for business permits, licenses and other government
dues except the income Tax paid which is not allowable by law as a
deduction.
a. Prepaid Interest c. Taxes and Licenses
b. Rent Expense d. Miscellaneous Expense

15.Refers to the account title for merchandise sold either in cash or account.
a. Sales c. Accounts Receivable
b. Purchases d. Accounts Payable

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 Additional Activities

Great! Now, that you have gained on the five major accounts and how to make a
chart of accounts, let us practice what we have learned.
In your community, look for a small business entity and make a chart of accounts
based on the daily transactions that transpired. Following the table provided below,
write your answer on the answer sheet.

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Answer Key

7
References
Lopez Jr., R. (2016). Fundamentals of Accounting (Simplified Procedural
Approach).

Tugas, F., Salendrez, H., & Rabo, J. (2016). Fundamentals of Accountancy,

Business and Management 1.

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 DISCLAIMER

This Self-learning Module (SLM) was developed by DepEd – Division of

General Santos City with the primary objective of preparing for and
addressing the new normal. Contents of this module were based on DepEd’s
Most Essential Learning Competencies (MELC). This is a supplementary
material to be used by all learners in General Santos City in all public
schools beginning SY 2020-2021. The process of LR development was
observed in the production of this module. This is version 1.0. We highly
encourage feedback, comments, and recommendations.

For inquiries or feedback, please write or call:

Department of Education – Division of General Santos City

Learning Resource Management System (LRMS)

Tiongson Street, Brgy. Lagao, General Santos City

Telefax No.: (083) 552-8909

Email Address: depedgensan@deped.gov.ph