ACCOUNT TITLES

ALWAYS REMEMBER THAT ALL THE ACCOUNTS UNDER ASSET, LIABILITY AND OWNERS EQUITY ARE PART OF THE
BALANCE SHEET ACCOUNT/STATEMENT OF FINANCIAL POSITION.

AND ALSO ALL THE ACCOUNTS UNDER INCOME/REVENUE AND EXPENSES ARE PART OF THE INCOME STATEMENT
ACCOUNT.

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ASSETS

CASH
– Currency (bills and coins), checks, postal money orders and treasury warrants received by the business.
– Current asset

• The following are the examples of Cash:

* PETTY CASH FUND

– Cash used to pay petty or small amounts.
– Current asset

* CASH ON HAND
– Cash in the possession and custody of the business.
– Current asset

* CASH IN BANK
– Cash that are deposited in the banks.
– Current asset

Investment in Trading Securities

This refers to short-term, highly liquid investment in securities such as shares and bonds.

Trade and Other Receivables

This refer to the amount collectible from a person or a company.

• The following are the examples of Trade and Other Receivables:

* ACCOUNTS RECEIVABLE
– Amount collectible from clients or customers services rendered or sale of goods.
– Current asset

In general, this account is not supported by promissory notes so that it is often referred to as arising from
sales “on open account”.
(Note: When a business does not expect to collect all its receivables, bad debts are provided and the
accumulated amount thereof in “allowance for bad debts” is treated as a deduction from receivables.)

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* ALLOWANCE FOR DOUBTFUL ACCOUNTS
– A contra-asset account that represents the estimated amount of trade receivables that are doubtful of
collection.

* NOTES RECEIVABLE
– Amounts collectible that are covered by promissory notes
– Represents the principal amount or the face value of the promissory note which is held by the payee.
– Current asset

*COMMISSION RECEIVABLE
– Represents the amount collectible from the party who is obliged to give a commission.
– Current asset

* INTEREST RECEIVABLE
– Amount collectible in a loan transaction.
– Current asset

* RENT RECEIVABLE
– Represents the amount collectible from the tenant or the lessee.
– Current asset

* ADVANCES TO ENPLOYEES
– Cash advance to be deducted from the gross salary of the employee.
– Current asset

Merchandise Inventory
– goods acquired for sale and are still unsold
– Current asset

Prepaid Expenses
– expenses to be incurred yet in the future but are already paid.
– Current asset

Examples are Prepaid Rent, Prepaid Interest and Prepaid Insurance.

– expenses of future accounting period(s) that are paid in advance.

Examples: Unexpired portion of insurance premiums (prepaid insurance) and advertisements paid in
advance (prepaid advertising)

• The following are the examples of Prepaid Expenses:

* PREPAID ADVERTISING
– Advance payment of advertising in all media types and promotional campaigns.
– Current asset

* PREPAID INSURANCE
– Advance payment of insurance whether it is life insurance or non-life insurance.
– Current asset

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* PREPAID RENT
– Advance payment of rent by the tenant.
– Current asset

* PREPAID SUBSCRIPTIONS
– Advance payment to print materials or non-print materials.
– Current asset

* OFFICE SUPPLIES
– Stationery used in the offices.
– Current asset

* STORE SUPPLIES
– Stationery or items used directly in selling activities.
– Current asset

Unused Supplies
– supplies that are still unused as of the end of an accounting period
– Current asset

Property, Plant, and Equipment

These refer to items that are useful for more than one year.

• The following are the examples of Property, Plant, and Equipment:

* LAND
– Refers to the surface of the earth that is not covered by a body of water.
– land acquired by the business for its use
– Non current assets

* BUILDING
– structures or edifices acquired for use of the business
– Refers to a structure with roof and walls that is constructed on land. Examples are office buildings, factory
plant, and similar structures.
– Non current assets

* MACHINERY
– Refers to an equipment that has power to produce movements or forces.
– Non current assets

* MACHINERY AND EQUIPMENT

– heavy, metallic, and movable items that are capable of performing certain functions or used to perform
certain functions.

Examples are sewing machines, lathe machines, cutting machines, and tractors.
– Non current assets

* FURNITURES AND FIXTURES

– This account title is used in referring to movable items of significant value and acquired to improve the
workable condition of a place such as tables, chairs, cabinets, electric fans and air-conditioners.
– Furniture refers to movable things that ate result of design. Examples are sofa, tables, and chairs.
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– Fixture, on the other hand, refers to something attached to a property such as walls. Examples
are cabinet, lightings, toilet fixtures.

* OFFICE EQUIPMENT
– Refers to business machines used in workplaces. Examples are computer, copier machines.
– heavy, metallic and movable items used in an office to perform certain functions or are capable of
performing certain functions.

Examples are typewriters, posting machines, and computers.

– Non current assets

* STORE EQUIPMENT
– Refers to business machines used in point-of-sale transactions. An example is a Cash Register.
– Non current assets

* DELIVERY EQUIPMENT
– wheeled items used in making deliveries to customers or clients. Examples are vans and trucks.
– Non current assets

* TRANSPORTATION EQUIPMENT
– Refers to vehicles whether land transport, sea transport, or air transport. Examples are motorcycle, car,
truck, ship, aircraft.
– Non current assets

* ACCUMULATED DEPRECIATION
– A contra-asset account that represents the cumulative depreciation of a fixed asset from the date it was
purchased up to the date of the financial statements.

Tools
– handy, small, and usually metallic items used in performing certain function such as saws, hammers,
pliers, scissors, screw drivers and jacks. Tools in general have long useful life but do not have significant peso
value.
Note: The cost of assets with relatively permanent life (such as buildings, machinery and equipment and
furniture) is allocated based on useful (or economic) life. The allocated portion to each accounting period is
charged to Depreciation Expenses. The reduction in the asset value is accumulated in the Accumulated
Depreciation account, a deduction from the corresponding asset account. In the case of tools, a portion of
their cost may be written off by charges to Tools Expense.
– Non current assets

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 " LIABILITIES "

Trade and Other Payables

This refer to the amounts payable to a person or a company.

• The following are the examples of Trade and Other Payables:

* ACCOUNTS PAYABLE
– Amount payable to suppliers or creditors for services, supplies, goods, or property.
– obligations to suppliers for items bought and are not supported by promissory notes. It is often referred to
as arising from purchases “on open account”.
– Current liability

* NOTES PAYABLE
– obligations covered by promissory notes.
– Represents the principal amount or the face value of the promissory note which is issued by the maker.
– Current liability

* COMMISSION PAYABLE
– Unpaid commissions.
– Current liability

* UTILITIES PAYABLE
– Unpaid communication, light, and water bills.
– Current liability

* INTEREST PAYABLE
– Unpaid interest in a loan transaction.
– Current liability

* RENT PAYABLE
– Unpaid rent.
– Current liability

* SALARIES AND WAGES PAYABLE

– Unpaid salaries and wages of the employees.
– Current liability

Expenses Payable (Accrued Expenses)

– obligations for expenses already incurred but not yet paid. Examples are Taxes Payable, Salaries and
Wages Payable, and Accrued Advertising.
– Current liability

Unearned Income
– This refers to cash received in advance but not yet earned.

• The following are the examples of Unearned Income:

* UNEARNED ADVERTISING
– Advance receipt of cash representing the payment for future advertising services.

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* UNEARNED COMMISSION
– Advance receipt of cash representing the payment for future services of an agent.

* UNEARNED RENT
– Advance receipt of cash representing the payment of future rent.

* UNEARNED SUBSCRIPTIONS
– Advance receipt of cash representing the payment for future subscriptions to print materials and non-print
materials.

Loans Payable
– obligations arising from loans obtained.
– Non current liability

Mortgage Payable
– This refers to a bank loan with collateral assets such as house and lot or vehicle.
– Non current liability

Bonds Payable
– This refers to a loan that is evidenced by a bond certificate and a bond indenture. Bond indenture refers to
the agreement between the borrower and the lender. The borrower normally the government and the
lender normally the public or a financial institution.
– Non current liability

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" OWNERS EQUITY "

Owner, Capital
– capital of the sole proprietor in his business. If the owner is Jose P. Golez, the account becomes Jose P.
Golez, Capital. At the end of the accounting period, it is adjusted for withdrawals and net income (net loss).

Owner, Drawing
– This account title is used for withdrawals made by the owner. If the owner’s name is Jose P. Golez, the
account title is Jose P. Golez, Drawing or Jose P. Golez, Personal.

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" REVENUE/INCOME "

Service Income
– This refers to revenue realized by providing services to customers

This refers to the income derived from the rendering of services and is the primary income for a service
business.

* COMMISSION INCOME
– Income derived by an agent for the performance of service such as product distribution, disintermediation
services, and others.

* DIVIDEND INCOME
– Income from share investments.
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* INTEREST INCOME
– Income from loan transactions.

* RENT INCOME
– Income from the use of the land or unit space.

* GAIN ON SALE OF FIXED ASSETS

– Excess of the Selling price of a fixed asset over its Net Carrying Value (NCV).
- NCV is the difference between the cost of the asset and its accumulated depreciation

Fees Income
– This refers to revenue realized by providing professional services to clients. Examples are legal, dental and
medical fees.

Sales
– This account title is used to refer to revenue from sale of goods that went previously acquired for sale.

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" EXPENSES "

Taxes and Licenses

–cost of permits and taxes incurred

Advertising Expenses
– incurred in making the public aware of the goods and services being offered by the business.

Examples are costs of or rentals for signboards and neon signs and advertisements in the newspapers and
through radio and television.

Salaries and Wages

– the compensation earned by employees for services rendered to the business.

Examples are the salaries of sales and office employees and wages of employee holding blue collar jobs
(factory and shop workers, maintenance men, drivers and mechanics).

Supplies Expenses
– cost of supplies already used.

Examples are factory and shop supplies (rags, brooms and lubricants), office supplies (paper, pencils, adding
machine tapes, and erasers) and dental supplies (cotton, dental floss, and facial tissue paper).

Light, Power and Water

– cost of light, power and water consumption as indicated on bills presented by utility companies
(MERALCO and Manila Water Co., Inc.)

Telephone and Telegram

– telephone and telegraph charges as indicated on bills presented by telecommunication companies (PLDT,
PT & T, RCPE, etc.)

Tools Expense
– cost of tools treated as expense
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Depreciation Expense
– the portion of property cost allocated to an accounting period.
– Non-cash expense that represents the total depreciation of the fixed assets for the year.

Example: A machine costing P20,000 has estimated useful life of 5 years. Annual depreciation expense may
be P4,000 (or P20,000/5 years).

Insurance Expense
– insurance premiums related to current period

Bad Debts
– provision for uncollectible receivables

RENT EXPENSE
– Payment made by a tenant lessee for the use of the land or unit space.
– the amount of rentals incurred based on occupancy of space or usage of property and equipment

UTILITY EXPENSE
– Utilities such as light, water, and communication facilities such as phone, the Internet, and others.

INTEREST EXPENSE
– Expense from loan transactions.

ADVERTISING & PROMOTION EXPENSE

– Advertising in all media types and promotional campaigns.

AGENCY SERVICES EXPENSE

– Payments to the agencies for providing janitorial, messengerial, and security services.

COMMISSION EXPENSE
– Payments made to agents for the performance of services such as product distribution, intermediation
services, and others.

DONATION EXPENSE
– Charitable contributions to a person, group of persons, or organizations.

FRINGE BENEFIT EXPENSE

– Benefits given to supervisory or managerial employees aside from the basic monthly compensation.

FUEL & OIL EXPENSE

– Refers to gasoline, oil, and lubricants used in operating a vehicle.

INSURANCE EXPENSE
– Refers to life insurance and non-life insurance purchased for the purpose of protecting an asset or a
resource.

OFFICE SUPPLIES EXPENSE

– Stationery used in the offices.

STORE SUPPLIES EXPENSE

– Stationery ot items used directly in selling activities.

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PAG-IBIG, PHILHEALTH, & SSS CONTRIBUTIONS EXPENSE
– Represents the following contributions of the employer:
• Pag-IBIG housing benefit contribution
• Philhealth health benefit contribution
• SSS health benefit contribution

PROFESSIONAL FEE
– Compensation given to persons rendering professional services to the business.

REPAIR AND MAINTENANCE EXPENSE

– Payments made to fix a broken item or to ensure that an asset is working in good condition.

REPRESENTATION & ENTERTAINMENT EXPENSE

– Expense related to the cost of meetings/events with clients or customers such as meals and other forms of
entertainment. May also include recreational activities of the management and employees.

SALARIES & WAGES EXPENSE

– Represents the total gross salary or wage of the employees.

SUBSCRIPTION EXPENSE
– Subscriptions to print materials such as newspapers, magazines, and others & non-print materials such as
Internet subscriptions.

TAX & LICENSE EXPENSE

– Licenses or permits issued by a Local Government Unit (LGU) & taxes on real estate.

TOLL & PARKING EXPENSE

– Road toll fees & parking fees.

TRAVEL EXPENSE
– Commuting costs of using public transportation including airport fees and other fees.

DOUBTFUL ACCOUNTS EXPENSE

– Non-cash expense that represents the estimated amount of Accounts Receivable (AR) which may be
uncollectable due to the risk of non-payment.

BAD DEBT EXPENSE

– Non-cash expense that represents uncollectible customer accounts that were writen-off from the books.

MISCELLANEOUS EXPENSE
– Expense which cannot be classified from the above expenses.
– The different minor expenses incurred and for which no specific account title has been adopted.

Examples are transportation expenses for P2.00 and bank service charges for P10.00