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