Accounting Equation Notes Receivable - receivables supported by written or formal Equipment- consists of various assets such as:

promises to pay in the form of promissory notes.

A = L + E/C a. Machineries and other factory equipment
Inventory - represents the goods that are held for sale by a
Assets – are the resources of the company that would give b. Transportation equipment, e.g., vehicles, delivery trucks
business. For a manufacturing business, inventory also includes
them or provide them future economic benefits.
goods undergoing the process of production and raw materials c. Office equipment, e.g., desks, cabinets, chairs d. Computer
Liabilities - are their obligations that they need to be settlled or that will be consumed in the production process. equipment, e.g., server, personal computers, laptops
pay.
Prepaid Supplies – represents the cost of unused office and e. Furniture and fixtures, e.g., desks, cabinets, movable
Capital – remaining value of an owner’s interest in a company other supplies. partitions
after deducting all of the liabilities.
Prepaid rent-rent paid in advance. Accumulated depreciation - equipment - the total amount of
Assets depreciation expenses recognized since the equipment was
Prepaid insurance - cost of insurance paid in advance.
acquired and made available for use.
Current Assets – are those assets that are related to their
Accumulated depreciation - building the total amount of
normal operating cycle or those that are useful one year after Collectively, land, building and equipment are referred to as
depreciation expenses recognized since the building was
the period. So, when we say current assets, something that is "Property, plant and equipment," "Capital assets," or "Fixed
acquired and made available for use.
just within the normal operating cycle of a company. assets."
Office Supplies – Pens, peppers that are stocks or the goods
When we say normal operating cycle, it’s their usual Furnitures and fixtures – anything that being installed
that the company self
operations that they have cash and then buy inventory that
Investment in equity securities – Sometimes the company
they will sell, and then render service or sell these products to Prepayment - covering less than1 year there are times that
purchase stocks from the other companies, as if there.
customers then they will receive cash because of that, and the companies pay for their rentals in advance
cycle goes and on again Intangible Assets – those without physical substance like
Merchandise Inventory – Inventory that are stocks or the goods
patents.
Non-Current Assets – usually those non-current assets are long- that the company sells
term things that we use. Investment Properties – are those properties that are held by
Non – Current Assets
company or owned by the company for rentals capital equation
Currents Assets
Long-tern receivables – we have receivables that will not be
Prepayments extending more than 1 year insurance - insurance
Cash – The company’s money received by the company, within one year or that’ll be regarded
policies then that would fall under non-current a text. But the
as a long-term receivable.
Accounts Receivable – You already rendered services to your current portion of the prepayments within one year will be
customers or sold goods with them, but the payment was not Land – The company’s lord and if they own Current Liabilities recorded as a current asset.
yet received by the company, so you’re expecting to receive also the building that they have.
Liabilities
smth from your customer, you will record them as AR.
- If the company only rents office space, they cannot
Current Liabilities- payable within one year then that is a
Allowance for bad debts - the aggregate number of estimated record the building as their own.
current liability but if it is longer than one year then that is on
losses from uncollectible accounts receivable. Another term is
Equipment and Machineries – current liability and basically if your liability is related to trade or
"allowance for doubtful accounts."
your normal operating as a current liability
Accounts Payable - we can say that that is the opposite of Other short-term liabilities – liabilities or obligations that fall Account – is a record of the increases and decreases in the
accounts. Receivable, vice versa. We’re the one who receive under just within one year after the reporting period and will specific item of asset, liability, equity, income or expense.
service or bought products, or we bought something from our also be regarded as short-term liability. It consists of 3 parts,
suppliers that has not been paid yet? So, we’re expecting to Account title, debit side and credit side
CAPITAL
pay, Obligation, obligation to pay.
- Debit is the left side of an account sometimes to
Sole Proprietorship
- obligations supported by oral or informal promises to referred as “the value received,
pay by the debtor. Owner’s equity - while credit is the right side and commonly known as
“value parted with”
Notes payable - obligations supported by written or formal Owner’s drawings
promises to pay by the debtor in the form of promissory note. 5 Major accounts are Assets, Liabilities, Equity, Income, and
Partnership Expenses
-because you promise to pay is made formally or in
writing. Partner’s Equity The balance of an account is the difference between the total
Partner’s Drawings debits and total credits in the account
Interest Payable – interest incurred but not yet paid. Interest
payable arises from interest bearing liabilities. Ex. You’ll incur Corporation A, L, E – are balanced sheet accounts while I and E are income
interest on your bank loan. statement accounts
Share Capital
Salaries Payable – salaries already earned by employees but not Chart of accounts is the list of all the accounts used by the
yet paid by the business. Share premium business.

Utilities Payable – utilities (electricity, water, telephone, Retained earnings Account numbers are assigned to each account to facilitate
internet, cable TV) already used but not yet paid. recording, cross- referencing and retrieval of information.

Short-term Notes Payable – when we say notes payable these Depreciation – Systematic way of allocating the cost of an asset Balance sheet (statement of financial position) shows the
are borrowings that the company did and then they sign a depending on how many years have been used. financial position of a business.
promise within one year then that is a short term not payable
Expenses- Expenses to continue operating. Income statement (or the statement of financial position)
Earned Revenue – for example the company has already shows the profit or loss of a business.
received payment from customers in advance, but the services Rent expense – happens only when we have rental fees
or goods has not been rendered or not yet provided then
Chart of Accounts – is a listing of the names of the accounts
there’s an under in revenue.
that a company has identified and made available for recording to indicate whether a debit or credit will increase the
amount in the account.
Unearned income – items related to income that were transactions.
collelcted in advance before they are earned. After the earning
- As we record transactions, we need to analyze what
process is completed, these will be transferred to income.
are the functions of that account, for use to classifty
Accruals – Expenses within the period but will be paid next where it belongs.
period. So that is an expnse period, but it is also a payable - The company should prepare a chart of account.
because its already expense those who aren’t considered.
 EXPENSES

Cost of sales (or Cost of goods sold) - represents the value of

inventories that have been sold during the accounting period.

Freight-out-represents the sellers' costs of delivering goods to

customers. Other terms for freight-out are "delivery expense,"
"transportation-out," and "carriage outwards."

Salaries expense represents the salaries earned by employees

for the services they have rendered during the accounting
period.

Rent expense - represents the rentals that have been used up

during the accounting period.