Analyzing the Transactions in Starting a • Assets – refer to things of value owned

Business by the business.

➢ Being used in operating the
business, and are expected to
Financial Structure of a Business Organization have a long life.
➢ Its resources will come from
• Assets = liabilities + equity
investors, and secondarily from
• The assets are claimable by the
creditors.
creditors (liabilities) and investors
➢ Claimable by investors and
(owner’s equity) and therefore should
creditor.
always be equal.
• Current assets – this can be converted
• Higher value of credit than debit means
into cash within one fiscal year or one
in risk for loss and bankruptcy.
operating cycle.
Element of Statement of Financial Position ➢ Used to facilitate day-to-day
operational expenses and
• Real Accounts – also known as balance investments.
sheet accounts or permanent accounts ➢ Examples: cash, accounts
since they carry on to the next receivable, inventory, prepaid
accounting period. expenses and other current
➢ It shows the financial position assets (supplies).
of a business which includes the
assets, liabilities, and the
owner’s equity or capital.
➢ Financial statements.
• Non-current assets – also known as
➢ Used as the beginning balance
long-term assets since they would not
for the next accounting period.
completely consumed in the current
➢ Closing book of the businesses. operation cycle.
• Nominal Accounts – also known as ➢ Examples: property, plant, and
income statement accounts or equipment, accumulated
temporary accounts since they are only depreciation, investment
applicable in their accounting period. properties, investments,
➢ It shows the financial intangible assets, and other
performance of the business in non-current assets.
the accounting year and include
• Liabilities – refer to amounts owed by
the income, expenses, and
lenders and suppliers.
withdrawals of the business. ➢ Often have the word “payable”
in the account title.
➢ Also include amounts received
in advance for a future sale or
future service to be performed.
• Liability as current liabilities
➢ It expects to settle the liability
Basic Elements of Accounting in its normal operating cycle.
 ➢ It holds liability primarily for ▪ Withdrawals – when the owner
trading. of a business entity withdraws
➢ The liability is due to be settled cash or other assets, such are
within twelve months after recorded in the drawing or
reporting period. withdrawal account rather than
➢ The entity does not have an directly reducing the owner’s
unconditional right to defer equity account.
settlement of liability for a least ▪ Income Summary - It is a
twelve months after the temporary account used at the
reporting period. end of the accounting period to
close income and expenses. This
Note: all other liabilities should be
account shows the profit or loss
classified as non-current liabilities.
for the period before closing the
• Current Liabilities capital account.
➢ Accounts Payable • Income / Net Income – is the net
➢ Notes Payable increase in assets in a given accounting
➢ Accrued Liabilities period.
➢ Unearned Revenues ➢ May be due to increases in
➢ Income Tax Payable assets or decreases in liabilities.
➢ The Current portion of long- ➢ It is the result in an increase in
term debt. equity.
• Non-Current Liabilities ➢ It is the result of providing goods
➢ Loans Payable and services or from investment
➢ Mortgage Payable income.
➢ Long Term Notes Payable ➢ Company’s profit.
➢ Bonds Payable • Expenses – these are the costs of
➢ Other Noncurrent Liabilities businesses during their operations.
• Owner’s Equity or Net Worth – ➢ These are decreases in assets or
represents the residual interest of the increases in liabilities.
owner in the entity’s assets. ➢ Results in a decrease in equity
➢ Partnership – partner’s equity except for those related to
➢ Corporation – shareholder’s distributions to holders of equity
equity claims.

▪ Capital – Latin word ‘capitalis’

means “property”
➢ Used to record the original Current Assets
and additional investments
❖ Cash and Cash Equivalents
of the owner of the
business entity. • It refers to the line item on
➢ Increased amount of profit the balance sheet that reports
earned during the year or is the value of a company’s
decreased by a loss. assets that are cash or can be
converted into cash
immediately and this includes
 bank accounts and vital to business operations
marketable securities and the long- term financial
(Tuovila, 2023). health of a company
• It can be found in current (Murphy, 2023).
assets section of financial • It can be found in non-
statements. current assets or fixed
assets.
❖ Accounts Receivable
•These are the balance of ❖ Accumulated Depreciation
money due to a firm for goods • It is the total amount of
or services delivered or used depreciation expense that
but not yet paid for by has been allocated for an
customers (Hayes 2022). asset since the asset was put
• It can also be found in into use (Investopedia,
current assets section of 2023).
financial statements. • It is under the Property,
❖ Inventory Plant, and Equipment.
• It refers to the raw materials ❖ Investment Properties

used in production as well as • It is real estate property

purchased with the
the goods produced that are
intention of earning
available for sale (Kenton,
a return on the investment
2023)
either through rental
• It can be found in current income, the future resale of
assets section too. the property, or both (Chen,
❖ Prepaid Expenses 2021).
• It is an expense that has been • It is part of non-current
paid for in advance but not yet assets or long-term assets
incurred (Tuovila, 2023). section.
• It can be found in current ❖ Investments
assets section. • It can be defined as an asset
❖ Supplies that is created with the
intention of helping your
• It is a fundamental
wealth to grow with time
economic concept that
and secure your future
describes the total
financial requirements (Max
amount of a specific good
Life Insurance, n.d.).
or service that is available
• It can be defined as an asset
to consumers (Kenton,
that is created with the
2023). intention of helping your
• It can be found in current wealth to grow with time
assets section of financial and secure your future
statements. financial requirements (Max
Non-current Assets Life Insurance, n.d.).
❖ Intangible Assets
❖ Property, Plant, and Equipment
• It is one that is not physical in
• These are long-term assets nature. Since intangible assets
 have no shape or form, they • It can be found in current
cannot be held or liabilities section too.
manipulated. Common types ❖ Income Tax Payable
of intangible assets include • It is the financial accounting
brands, goodwill, and term for current tax liability
intellectual property (Kenton, reported on a company’s
2023). balance sheet (Scott, 2019).
• It falls under non-current
• It can be found in current
assets.
liabilities section.
Current Liabilities
Non-current Liabilities
❖ Accounts Payable
•It refers to the money a ❖ Loans Payable
company owes its suppliers • It refers to the amounts
for goods and services that that have been loaned to
have been provided and for the company and that it still
which the supplier has owes (Loans Payable -
submitted an invoice Financial Definition, n.d.).
(Accounts Payable, 2023). • It falls under long-term or
• It is listed under current non-current liabilities
liabilities. section.
❖ Notes Payable ❖ Mortgage Payable
• These are written agreements • It is the liability of a property
(promissory notes) in which owner to pay a loan that is
one party agrees to pay the secured by property. It is
other party a certain amount considered as a long-term
of cash (Team, 2023). liability in the perspective of
• It also falls under the borrower (Bragg, 2023).
current liabilities. • It can be found in long-
❖ Accrued Liabilities term or non-current
• It refers to an expense liabilities section.
incurred but not yet paid for ❖ Long-Term Notes Payable
by a business. These are costs • It refers to an agreement a
for goods and services company enters with another
already delivered to a party, which includes a
company for which it must formal written promise to
pay in the future (Grant, pay pre-determined amounts
2022). on specific dates. The
• It can be found under maturity of the note must be
current liabilities longer than one year or
section. operating cycle (Moneyzine,
❖ Unearned Revenues n.d).
• It is money received by an • It falls under long-term or non-
individual or company for a current liabilities section.
service or product that has ❖ Bonds Payable
yet to be provided or • It refers to the liability
delivered (Liberto, 2022). account that contains the
 amount owed to bond • The overall information
holders by the issuer (Bragg, about company’s
2023). financial health.
• It falls in under long- • Real accounts.
term or non-current ❖ Income Statement
liabilities. • It is one of the three
important financial
statements used for
❖ Sales
reporting a company’s
financial performance over a
• It is a transaction between
specific accounting period. It
two or more parties that
focuses on the revenue,
involves the exchange of
expenses, gains, and losses
tangible or intangible goods,
reported by a company
services, or assets for money
during a particular period.
(Twin, 2022).
• It can be found within the
• It is typically part of the
company’s financial
company’s income statement.
statements.
❖ Capital
• Nominal accounts.
• It is a broad term that can be
describe anything that
confers value or benefit to its
The Accounting Equation
owners, such as a factory and
its machinery, intellectual
property like patents, or the • Accounting equation – always have
financial assets of a business equal left side and right side.
or an individual (Hargrave, ➢ Note: Preserve the balance on
2022). both sides in order not to make
• These are all the information any errors in accounting and
on the first section of balance recording transactions.
sheet which is the company’s • Sole proprietorship – if the assets is
total assets specifically under invested solely by the owner.
owner’s equity or net worth. ➢ Assets = Owner’s Equity
❖ Withdrawals
• Partnership / Corporations – if the
• It involves removing the
assets came from mixture of investors
funds from a bank account,
and creditors.
savings plan, pension, or
➢ Assets = Liabilities + Owner’s
trust (Grant, 2023).
equity
• This accounted on the income
statement.
❖ Balance Sheet Statement of Financial Position
• It refers to a financial
• Assets, liabilities, and owner’s equity are
statement that reports a
company’s assets, liabilities, presented in this report to determine
and shareholder equity at a the wealth accumulated by the business,
specific point in time its net worth, and its liquidity and
(Fernando, 2023).
 solvency of a business or company on a owner’s equity, statement of financial
given date. position, and statement of cash flows.
• Previously called ‘Balance Sheet’ before
PAS was revised in 2007 because it Statement of Comprehensive Income/ Income
shows the balances of each account and Statement
the grand total shows a balance
between the assets (business resources) • Also known as the statement of
on one hand and the liabilities and operations, profit and loss statement,
owner’s equity (claim over the assets) on and statement of earnings.
the other. • One of a company's main financial
statements.
• Its purpose is to report a summary of a
company's revenues, expenses, gains,
losses, and the resulting net income that
occurred during a year, quarter, or other
period of time.
• Revenues – which are the amounts
earned through the sale of goods and/or
the providing of services.
• Expenses – which include the cost of
Summary
goods sold, SG&A expenses, and interest
• In a business transaction, there must be expense.
• Gains and losses – such as the sale of a
an: a. EXCHANGE OF VALUES; b.
noncurrent asset for an amount that is
between TWO PARTIES; c. in terms of
different from its book value.
MONEY.
• Net income – which is the result of
• Account – a brief description of items
representing each of the accounting subtracting the company's expenses and
elements. losses from the company's revenues and
gains.

INTERRELATIONSHIP OF FINANCIAL
STATEMENTS

Financial Statements

• General-purpose, external financial

reports that are distributed by a
company to people outside of the
company.
• A more-detailed, internal financial
report that remains inside of the
company for use by the company's
management.
• It consists mainly of the income
statement, statement of changes in
Statement of Changes in Owner’s Equity

• Shows the changes in the capital account

due to contributions, withdrawals, and
net income or net loss.

Statement of Cash Flows

• Shows the changes (cash flows) in the

business activities; starting with the
operating activities appearing in the
income statement, and the investing and
financing activities appearing in the
statement of financial position.
• This is prepared for a certain period of • Expenses – cash OUTFLOWS resulting
time. from the use of asset or service in
• Use of this statement: generating income.
➢ To evaluate cash stewardship of • Revenues > Expenses = Net
the finance officer. Profit/Income
➢ To guide the planning of future
• Revenues < Expenses = Net Loss
cash flows.
• Revenues = Expense = Breakeven
➢ To assess ability of the business
in generating cash from • Four basic financial statements are:
operation. a. Statement of Financial Position;

b. Income Statement;
c. Statement of Cash Flows;
Summary of the Lesson d. Statement of Changes in Owner’s
Equity
• Accrual concept – recognizes revenues
• Accounting period – which usually is one
and expenses based on their occurrence
year, is the time basis used in the
regardless of whether cash is collected
preparation of financial statements.
or paid.

• Cash concept – recognizes revenues and

expenses only at the time of collection or The Chart of Accounts, The Journal, The Ledger
payment. and Posting Procedures, and The Trial Balance
• Revenues – cash INFLOWS resulting
from the services rendered or
merchandise sold.
Chart of Accounts
 • A listing of all account titles to guide the • Assets, Expenses and Drawings increase
bookkeeper in recording transactions. on the debit side.
• The accounts are properly arranged with • Liabilities, Owner’s Equity and
the assets listed first, followed by the Revenues increase on the credit side.
liabilities and lastly by the owner’s
equity.
• Account numbers are assigned for each The Journal
account for easy reference.
• Also called the ‘Book of Original Entry.’
• The debits and credits of each account
are recorded chronologically by day.
• Simplest form of journal – two-column
general journal.
• Journalizing – the process of recording.
• Journal Entry – each entry made.
• Consist of:
▪ Date
▪ Account title and the amount
debited
▪ Account title and the amount
credited
▪ Explanation

Trial Balance

• Establishing the equality of the debits

and credits in the T-accounts or in the
general ledger by preparing trial
balance.
• A list of account with ledger balances.
T-accounts
• The debit total should tally with the
• Gives a way of analyzing transactions credit total.
with each account separately analyzed • Headings: Name of Business, Title of the
for increases and decreases. report, and Date.
• It got its name because it resembles the • Account Titles: Assets, Liabilities,
letter “T” and is convenient to use as it Capital, Revenues, and Expenses.
has two sides – the left side and the right
side where the increases and decreases
are separately placed. Summary
• At the center of the T Account is the
• Chart of Accounts is simply a listing of all
name or title of the account.
account titles to guide the bookkeeper in
• Left side is called the debit side.
recording transactions.
• Right side is the credit side.
 • T Account is a process of analyzing the Saan manggagaling ang pera?
debits and credits of an account.
• Assets, expenses and drawings are Answer:
debited for increases (normal balance) a. Mangungutang sa iba (Ex. Bank) P60
while credited for decreases. b. "Mangungutang" sa may-ari or owner P40
• Liabilities, owner’s capital and revenues
are credited for increases (normal P60 + P40 = P100
balance) while debited for decreases. Ang pera na ngayon ni "Business" ay P100
• A journal is called the book of original
entry wherein transactions are initially Business:
recorded here in chronological order. A = P100 (Pera/Asset)
Each entry made is called a journal entry L = P60 (Utang sa Bank)
which contains a date, the account title OE = P40 ("Utang" sa Owner)
and amount debited, the account title
and amount credited and an In simple words, ang Pera ng Business na P100
explanation. (ASSET):
• Trial Balance is a list of accounts with
ledger balances to establish the equality ~ay galing sa utang sa Bank P60 (LIABILITY), at
of debits and credits in the T accounts. galing sa "utang" sa Owner P40 (OWNER'S
EQUITY)
ACCOUNTING TUTORIAL (PART 1)
A = L + OE
"BASIC" ACCOUNTING EQUATION" P100 = P60 + P40
A = L + OE
#REMINDER
Assets = Liabilities + Owner's Equity ~In Form, parang ISA lang ang "Business" at
P100 = P60 + P40 "Owner"
~Pero in Substance, IKAW lang si " BUSINESS" (at
"CHARACTERS" 🙂 "parang" pinautang ka lang ng sarili mo)
a. BUSINESS = "Ikaw"
b. ASSET = Pag-aari "ng business" ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
c. LIABILITY = Utang "ng business" sa iba (Ex.
Bank) "DEBIT AND CREDIT"
d. OWNER'S EQUITY = "Utang" "ng business" sa
may-ari (owner) 1. Bumili ka ng Laptop at nagbayad ka ng P50000

#CommonMistake DEBIT: Laptop 50000

Ang "Business" at ang "Owner" ay IISA.. CREDIT: Cash 50000

*MALI po yan. Para maintindihan natin ang Nagkaroon ka ng Laptop, kaya DEBIT
Accounting Equation (A=L+OE), ang una dapat Nawalan ka naman ng Cash, kaya CREDIT
nating isipin ay magkaiba ang "BUSINESS" at ang
"OWNER" NOTE: (ASSET)
Pag "nagkakaroon" ka ng Asset (or bagay) =
#HALIMBAWA DEBIT
BUSINESS(Ikaw) = Buy & Sell ng damit Pag "nawawalan" ka ng Asset (or bagay) =
CREDIT
~kung ikaw si BUSINESS, kailangan mo ng "pera"
pambili ng damit. ..............................................

#QUESTION 2. Bumili ka ng Laptop pero utang, P50,000

 ..............................................
DEBIT: Laptop 50000
CREDIT: Accounts Payable 50000 5. Nakolekta mo na yung pautang mo sa tinuruan
mong estudyante P20,000.
Nagkaroon ka ng Laptop, kaya DEBIT
Nagkaroon ka ng utang (Accounts Payable), kaya DEBIT Cash 20000
CREDIT CREDIT Accounts Receivable 20000

NOTE: (LIABILITY or UTANG) Nagkaroon ka ng Cash, kaya DEBIT

Pag "nagkakaroon" ka ng utang = CREDIT Nawalan ka ng pautang(Accounts Recevable),
Pag "nawawalan" ka ng utang = DEBIT kaya CREDIT

#IMPORTANT ...............................................
Baliktad ang ASSET at LIABILITY
(ASSET) 6. Nagbayad ka ng P10,000 sa inuupahan mong
DEBIT: pag "nagkakaroon" ka ng Asset (or bagay) lugar para sa tutorial.
CREDIT: pag "nawawalan" ka ng Asset (or bagay)
DEBIT Expense 10000
(LIABILITY) CREDIT Cash 10000
CREDIT: pag "nagkakaroon" ka ng utang
DEBIT: pag "nawawalan" ka ng utang Nagkaroon ka ng gastos (expense), kaya DEBIT
Nawalan ka din ng cash, kaya CREDIT.
..............................................
NOTE: (EXPENSE or GASTOS)
3. Binayaran mo na ang utang.. Pag "nagkakaroon" ka ng gastusin = DEBIT

DEBIT: Accounts Payable 50000 ~~~~~~~~~~~~~~~~~~~~~~~~~

CREDIT: Cash 50000
Point of view of the BUSINESS:
Nawala na ang utang (Accounts Payable), kaya
DEBIT. Increase in Asset
Nawalan ka din ng Cash, kaya CREDIT. Nagkakaroon ng asset ang business kasi
pwedeng
*Yehey, wala nang utang. 🙂 -nanggaling sa inutang niya (ito ang pautang or
investment ng creditors)
.............................................. -nanggaling sa owner (ito ang initial or additional
investment ng owner)
4. Ginamit mo yung Laptop sa business mong -galing sa serbisyo/benta
Accounting Tutorial. Kumita ka ng P20,000 pero
"pautang". Decrease in Asset
Nawawalan naman ng asset ang business kasi
DEBIT Accounts Receivable 20,000 pwedeng
CREDIT Service Income 20,000 -nagbayad siya ng utang
-ibinalik na yung capital sa owner (withdrawal by
Nagkaroon ka ng "pautang"(Asset siya kasi the owner)
makokolekta mo siya), kaya DEBIT -may mga gastusin o expenses
Nagkaroon ka din ng kita o income, kaya CREDIT.
Equity/Capital = Investment + Revenue -
NOTE: (INCOME or KITA) Expenses - Drawings(Withdrawal)
Pag "nagkakaroon" ka ng income = CREDIT
 Part 1. Multiple-choice (Situational)

Increase in Equity 5 accounting elements

-Tumataas ang Equity pag mas malaki ang
Assets
kita(revenue) kaysa sa gastos(expenses). Ang
tawag dito ay "Net Income". Liabilities

-Pwede rin tumaas ang Equity pag nadadagdagan Owners Equity

ang capital (pera o gamit) ng business.
Revenue
Decrease in Equity
Expenses
-Bumababa ang Equity pag mas malaki ang
gastos (expenses) kaysa sa revenue or kita. Ang Accounting Equation Formula
tawag dito ay "Net Loss".
-Pwede rin bumaba ang Equity pag ibinalik na Assets = Liabilities + Owners Equity
ang capital (pera o gamit) sa may-ari.
(Withdrawal by the owner)
Ruling:
Normal Balances:
If Drawings, Expenses, and Assets increase /
DEBIT (DEAL) nadadagdagan (Debit), if decrease /
D-ividends (Drawings)
nababawasan (Credit).
E-xpenses
A-sset If Liabilities, Equity(Capital), Revenue(Income)
L-osses increase / nadadagdagan (Credit), if
decrease/nababawasan (Debit).
CREDIT (GIRLS)
G-ains
I-ncome
R-evenues Note in Journal Entries:
L-iabilities
S-tockholder's (or Owner's) Equity If you read the words invested, deposited in the
accounting transactions automatically, may
ASSETS ka na papasok sa business either Cash,
Part 2. Computation
property, or anything that is invested by the
1. Worksheet owner, and Owners Equity (Capital).

2. Journal Entries In Sales perspective or rendered services,

nagbigay ka ng serbisiyo sa customers or clients
3. Statement of Financial Position
mo, 2 concepts lang palagi yan either binayaran
ka ng CASH or wala kang na received na pera
(Accounts Receivable).

*Billed clients, on credit ( Accounts Receivable

yan)
Recieved Cash, deposited directly to the bank enterprise as producers or consumers of its
account, checks, etc.. Cash po yan products or services, or as its employees.

if Collected naman, ibig sabihin niyan- may ~~~~~~~~~~~~~~~~~~~~~~~~

nagbayad ng utang, mababawasan ang Accounts
"TYPES" OF BUSINESS
Receivable mo.
[Link] BUSINESS. This business renders
Sa Purchases naman na perspective, 2 concepts
services to customers or clients for a fee.
ulit yan either naglabas ka ng pera/nagbayad ka
ng cash (bawas sa Cash mo yan), if wala kang (Sale of SERVICES)
ibinigay na pera/ hindi ka naglabas ng pambayad
5. MERCHANDISING/TRADING BUSINESS. This
na cash pero may nakuha kang property,
business buy goods or commodities and sell
materials or supplies or services na gagamitin mo
them at a profit.
sa business mo, Utang yan (Accounts Payable
yan). (Sale of GOODS) (Buy=>Sell)

Paid - meaning nagbayad ka ng utang or 6. MANUFACTURING BUSINESS. This business

nagbayad ka sa mga binili or nagamit mong mga makes "finished goods" from "raw materials" or
serbisyo ( Bawas sa Cash mo yan), expenses yan. unassembled parts. It "produces" the goods that
it sells.
Nagbayad ka in-advance, Prepaid yan under
assets. (Sale of GOODS) (Buy=>"Produce"=>Sell)

ACCOUNTING TUTORIAL (Part 4)

"BASIC ACCOUNTING" ~~~~~~~~~~~~~~~~~~~~~~~~

"FORMS" OF BUSINESS ORGANIZATION

1. SINGLE/SOLE PROPRIETORSHIP is a business "ELEMENTS" of FS (Financial Statements)

owned by only ONE INDIVIDUAL.
7. INCOME/REVENUE is the gross INFLOW of
[Link] is an association of "TWO or economic benefits during the period in the form
MORE" persons who bind themselves to of INFLOWS or enhancements on assets or
contribute money, property or industry(services) decrease in liabilities that result in increase in
to a common fund, with the intention of dividing equity, other than those relating to contributions
the profits among themselves. from the owner or owners.

3. CORPORATION is an artifical being(not natural, 8. EXPENSE is defined as the gross OUTFLOW of

like human being) created by operation of LAW, economic benefits during the period in the
having the rights of SUCCESSION, and the course of ordinary activities when these
POWERS AND ATTRIBUTES expressly authorized OUTFLOWS result in DECREASE in equity other
by law or incident to its existence. than those relating to distribution to owners.

~In simple terms, these are COSTS incurred to

produce income/revenue.
4. COOPERATIVE is a legal entity owned and
democratically controlled by its members. 9. ASSETS are defined as RESOURCES controlled
Members often have a close association with the by the enterprise as a result of past transactions
and events and from which future economic 2. TRADING SECURITIES are debt and equity
benefits are expected to flow to the enterprise. securities that are purchased with the intent of
selling them in the "near term" or very soon
~In simple terms, these are PROPERTIES owned
by the business. Current asset.

10. LIABILITIES are defined as present 3. ACCOUNTS RECEIVABLES are claims against
OBLIGATIONS of an enterprise arising from past debtors or customers arising from services
transactions or events, the settlement of which rendered on account and sale of merchandise on
is expected to result in an outflow from the account.
enterprise of resources embodying economic
Current asset.
benefits.
4. ALLOWANCE FOR DOUBTFUL ACCOUNT
~In simple terms, these are the financial
relates to the company's receivables which
obligations or DEBTS of the [Link] is also
might not be collected.
described as CLAIM of the CREDITORS on the
Assets of the enterprise. Current asset. (Contra-Asset

11. OWNER'S EQUITY/CAPITAL represents the #NOTE: "CONTRA-ASSET" account is the

CLAIM of the OWNER on the Assets of the opposite of "ADJUNCT" account
business. It is the RESIDUAL INTEREST in the
In layman's term,
Assets of the business after deducting all its
liabilities. CONTRA = deducted

ADJUNCT = added (Example: Freight In)

~~~~~~~~~~~~~~~~~~~~~~~~~ 5. NOTES RECEIVABLE are claims supported by

promissory note.

Current asset, if short-term. (Also a Current Asset

Important: CAPITAL ACOUNT (or EQUITY
if the problem is SILENT)
ACCOUNT) consists of the following:
Noncurrent asset, if long-term.
a. "Owner's Capital"

b. "Owner's Drawing"
6. MERCHANDISE INVENTORY are goods on hand
and are available for sale.
~~~~~~~~~~~~~~~~~~~~~~~~
Current asset.

7. ACCRUED INCOME. Earned but not yet

EXAMPLES of "ASSET" Accounts received/collected.

1. CASH is any medium of exchange that a bank Current asset.

will accept at face value. It includes coins and
8. ADVANCES TO EMPLOYEES. Cash received by
currencies, checks, money orders and bank
employees to be deducted from their salaries in
drafts.
the future
Current asset.
Current Asset.
9. PREPAID EXPENSES are expenses PAID IN
ADVANCE by the business ("Paid but not yet
incurred").

Current asset.

10. OFFICE/STORE SUPPLIES are being used by

the business like papers, pens, pencils, folders,
staplers, etc.

Current asset.

11. LAND is an asset that is not subject to

depreciation. It appreciates (value increases) as
time goes by.

Noncurrent asset.

12. BUILDING can be acquired by PURCHASE or

by means of CONSTRUCTION. Construction costs
may include materials, labor, overhead, permit
or license, Architect fee, Excavation cost, etc.

Noncurrent asset.

13. MACHINERY & EQUIPMENT includes

computers, air-conditioning units, electric fans,
freezers, refrigerators, truck, etc.

Noncurrent asset.

14. FURNITURE AND FIXTURES includes tables,

chairs, filing cabinets, etc

Noncurrent asset.

15. ACCUMULATED DEPRECIATION. "Total"

depreciated c