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Account Titles Essay Sample

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  • Pages: 6
  • Word count: 1,463
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Introduction of TOPIC

Current Assets

Cash – A current asset account which includes currency, coins, checking accounts, and undeposited checks received from customers. The amounts must be unrestricted. (Restricted cash should be recorded in a different account.) Petty Cash Fund – A current asset account that represents an amount of cash for making small disbursements for postage due, supplies, etc. Notes Receivable – An asset representing the right to receive the principal amount contained in a written promissory note. Principal that is to be received within one year of the balance sheet date is reported as a current asset. Any portion of the notes receivable that is not due within one year of the balance sheet date is reported as a long term asset. Accounts Receivable – A current asset resulting from selling goods or services on credit (on account). Allowance for Bad Debts – A valuation account used to estimate the portion of a bank’s loan portfolio that will ultimately be uncollectible.

When a loan goes bad, the asset is removed from the books and the allowance for bad debt is charged for the book value of the loan. Also known as “loan-loss reserve.” Accrued Interest Income – An accrual accounting method when interest that is either payable or receivable has been recognized, but not yet paid or received. Accrued interest occurs as a result of the difference in timing of cash flows and the measurement of these cash flows. Advances to Employees – An asset account used to record amounts given to an employee with the expectation of repayment. For example, if an employee is given money by a company and the money is expected to be repaid or spent for company purposes, the amount will be recorded in this current asset account until it is repaid or until the expense documentation is provided.

Inventories – A current asset whose ending balance should report the cost of a merchandiser’s products awaiting to be sold. The inventory of a manufacturer should report the cost of its raw materials, work-in-process, and finished goods. The cost of inventory should include all costs necessary to acquire the items and to get them ready for sale. Prepaid Expenses – A current asset representing amounts paid in advance for future expenses. As the expenses are used or expire, expense is increased and prepaid expense is decreased. Unused Supplies – Unused supplies as of the balance sheet date should be reported in the asset account Supplies or Supplies on Hand.

Non-current Assets

Property and Equipment – A major classification on the balance sheet. It is the second long term asset section after current assets. Included are land, buildings, leasehold improvements, equipment, furniture, fixtures, delivery trucks, automobiles, etc. that are owned by the company. Land – A long-term asset account that reports the cost of real property exclusive of the cost of any constructed assets on the property. Land usually appears as the first item under the balance sheet heading of Property, Plant and Equipment. Generally, land is not depreciated. Building – Buildings is a noncurrent or long-term asset account which shows the cost of a building (excluding the cost of the land). Buildings will be depreciated over their useful lives by debiting t

he income statement account Depreciation Expense and crediting the balance sheet account Accumulated

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Depreciation. Equipment – Equipment is a noncurrent or long-term asset account which reports the cost of the equipment.

Equipment will be depreciated over its useful life by debiting the income statement account Depreciation Expense and crediting the balance sheet account Accumulated Depreciation (a contra asset account). Furniture & Fixtures – Long-term assets that are reported under the classification of property, plant, and equipment on a company’s balance sheet. These assets are depreciated over their useful life. Accumulated Depreciation – Accumulated depreciation is the total amount of depreciation for a fixed asset that has been charged to expense since that asset was acquired and made available for use. The accumulated depreciation account is an asset account with a credit balance (also known as a contra asset account); this means that it appears on the balance sheet as a reduction from the gross amount of fixed assets reported.

Current Liabilites

Accounts Payable – This current liability account will show the amount a company owes for items or services purchased on credit and for which there was not a promissory note. This account is often referred to as trade payables (as opposed to notes payable, interest payable, etc.) Notes Payable (short-term) – The amount of principal due on a formal written promise to pay. Loans from banks are included in this account. Accrued Expenses – An expense that has occurred but the transaction has not been entered in the accounting records. Accordingly an adjusting entry is made to debit the appropriate expense account and to credit a liability account such as Accrued Expenses Payable or Accounts Payable. SSS Premium Payable

Philhealth Premium Payable
Pag-ibig Premium Payable
Withholding Tax Payable
Pre-collected or Unearned Income – A liability account that reports amounts received in advance of providing goods or services. When the goods or services are provided, this account balance is decreased and a revenue account is increased.

Non-current Liabilities

Notes Payable (long-term) – The amount of principal due on a formal written promise to pay. Loans from banks are included in this account. (Exceeds one year) Mortgage Payable – A liability account whose balance is the unpaid principal balance as of the balance sheet date. The amount of principal required to be paid within 12 months of the balance sheet date is reported as a current liability. The unpaid principal balance not due within one year of the balance sheet date is reported as a long term liability.

Revenues or Income

Sales – A revenue account that reports the sales of merchandise. Sales are reported in the accounting period in which title to the merchandise was transferred from the seller to the buyer. Service Income – Reports the fees earned by a company during the time period indicated in the heading of the income statement. Professional Income

Rental Income – The rent earned during the period indicated in the heading of the income statement, regardless of when the money is received from the tenant. Interest Income – Reports the interest earned by a company during the time period indicated in the heading of the income statement. Interest Revenues account includes interest earned whether or not the interest was received or billed. Miscellaneous Income

Expenses

Cost of Sales or Cost of Goods Sold – The expenses incurred in producing or acquiring goods that have been sold. Rent Expense – Report the cost of occupying space during the time interval indicated in the heading of the income statement, whether or not the rent was paid within that period. Repairs and Maintenance – The costs incurred to bring an asset back to an earlier condition or to keep the asset operating at its present condition (as opposed to improving the asset). Stationery and Office Supplies Expense – Reports the amount of supplies that were used during the time interval indicated in the heading of the income statement.

Salaries Expense – Reports the salaries that employees have earned during the period indicated in the heading of the income statement, whether or not the company has yet paid the employees. Bad Debts – This is an operating expense resulting from making sales on credit and not collecting the customers’ entire accounts receivable balances. Depreciation Expense – The income statement account which contains a portion of the cost of plant and equipment that is being matched to the time interval shown in the heading of the income statement. (There is no depreciation expense for land.) Taxes and Licences

Insurance Expense – The amount of insurance that was incurred/used up/expired during the period of time appearing in the heading of the income statement. Utilities Expense – This account reports the cost of the electricity, heat, sewer, and water used during the period indicated in the heading of the income statement. SSS Contribution

Pag-ibig Contribution
Miscellaneous Expense – An income statement account for expense items that are too insignificant to have their own separate general ledger accounts.

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