Types

of
Major
Accounts
 ASSETS
=
LIABILITIES
+
OWNER’S EQUITY
Types of major accounts:
1. Assets,
2.Liabilities,
3. Owner’s Equity,
4.Income and
5. Expense.
 • Assets are the
resources owned
and controlled
by the firm.
 Current Assets are assets that can be realized (collected, sold, used up)
one year after year-end date.
 Examples include Cash, AccountsReceivable, Merchandise Inventory,
Prepaid Expense, etc.
Non-current Assets are assets that cannot be realized (collected, sold,
used up) one year after year-end date.
 Examples include Property, Plant and Equipment (equipment, furniture,
building, land), long term investments

Tangible Assets are physical assets such as cash, supplies, and

furniture and fixtures.
Intangible Assets are non-physical assets such as patents and
trademarks
• Liabilities are the debts
and obligations of the
company to another
entity.
• Current Liabilities. Liabilities that fall due within
one year after year-end date. Examples include
Accounts Payable, Utilities Payable and Unearned
Income.

• Non-current Liabilities are liabilities that do not

fall due within one year after year-end date.
Examples include Notes Payable, Loans Payable,
Mortgage Payable, etc.
• Current Liabilities. Liabilities that fall due within
one year after year-end date. Examples include
Accounts Payable, Utilities Payable and Unearned
Income.

• Non-current Liabilities are liabilities that do not

fall due within one year after year-end date.
Examples include Notes Payable, Loans Payable,
Mortgage Payable, etc.
• Owner’s Equity is the
residual interest of the owner
from the business. It can be
derived by deducting
liabilities from assets.
• Income is the Increase in resources
resulting from performance of service
or selling of goods
• Service revenue for service entities,
Sales for merchandising and
manufacturing business
•Expense is the decrease in
resources resulting from the operations
of business
• Salaries Expense, Interest Expense,
Utilities expense
Rules of Debit and Credit
• Increase and decreases in different
accounts are recorded differently as debits
and credits
• Every transaction requires atleast one
debited account and also one atleast one
credited account
ASSETS:

Increase(Debit)
Decrease(Credit)
Liabilities and Owner’s
Equity

Increase(Credit)
Decrease(Debit)