MAJOR ACCOUNTS

Ana Flor V. Cerbo

Current Assets - Assetsthat are expected to be realized
and consumed within the company’s normal operating cycle.

• Cash – the account title to describe money,

either in paper or in coins and money.
– Cash in bank
– Cash on hand
• Petty cash fund – the account title for money placed
and set aside for petty or small expenses.

• Cash equivalents – shorterm, highly liquid

instruments that are readily convertible into cash.
• Notes Receivable- promissory note that is
received by the business from the customer
arising from rendering of services, sales of
merchandise and etc.
• Accounts Receivable – amount collectible
arising from services rendered to customer or
client on a credit or sale of good to customers
on accounts.
• Allowance of Doubtful Accounts – Contra asset
of accounts receivable.
• Advances to Employees – collectible from the
employees for allowing them to make cash
advances which are deductible against their
salaries or wages.
• Inventories- held for sale in the ordinary
course of business
– In the process of production for such sale
– In the form of materials or supplies to be
consumed in the production process or in the
production process.
• Under inventories
– Merchandise inventory – unsold merchandise at
the end of the accounting period
– Supplies Inventory or Unused Supplies- an account
for cost of stationary and other supplies
purchased for use but are left on hand and still
unused.
• Unused office supplies
• Unused shop supplies
• Prepaid Expenses – paid in advance but are not yet
incurred or have not yet expired.
• Examples of prepaid expenses
– Prepaid rentals
– Prepaid Insurance
– Prepaid Interest
– Prepaid advertising
 Non-Current Assets –long-term assets
-the full value will not be realized within the accounting year

• Property and Equipment – “tangible assets

which are held by the business.
– Land- where building used as office or store is
constructed.
– Building – finished transaction owned by the
business where operations and transactions took
place.
 Under equipment
• Office Equipments - calculators,
typewriter, computers, filling cabinets.
Used in the Office
• Delivery Equipments – trucks, jeep, vans,
automobiles and other vehicles.
• Furniture and Fixtures – includes chairs,
tables, counters, display cases and the like.
– Office Furniture and Fixtures – used in office
– Store furniture and fixtures – used in store
• Accumulated Depreciation – contra-asset account
to property land and equipment.
Current Liabilities – all liabilities of the business
that are to be settled in cash within the fiscal year or
operating cycle.
• Accounts Payable – for financial
obligation of an enterprise that
constitutes oral or verbal promise to
pay.
• Notes Payable – same as Accounts
Payable in nature but only the
obligation is evidenced by a
promissory note.
• Unearned Income- an income
collected or received in advance but
services has not been rendered yet
• Accrued expense – expenses
incurred by the enterprise but are
not yet paid.
 Non- Current Liabilities – long-term
liability that will not be paid within the
year
• Notes Payable (Long-term) – require
payment for more than a year.
• Mortgage Payable - obligation of the
business which requires a fixed or
tangible property to be pledge as a
collateral to ensure payment.
 Owner’s equity
• Also recorded as the capital
• But it should be given a title by indicating the
name, with the word capital written after the
name which is separated by a “comma”(,).
Income Statement
Accounts
 1.Income or Revenue
• Proceeds from services rendered by the
business, also includes proceeds from
merchandise
• Sales – merchandise sold either in cash
or on account.
• Sales Returns and Allowances –
reduction from sales account for goods
that were sold but were returned by the
buyer for bad order or not conforming
with the order.
• Sales Discount – discount given to the
buyers for early payment of merchandise
purchased on account or payment within
the discount terms.
• Service Income– used for all types of
income derived from rendering services
• Professional Income– income from the
practice of profession
• Rental Income – income earned by rent
• Interest Income – arising from an amount
of money borrowed by a customer and
usually covered by a promissory note.
• Miscellaneous Income – income not
direct to the company’s operation
 2. Cost and Expenses
• Expenditures incurred by the
business during the operation
• Cost of sales or Cost of good sold– cost
produce and sell the merchandise
• Freight- in– transportation cost incurred
in buying goods.
• Purchases – “merchandise” purchased
during the period
Supplies Expense – this represents cost of supplies that were used and
consumed that bears specific titles as office supplies expense, store
supplies expense, shop supplies expense, etc.

Rent Expense - for the amount paid or incurred for the use of property,
usually premises.

Repairs and Maintenance – for expenses incurred in repairing or servicing

the buildings, machineries, vehicles, equipment, etc., which are owned by
the business.

Salaries Expense – for compensation given to employees of a business.

Uncollectible Accounts – for the anticipated loss that the business may
incur arising from uncollectible accounts
Depreciation Expense – for the portion of the cost of property and equipment or
fixed assets that has expired based on rational and systematic allocation
procedure.

Taxes and Licenses – for the amount paid for business permits, licenses and
other government dues except Income Tax.

Insurance Expense – account title for the expired portion of the insurance
premium paid.

Utilities Expense - the account title telephone, light and water bills.

Interest Expense – an expense incurred from borrowed money

Miscellaneous Expense – any amount paid as an expense which is not

significant enough to warrant a particular classification.

Gas and Oil – account tile for gasoline, lubricants, grease, fluids, lube oils, etc.,
for use by company vehicles.