Arrangement of Accounts

CHART OF ACCOUNTS
are based on its LIQUIDITY
Liquidity means - how fast an
A typical example of Chart of Accounts for Service and Merchandising Business is illustrated below:

FABM BUSINESS ENTREPRISE CHART OF ACCOUNTS

Account No. Account Title Description Servicing Buss. Merchandising Buss.
CURRENT ASSETS - Items that are completely consumed, sold, or converted in cash within one year or 12 months.
101 Cash on Hand / CASH It includes revolving/petty cash fund and undeposited collections that are
still on hand.  
101 Cash in Bank / CASH Bank deposits either savings, time deposits or checking deposits  
102 Petty Cash Fund The account title for money placed and set aside for petty or small  
103 Accounts Receivable Amount owed to the company by the customers through sale of goods or
merchandises  
131 Allowance for Uncollectible Accounts These are reserves or allowance for uncollectible accounts from
customers. This is a contra-asset account of Account Receivable.  
104 Notes Receivable Amounts owed to the company by customers evidenced by a written
promise of customer to pay a certain amount of money a specified time  
as payment for goods or merchandised delivered.
105 Advances to employees These are cash advances extended to its employees either for liquidation
of expenses or deduction from salary.  
106 Merchandise Inventory These are good/products that are kept in a warehouse for sale or unsold
items in the store. 
107 Office Supplies / Supplies Items such as bondpapers, folders, fasteners, ballpens, envelopes, and
other supplies used in the office  
108 Store Supplies / Supplies items such as bondpapers, folders, fasteners, ballpens, envelopes, and
other supplies used in the store 
109 Prepaid Insurance/ Prepaid Expense Insurance policy premium paid in advance by the company  
110 Prepaid Taxes/ Prepaid Expense Taxes, permits and licenses paid in advance to the government  
111 Prepaid Advertising/ Prepaid Expense These are advance payment or deposits intended for advertisements of
the company  
112 Prepaid Rent/ Prepaid Expense These are normally rental payments of office or stores equivalent to 3 or
6 months paid in advance by the company to the lessor  
113 Unused Supplies An account title for cost of stationery and other supplie 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 - Are tangible or intangible assets with a life span of more than one year and usually longer which typically not very liquid.
1001 Office Equipment Items such as airconditioning unit, computer and printer, check writer,
typewriter, laptops, communication equipment, electric fan, cash  
registers, etc.
1001-1 Accumulated Depreciation-Office Equipment(OE) This is a contra-asset account or asset offset of the office equipment, for
the amortization of its cost over useful years  
1002 Delivery Vehicle Vehicle used to perform delivery of goods or merchandises to customers  
1002-1 Accumulated Depreciation-Delivery Vehicle(DV) This is a contra-asset account of the delivery equipment, for the
amortization of its cost over useful years  
1012 Service Equipment Items used in rendering services related to the generation of revenues 
1012-1 Accumulated Depreciation-Service This is a contra-asset account of the service equipment, for the
Equipment(SE) amortization of its cost over useful years 
1003 Furniture and Fixtures Items such as filing cabinets, office chairs and tables, computer tables,
etc.  
1003-1 Accumulated Depreciation- This is a contra-asset account of the furniture and fixtures, for the
Furniture&Fixtures(F&F) amortization of its cost over useful years  
1004 Land Land used in the business  
1005 Building Building used in the business  
1005-1 Accumulated Depreciation-Building(Bldg.) This is a contra-asset account of the building, for the amortization of its
cost over useful years  
1006 Service Vehicle Official vehicle used as service car for officers and employees  
1006-1 Accumulated Depreciation-Service Vehicle(SV) This is a contra-asset account of the Service Vehicle, for the amortization
of its cost over useful years  
1008 Rental Deposit / Security Deposit Deposit made by the company for the space occuppied which can only be
withdrawn or reimbursed at the end of the leased contract  
CURRENT LIABILITIES - This consists of short-term debts that require payment in one(1) year or less.
201 Accounts Payable Amounts owed to suppliers for the purchase of goods & services  
202 Unearned Income Amount received from customer in advance either as deposit or
downpayment for goods or merchandises that has yet to be delivered by  
the company
203 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
204 Withholding Tax Payable Amount withheld as taxes from salaries of officers and employees for
remittance to the BIR  
205 SSS Premium Payable Amount of contribution by employees deducted from the salary including
employer share for remittance to SSS  
206 PhilHealth Payable Amount of contribution by employees deducted from the salary including
employer share for remittance to PhilHealth  
207 Pag-IBIG Payable Amount of contribution by employees deducted from the salary including
employer share for remittance to Pag-IBIG  
208 VAT Payable This amount represents the tax added to the goods/merchandises or
service revenues being billed to cutomers, be it cash or on account.  
NON-CURRENT LIABILITIES - These are long-term debts that will be settled or paid beyond one year.
208 Notes Payable Amounts owed by the company to creditors for items purchased as
evidenced by a written promissory note to pay the debt in a specified  
period normally longer than one year
209 Loans Payable Amount owed to creditors or banks and other financial institutions for
amount borrowed normally for a longer period of time  
CAPITAL ACCOUNTS - Also called the residual value or interest of the owner from the business. The value of assets after deducting the total of liabilities from the total of assets.

300 Capital These are contributions of the owner to the business, either in cash or
non-cash assets like equipment,vehicles, furnitures, etc.  
301 Drawings These are amounts withdrawn by the owner for personal use
 
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.  
REVENUE / INCOME ACCOUNTS - The actual money earned over a period of time from a job, sale of goods or products and servicesm either in cash or on account.

401 Sales These are amounts earned for the sale of goods or merchandises to
customers, either in cash or on account 
401 Service Revenue These are amounts earned by performing or delivering of services to
customers, either in cash or on account 
402 Sales Returns & Allowances / Sales Returns These represent goods or merchandises that are returned by customers
due to defect or other reasons 
403 Sales Discounts These are discounts extended to customers by either buying in bulk or
being loyal to the business 
404 Interest Income These are the amount of interest earned from bank deposits or other
form of investments  
405 Gain on Sale of Assets These are gain in selling shares held as investment or gain in selling
equipment,vehicles or furnitures  
COST OF SALES ACCOUNT / COST OF GOODS SOLD - refers to the direct costs of producing the goods sold by a company.
501 Purchases This account is used for various purchases of goods or merchandises that
are intended for sale 
502 Purchase Returns & Allowance / Purchase This account is used for goods or merchandises that are returned to the
Returns suppliers for various reasons,like defect 
503 Purchase Discounts These are discounts extended to suppliers by either buying in bulk or
being loyal to the product 
504 Freight In This account in an inventoriable cost, which means that it will become
part of the cost of the products/goods being purchased. These are
expenses paid in the deliveryof the goods being shouldered by the buyer

EXPENSE ACCOUNTS - A cost incurred as part ofa company's operating activities during a specified accounting period which are necessary in the conduct of the business.

601 Advertising Expense The cost of advertising  

602 Taxes and Licenses These are permits, licenses and other taxes paid to the government  
603 Rent Expense This is the rental cost of the space occupied by the business  
604 Insurance Expense These are insurance cost premium paid for equipment, building,
furnitures and employees  
605 Light and Water Expense The amount of electricity and water  
606 Office Supplies Expense / Supplies Expense The cost of office supplies consumed during the period  
607 Salaries,Wages&Benefits / Salaries Expense The amount of salaries and benefits incurred for the period  
608 Gasoline Expenses The amount of gasoline consumed by officers and employees during
official business travel/trips and gasoline incurred by delivery trucks and  
service vehicles
609 Interest Expense or Finance Costs These are finance cost charged by banks or other financial institutions or
creditors for the loan availments  
610 Representation Expenses Cost of entertaining a client in relation to business functions  
611 Repairs and Maintenance These are expenses incurred for the repairs and maintenance of
transportation and other equipment and furnitures of the company  
612 Depreciation Expense These are the amortization costs ofcapitalized non-current assets over
the estimated life of the assets  
613 Communication Expenses These are telephone, cellphone, internet and other form of
communications incurred by employees  
614 Transportation Expenses These are fares or transportation costs incurred by employees  
615 Freight Out or Delivery Expenses These are expenses incurred by the seller in the delivery of goods to the
customers  
616 Miscellaneous Expenses This will be used for expenses that cannot be classified in the above
accounts  
Acierto, M. A., & Abarquez, B. A., Jr. (2017). Chapter 8: Types of Major Accounts. In Fundamentals of Accounting , Business and Management I (pp. 97-106). Intramuros, Manila: Unlimited Books Library Services & Publishing Inc.