Accounting 101 Chapter 2
Accounting 101 Chapter 2
Accounting 101 Chapter 2
Accounting Elements
and Financial
Statements
Accounting Elements
Basic accounting elements
Assets – are resources controlled by the enterprise as a result of past transactions or events
from which future economic benefits are expected to flow to the enterprise.
Liabilities – are present obligation of an enterprise arising from past transactions or events, the
settlement of which is expected to result in an outflow from the enterprise of resources
embodying economic benefits.
Equity – represents residual interest in the assets of the enterprise after deducting all
liabilities.
These accounts provide information on the financial condition of the business. They are
presented in the balance sheet and are thus called balance sheet accounts or also
termed real accounts.
Accounting Elements
Other accounting elements
Revenues – gross inflow of economic benefits during the period arising in the course
of ordinary activities of an enterprise whom those inflows result in increases in
equity other than those relating to contribution from owners.
Expenses – gross outflow of economic benefits arising in the course of ordinary
activities when those outflow result in decrease in equity, other that those relating
to distribution to owners.
These accounts provide information on the changes in capital as the result of
operation in the business. They are presented in the income statement and
are termed income statement accounts or also called nominal accounts.
Assets
Classified as Current Assets and Non-current Assets
Current Assets
Cash
Cash equivalent
Trading securities
Accounts receivable
Allowance for doubtful accounts
Notes receivable
Merchandise inventory
Finished goods, good in process, raw materials, and factory manufacturing supplies
Prepaid rent
Prepaid insurance
Unused supplies
Assets
Non-Current Assets
Property, Plant and Equipment of Fixed Assets
Land
Building
Office equipment
Store equipment
Delivery equipment
Machineries
Furniture and fixtures
Accumulated depreciation
Long Term Investments
Intangibles
Copyright
Franchise
Patent
Goodwill
Trademark or brand name
Other Non-Current Assets
Liabilities
Classified into Current Liabilities and Non-current Liabilities
Current Liabilities
Accounts Payable
Notes Payable
Accrued Expenses
Interest Payable
Salaries Payable
Bank Loans Payable
Deferred Revenues
SSS Premium Payable
Philhealth Premium Payable
Withholding Tax Payable
Non-Current Liabilities
Mortgage Payable
Deferred Revenue
Equity
Owners’ Capital
Owners’ Drawing
Revenue
Service Concern
Service income
Professional income
Rent income
Repair income
Laundry income
Transportation income or fares earned
Ticket sales
Miscellaneous income
Merchandising Concern
Sales
Sales returns
Sales allowances
Sales discounts
Expenses
Cost Accounts
Purchases
Purchase returns
Purchase allowances
Purchase returns and allowances
Purchase discounts
Freight In
Other Expense Accounts
Salaries and wages
Advertising expense
Rent Expense
Repairs and Maintenance
Transportation Expense
Expense
Other Expense Accounts
Taxes and Licenses
Depreciation Expense
Insurance Expense
Supplies Expense
Utilities Expense
Representation and Entertainment
Postage and Communication
SSS Premium
Miscellaneous Expense
Financial Statement