Concept

Lesson 04: Types of Major Accounts

 Lesson Objective
FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts
100% of the students are expected to achieve at least
➢ Lesson Objective 75% proficiency
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion ❑ Discuss the five major accounts
➢ Recap ❑ Cite examples of each type of account
➢ Check up Test
❑ Prepare a Chart of Accounts
 Introduction
FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM After learning about the accounting equation, it is important to
Types of Major Accounts
understand the five major accounts in accounting. You will get
➢ Lesson Objective to apprehend more about Assets, Liabilities, Owner’s
➢ Lesson Introduction Equity/Capital, Income/Revenue, and Expense. At the end of
➢ Video Clip this module, not only will you obtain knowledge on the types of
➢ Lesson Discussion accounts but you will also get to make your own Chart of
➢ Recap
➢ Check up Test
Accounts.
 FUNDAMENTALS OF Video Clip
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts

➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test

https://youtu.be/yOQiA1KnntE
 FUNDAMENTALS OF Video Clip
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts

➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test

https://youtu.be/F_pqk7eO_nI
 FUNDAMENTALS OF Video Clip
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts

➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test

https://youtu.be/L3jrbx4r2d8
 FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM FIVE TYPES OF MAJOR ACCOUNTS
Types of Major Accounts
1.
➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
Discussion
ASSETS - These are all the economic resources owned by the
company and are expected for future gain. They include
property and rights of value owned by the company. Assets
refer to items like cash, inventory, accounts receivable,
buildings, land, or equipment.
Assets can be categorized to Tangible and Intangible. Tangible
Assets are the physical entities that the business owns such
as its land, buildings, vehicles, equipment, and inventory.
While Intangible Assets are the things that represent money
or value such as Accounts Receivables, Patents, Contracts,
and Certificate of deposit (CDs).
 FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM Two types of Assets:
Types of Major Accounts
a.
➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
Discussion
Current Assets - cash and other assets that are expected to
be converted to cash within a year. Examples:
Cash includes coins, currencies, checks, bank deposits, and
other cash items readily available for use in the operations of
the business.
Cash equivalents are short-term investments that are
readily convertible to known amounts of cash which are
subject to an insignificant risk to changes in value.
Marketable securities are stocks and bonds purchased by
the enterprise and are to be held for only a short span of time
or duration. They are usually purchased when a business has
excess cash.
 FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts b.
➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
Discussion
Non-Current Assets - an asset that is not likely to turn to
unrestricted cash within one year. It is also referred to as a
long-term asset. Examples:
Long-term investments are assets held by an enterprise
for the accretion of wealth through capital distribution
such as interests, royalties, dividends and rentals, for
capital appreciation or for other benefits to the investing
enterprise such as those obtained through trading
relationships.
Property, Plant, and Equipment are tangible assets that
are held by an enterprise for use in the production or
supply of goods or services, or for administrative
purposes.
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM ✓ Land - a piece of lot or real estate
Types of Major Accounts
✓ Building - structure used to accommodate the office, store, or
➢ Lesson Objective
➢ Lesson Introduction
factory
➢ Video Clip ✓ Equipment - includes typewriter, air-conditioner, calculator,
➢ Lesson Discussion
➢ Recap filing cabinet, computer, electric fan, trucks, and cars used by
➢ Check up Test the business in its office or factory.
Specific account titles may be used such as: -office equipment,
-store equipment, -delivery equipment, -transportation
equipment, and -machinery and equipment.
✓ Furniture and fixtures - include tables, chairs, carpets,
curtains, lamp and lighting fixtures. Specific account titles may
be used such as: -office furniture and fixtures - store furniture
and fixtures
 FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM 2.
Types of Major Accounts
➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
Discussion
LIABILITIES - These include the debts or obligations payable
to creditors and other outsiders to which your company owes
money. Liabilities are one of three ways in which a business
can acquire funding.
Two types of Liabilities:
a. Current Liabilities - amounts due to be paid to creditors
within twelve months. Examples:
Accounts payable includes debts arising from the
purchase of an asset or the acquisition of services on
account.
Notes payable includes debts arising from the purchase
of an asset or the acquisition of services on account
evidenced by a promissory note.
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM Loan Payable is a liability to pay the bank or other financing
Types of Major Accounts
institution arising from funds borrowed by the business from
➢ Lesson Objective these institutions payable within twelve months or shorter.
➢ Lesson Introduction
➢ Video Clip Utilities payable is an obligation to pay utility companies for
➢ Lesson Discussion
services received from them. Examples of this are telephone
➢ Recap
➢ Check up Test services, electricity, and water services.
Unearned revenues represent obligations of the business
arising from advance payments received before goods or services
are provided to the customer. This will be settled when certain
goods or services are delivered or rendered.
Accrued liabilities include amounts owed to others for
expenses already incurred but are not yet paid. Examples of
these are salaries payable, utilities payable, taxes payable, and
interest payable.
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts b. Non-current Liabilities - are long term liabilities or
obligations which are payable for a period longer than one
➢ Lesson Objective year. Examples:
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap Mortgage payable is a long-term debt of the business
➢ Check up Test with security or collateral in the form of real properties.

Bonds payable is a certificate of indebtedness under the

seal of a corporation, specifying the terms of repayment
and the rate of interest to be charged.
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM 3. OWNER’S EQUITY - defines how much your business is
Types of Major Accounts
currently worth. Owner’s Equity or Capital is an account
➢ Lesson Objective bearing the name of the owner representing the original and
➢ Lesson Introduction
➢ Video Clip additional investment of the owner of the business. It is
➢ Lesson Discussion increased by the amount of net income earned during the
➢ Recap
➢ Check up Test year and decreased by the cash or other assets withdrawn by
the owner as well as the net loss incurred during the year.
Drawing represents the withdrawals made by the owner of
the business in cash or other assets.
Two types of Equity:
✓ Contribution (Investments) - may be start-up capital or a later
infusion of cash.
✓ Drawing (Withdrawals) - If a business is profitable, the owners
often want some of the profit returned to them.
 FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts 4.
➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
Discussion
INCOME OR REVENUE - is money the business earns from
selling a product or service, or from interest and dividends
on marketable securities. Other names for income are
revenue, gross income, turnover, and the "top line."
Net income is computed as revenue less expenses. Other
names for net income include profit, net profit, and the
"bottom line." Income accounts are classified as
temporary or nominal accounts. This is because their
balance is reset to zero at the beginning of each new
accounting period.
 FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM 5.
Types of Major Accounts
➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
Discussion
EXPENSES - these are money the company spends that allow
a company to operate. This may include advertising costs,
utilities, rent, salaries and others. Like revenue accounts,
expense accounts are temporary accounts that collect data
for one accounting period and are reset to zero at the
beginning of the next accounting period.
A unique type of Expense account, Depreciation Expense, is
used when purchasing Fixed Assets. Costly items, such as
vehicles, equipment, and computer systems, are not
expensed, but are depreciated over the life expectancy of the
item. A contra-account, Accumulated Depreciation, is used to
offset the Asset account for the item.
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts Examples:
Salaries or wages expense include all payments made to
➢ Lesson Objective
➢ Lesson Introduction
employees or workers for rendering services to a company.
➢ Video Clip
➢ Lesson Discussion
➢ Recap Utilities expense is an expense related to the use of
➢ Check up Test
electricity, fuel, water, and telecommunication facilities.

Supplies expense covers office supplies used by a business

in the conduct of its daily operations.
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM Insurance expense is the expired portion of premiums paid on
Types of Major Accounts
insurance coverage such as premiums paid for health or life
➢ Lesson Objective insurance, motor vehicles, or others.
➢ Lesson Introduction
➢ Video Clip Depreciation expense is the annual portion of the cost of
➢ Lesson Discussion
tangible assets such as buildings, machineries, and equipment
➢ Recap
➢ Check up Test charged as expense for the year.
Uncollectible accounts expense/doubtful accounts
expense/bad debts expense means the amount of receivables
charged as expense for the period because they are estimated to
be doubtful of collection.
Interest expenses are the amount of money charged to the
borrower for the use of borrowed funds.
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM CHART OF ACCOUNTS
Types of Major Accounts

➢ Lesson Objective
➢ Lesson Introduction A chart of accounts is a list of all your company’s accounts used,
➢ Video Clip and is listed together in one place. The main account types
➢ Lesson Discussion
➢ Recap include Assets, Liabilities, Owner’s Equity, Income, and Expenses.
➢ Check up Test

Here’s a sample chart of accounts list. This is a chart of accounts

for a fictional business: Ewing Cleaning Supply.
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts

➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
 FUNDAMENTALS OF Discussion
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM Companies in different lines of business will have different
Types of Major Accounts
looking charts of accounts. The chart of accounts should give
➢ Lesson Objective anyone who is looking at it a rough idea of the nature of your
➢ Lesson Introduction
➢ Video Clip business by listing all the accounts involved in your company’s
➢ Lesson Discussion day-to-day operations.
➢ Recap
➢ Check up Test
The chart of accounts is designed to be a map of your business
and its various financial parts. A well-designed chart of accounts
should separate out all the company’s most important accounts,
and make it easy to figure out which transactions get recorded in
which account.
 FUNDAMENTALS OF Recap
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts Summary

➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
 Recap
FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts

➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
 FUNDAMENTALS OF Check up Test
ACCOUNTANCY, BUSINESS AND
MANAGEMENT Grade 11-ABM
Types of Major Accounts

➢ Lesson Objective
➢ Lesson Introduction
➢ Video Clip
➢ Lesson Discussion
➢ Recap
➢ Check up Test
 Concept
Lesson 04: Types of Major Accounts

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