ASSET, LIABILITIES AND CAPITAL

(OWNERS EQUITY) ACCOUNTS

AND ACCOUNT TILES
FUNADAMENTALS OF BASIC ACCOUNTING
THE ACCOUNT
• An account is a device used in grouping and
summarizing the amount of values in business
transactions relative to one item only.
 Types of Accounts

Personal Accounts
Real Accounts
Nominal Accounts
PERSONAL ACCOUNTS

• Are accounts related to persons

• Could be artificial persons like companies, bodies of companies
or associations of persons or partnerships, etc. (i.e. ABC Bank
account)
• There could be representative personal account as well (salary
payable acct.. Rent payable, insurance prepaid, commission
pre-received etc.)
REAL ACCOUNTS

Accounts related to assets or properties or

possessions. Depending on their physical existence
or otherwise , they are classified as follows:
 Tangible Real Accounts
Intangible Real Accounts
Tangible Real Accounts

• Assets that have physical existence and can be seen

, and touched ( e.g. Machinery Account, Stock
Account, Cash Account , Vehicle Account etc.)
Intangible Real Account

• Represents possession of properties that have no

physical existence but can be measured in terms of
money and have value attached to them. (e.g.
Goodwill account, Trademark account, Patents
account and Copyright accounts)
NOMINAL ACCOUNTS

There are accounts related to expenses of losses

and incomes or gains
E.g. Salary and Wages, Rental Expense account,
Travelling Expenses, Commission Received etc.
Debit and Credit
• Used as a verb
• The account was debited with P10,000
• The account was credited with P2,000
• Used as an adjective
• The debit side of the account has an entry of
P10,000
• The credit side of the account has an entry of
P2,000
ACCOUNT TITLES

• Describes the item or items (or value or

group of values) akin to each other. It is
brief and clear.
Examples of ACCOUNT TITLES

• Cash
• Furniture
• Tools
• Transportation Equipment
• Delivery Equipment
• Accounts Receivable
• Accounts Payable
• Capital (Owner’s Equity) etc…
ASSET ACCOUNT
• Cash – generic account. This could be:
1. cash in hand – denotes to money or cash substitute representing collection of
the company awaiting deposit to the company’s depository bank the
following banking day, or if the company has collection on non-banking day,
it has no choice but to wait for the next banking day
2. cash in bank – denotes to the money of the company that is in the bank
awaiting payment. If some companies maintain several bank accounts, an
additional description representing the name of the bank appears. For
example:
• Cash in bank – Security Bank
• Cash in bank – Metro Bank
Asset account

• Cash in fund - denotes to money placed in a specific fund for a specific

purpose. For example:
1. Petty Cash Fund - a fund intended to pay petty expenses.

• Cash Equivalent – refers to short-term investments made by the company.

It is generally accepted that only account under three (3) months maturity
will be considered on this account
Asset Accounts
• Accounts receivable – refers to customer’s account arising from selling activities.
• Notes receivable – refer to account receivable or collectible of the company
supported by a promissory note
• Merchandise inventory – refers to the merchandise of the company intended for
the sale in the course of its business operations
• Prepayments – advance payment made by the company. I.e. Prepaid rent
expense prepaid advertising, prepaid insurance, unused office supplies or unused
store supplies
• Land – the land owned by the company being used in the business. It is classified
as an investment.
• Building – the infrastructure owned by the company that is used in the business
Asset Accounts
• Furniture and Fixtures - represents the following
• Chairs and tables
• Air conditioners
• Cabinets
• Electric fans

• Office Equipment- account that includes the following

• Computer
• Calculator
• Typewriter
• Fax machine
• Photocopier
• Telephone units
• Store Equipments
Asset Accounts

• Delivery Equipment - account used if the vehicle

used in the business is used for delivery of
goods/services otherwise it is transportation
equipment
TOOLS ACCOUNT

• Hammers, screw drivers, pliers, saw, monkey

wrenches and the likes
DELIVERY EQUIPMENT
TRANSPORTATION EQUIPMENT
• Trucks, automobiles, jeeps, vans, station wagons and other
kinds of motor vehicles are described as TRANSPORTATION
EQUIPMENT

• However, if some vehicles are used exclusively for delivery of

goods to customers, it is better denoted as DELIVERY
EQUIPMENT
Liability Accounts

• Accounts payable – represent liability accounts to the

company arising from purchase of merchandise that is
intended for sale
• Notes payable – liability accounts supported by promissory
note issued by the company
• Bank payable – liability to a bank
Capital account

• X, capital - refers to the capital of the owner, where

“x” represents the name of the owner.
• X, Withdrawal (or X, drawing) – refers to the
withdrawal made by the owner