FOUNDAMENTALS OF

ACCOUNTANCY & BUSINESS

MANAGEMENT 2
The
Five Major
Accounts
  After the discussions, the students are expected to ;

Learning 1. discuss the five major accounts

Objectives 2. identify the account as assets,
liabilities, or owner’s equity

3. apply the accounting equation in

solving accounting problems.
 
What I need to know
 Activity 1:
Review the For 5 minutes , open the mobile
Accounting Equation apps or read your notes to recall
our last lesson on:

1.Basic Accounting
2.Accounting Equation
3.Business Transactions
What I know
 Guide Question:
Review the
Accounting Equation
1.What is the accounting
Equation ?

2. Give at least 3 examples of

assets and liabilities .
What I know
 Review the
Accounting Equation

What I know
 Assets are the resources owned and controlled by the firm.
5 Types of Major
Liabilities are obligations of the firm which are to be settled
Accounts in the future.

Owner’s Equity are the owner’s claims in the business. 

1.Assets
Income is the increase in economic benefits in the form of
2.Liabilities
inflows of cash or other assets, It includes revenue and
3.Owner’s Equity gains.
4.Income
Expenses are decreases in economic benefits in the form of
5.Expenses
outflows of assets
 

What’s New
  
Current Assets are assets that can be realized (collected,
sold, used up) one year after year-end date.
Types of Assets Examples :
1.Cash is money on hand, or in banks,.

2. Accounts Receivable are amounts due from customers

1. Current 3. Notes Receivable are amounts due from clients supported

2. Non Current by promissory notes.
4. Inventories are assets held for resale
3.Tangible
4.Intangible 5. Supplies are items purchased by an enterprise which are
unused as of the reporting date.

5. Prepaid Expenses are expenses paid in advance.,

 
What it is
  
 Non-current Assets are assets that cannot be
realized (collected, sold, used up) one year after
Types of Assets year-end date.

Examples :
1. Property, Plant and Equipment are long-lived
assets which have been acquired for use in
1. Current operations.
2. Non Current Ex. equipment, furniture, building, land
3.Tangible
4.Intangible 2. Long term Investments are the investments
made by the company for long-term purposes
 
 
 
   

Tangible Assets are physical assets

Types of Assets
Examples:
cash, supplies, and furniture.

1. Current Intangible Assets are assets without a

2. Non Current physical substance.
3.Tangible
Examples :
4.Intangible franchise , patent trade mark and copyright.

 
  
Current Liabilities. Liabilities that fall due (paid, recognized as
revenue) within one year after year-end date.

Types of Examples :
1.Accounts Payable are amounts due, or payable to, suppliers for goods purchased

Liabilities on account or for services received on account.

2. Notes Payable are amounts due to third parties supported by promissory notes.

3. Accrued Expenses are expenses that are incurred but not yet paid (examples:
salaries payable, taxes payable)

4. Unearned Income is cash collected in advance; the liability is the services to be

1. Current performed or goods to be delivered in the future.
 
2. Non  
Non-current Liabilities are liabilities that do not fall due
Current within one year after year-end date.
 
Examples :
Notes Payable, Loans Payable, Mortgage Payable.
 
  
O
  wner’s Equity
- is the residual interest of the owner from the
Owner’s business.
- are the owner’s claims in the business. 
Equity -It can be derived by deducting liabilities from
assets.
 
Examples of Equity :
Owner’s Equity = 1. Capital is the value of cash and other assets
invested in the business by the owner of the
Assets – Liabilities
business.
2. Drawing is an account debited for assets
withdrawn by the owner for personal use from the
business.
  
  Income is the increase in economic
benefits in the form of inflows of cash
Income or other assets, It includes revenue and
gains.

Examples :
Service revenue for service entities
Sales for merchandising and
manufacturing companies
 
  
  

Expenses - are decreases in economic

Expenses benefits in the form of outflows of assets.

Examples :
Salaries Expense
Interest Expense
Utilities Expense
 
ACTIVITY 3 :
Tell whether if the account is an asset, liability, equity.

1 .Accounts Receivable8 . Office Supplies

2. Loan payable 9. Bonds Payable
3. Building. 10 .Cash
4. Capital 11 Rent
5. Delivery Truck 12. Interest Payable
6. Inventories 13 .Land
7. Mortgage Loans 14 . Notes Payable
  
  Now let’s apply the AE to solve business
transactions or accounting problems
Connect to a real
life situation

Note:
“ Every transaction,
the accounting
equation should
always be balanced”

What can I do
 Torres Company’s total liabilities amounted
Php 100,000 and Total equity had an
Example ending balance of Php 45,000. How much
is total assets?

= 100,000 + 45,000
Total Assets = 145,000
Additional Activities
 Group 1. Angels Tutorial Center has an asset amounting to
P 200,000, Liability is P 75,000. How much is the
Activity owner’s equity account ?
 
2. Assets of TMAM is P15,000 and Total Equity is
P10,000, how much is the total Liabilities?

3. The Current Assets is P50,000, Non- Current

Assets is P150,000.00, Current Liabilities is
P10,000 and Non- Current Liabilities is P40,000,
How much is the Equity of the company?

Additional Activities
 Base from our discussions
What I haved
learned ? 1. What is the Basic Accounting
Equation?
2. What are the 5 major accounts?
3. The difference of ff:
a. Assets and liabilities
b. Capital and Revenue
c. Income and Expenses
Evaluation: ( 1 whole sheet paper )
A. Identify the following :
 
____________ 1. It is the obligations of the company payable in money, goods
or services.
____________ 2. These are non-current tangible assets.
____________ 3. These assets are identifiable, non-monetary assets without
physical substance.
____________ 4. It is the claim of the owner also known as the capital.
____________ 5. It is the most liquid asset and is the medium of exchange for
business transactions.
____________ 6. It is an expense for leased office space, equipment or assets
rented from others.
____________ 7. Examples of this are cash, account receivable and prepaid
expenses.
____________ 8. It is a written promise from the customer to pay his
receivables on a certain future date.
B. Solve
the given business transactions using Accounting
Equation
 
1. Assets is equal to P300,000, Owner’s equity is 50,000, How much is Equity?
2.Sure Fresh Company’s total liabilities amounted P10,000. Total equity had an
ending balance of P 45,000. How much is total assets?

3.Current Assets is P50,000, Non- Current Assets is P450,000.00, Current

Liabilities is P10,000 and Non- Current Liabilities is P70,000, How much is the
Equity of the company?
 
4.Angels Tutorial Center has an asset amounting to P 250,000, Liability is P
75,000. How much is the owner’s equity account?
 
5.Assets of TMAM is P15,000 and Total Equity is P16,000, how much is total
Liabilities?
Assets & Liabilities of Life
 The
Five Major
Accounts
Nancy T. Atentar
FABM 2 TEACHER