WORK PLAN

Routine
Overarching Question
Activity 1
Discussion
Activity 2
Wrap Up
Isaac Newton was an
English physicist and
mathematician
famous for his laws of
physics.

Motion of Law - states that

“every object will remain at
rest or in uniform motion in a
straight line unless compelled
to change its state by the
action of an external force.
“For every action,
there is corresponding
reaction”
FIVE MAJOR ACCOUNTS
Accounting Categories and Their Role
There are five main types of accounts in accounting, namely
assets, liabilities, equity, revenue and expenses. Their role is to
define how your company's money is spent or received.

1) ASSET
2) LIABILITY
3) REVENUE
4) EXPENSES
5) CAPITAL
The five major accounts relate to each other. If
one changes, the others will change too.
ACTIVITY:
In 10 minutes, find out information about the
type of account assigned to you. List down and
present the information and examples you got
from the internet.
1) ASSET
2) LIABILITY
3) REVENUE
4) EXPENSES
5) CAPITAL
ASSETS ACCOUNT
The assets account includes everything that your company
owns. Assets are divided into tangible and intangible.
Examples of tangible assets include:
• Cash
• Equipment
• Buildings
• account receivable – amount of money owed by the
customers to the business
• Notes receivable - amount of money owed by the
customer evidenced by a promissory note
• Inventories – assets held for sale
• Unused supplies – supplies which remained unused
• Prepayment – advance payment of expenses
• Furnitures and fixtures – assets such as chairs, tables,
cabinets etc.
 Contra-Asset Accounts:

o Allowance for Doubtful Accounts – portion of account

receivable that are estimated to be uncollectible

o Accumulated Depreciation – aggregate portion of total

cost of property, plant and equipment that has been
charged to depreciation expense.

Your trademark, logo, copyrights and other non-physical

items are considered intangible assets.
Assets are also grouped according to either their life span or
LIQUIDITY - the speed at which they can be converted into
cash.

• Current assets are items that are completely consumed,

sold, or converted into cash in 12 months or less. Examples
of current assets include accounts receivable and prepaid
expenses.

• Noncurrent (Fixed) assets are tangible assets with a life

span of at least one year and usually longer. Fixed assets
might include machinery, buildings, and vehicles. Fixed
assets are typically not very liquid. And because of their
higher costs, assets are not expensed, but depreciated, or
"written off" over a number of years according to one of
several depreciation schedules.
Expenses Account
Any product or service that your company purchases to generate
income or manufacture goods is considered an expense. This may
include advertising

• Utilities expense – cost associated with usage of electricity

• Supplies expense – supplies used during a particular accounting
period
• Salaries expense – costs incurred associated with the services
rendered by the employees who are paid on a regular basis.
• Depreciation Expense – allocated portion of cost of property,
plant and equipment charged to expense in the current
accounting period.
• Taxes and Licenses – cost incurred to register the business to
acquire the right to operate
Revenue or Income
These are earnings arising from the main line of operations of
the business. This results from rendering of services or selling of
goods. Revenue, one of the primary types of accounts in
accounting, includes the money your company earns from
selling goods and services.

• Service revenue – earnings made by any business that is

into rendering services.
• Interest Income – interest credited by the bank to account
of business arising from bank deposits.
• Sales – earnings made by any business that is into selling
goods or merchandise.
• Professional Fees - earnings made by professionals or
expert from rendering services to their client.
Liabilities Account
Liabilities include the debts or obligations payable to creditors
and other outsiders to which your company owes money. These
can be

• Accounts Payable – amount of money owed by the business to the

creditors or suppliers.
• Notes Payable - amount of money owed by the business to the
creditors or suppliers evidenced by a note.
• Loan Payable – amount of money borrowed by the business from a
bank or lending institution.
• bank overdrafts - taking out more money than what is in your
account
• Mortgage payable - a loan that is secured by property
• Advances from Customers or Unearned Revenue – cash collected
by the business in advance for a service or good that is yet to be
rendered or delivered.
Liabilities are classified as current or long-term.

• Current liabilities are debts that are paid in 12 months or

less, and consist mainly of monthly operating debts.
Examples of current liabilities may include accounts
payable and customer deposits.

• Noncurrent (Long-term) liabilities are typically mortgages

or loans used to purchase or maintain fixed assets, and are
paid off in years instead of months.
 Equity Account/Capital
The equity account defines how much your business is currently worth. It's
the residual interest in your company's assets after deducting liabilities.

This is a portion of the total assets that the owners or stockholders of the
company fully own.

Owner’s Capital is increased by additional contribution of the owner/s ad

recognition of income and is decreased by withdrawals by the owner/s
and recognition of net loss

It reflects your company's financial position and offers valuable insights into
its overall performance.

Owner's Drawing – represents the amount of money withdrawn by the

owner/s
 CHART OF ACCOUNTS

Within the chart of accounts you will A chart of accounts is a

find that the accounts are typically
listed in the following order:
listing of the names of the
accounts that a company
has identified and made
available for recording
transactions in its general
ledger.

A company has the flexibility

to tailor its chart of accounts
to best suit its needs,
including adding accounts
as needed.
Chart of Accounts Best Practices
The following points can improve the chart of accounts concept for a
company:

•Consistency. It is of some importance to initially create a chart of accounts

that is unlikely to change for several years, so that you can compare the
results in the same account over a multi-year period. If you start with a small
number of accounts and then gradually expand the number of accounts
over time, it becomes increasingly difficult to obtain comparable financial
information for more than the past year.

•Lock down. Do not allow subsidiaries to change the standard chart of

accounts without a very good reason, since having many versions in use
makes it more difficult to consolidate the results of the business.

•Size reduction. Periodically review the account list to see if any accounts
contain relatively immaterial amounts. If so, and if this information is not
needed for special reports, shut down these accounts and roll the stored
information into a larger account. Doing this periodically keeps the number
of accounts down to a manageable level.