Asset Titles

• 011 Cash on Hand

  • Coins, currency, and other cash equivalents owned by the business and not yet deposited in the bank
• 012 Cash in Bank

  • unwithdrawn deposits in the bank; Usually, the name of the bank is used as the account title.
• The five major accounts in basic accounting are Assets, Liabilities, Owner's Capital, Owner's Drawing, and Income.
• Examples of each type of account in basic accounting are Cash on Hand, Cash in Bank, Notes Receivable, Interest Receivable, Accounts Receivable, Allowance for bad debts, Merchandise Inventory, Supplies Unused, Prepaid Insurance, Furniture and Fixtures, Equipment, Land, Building, and Building Accumulated Depreciation.
• The chart of accounts is a list of account titles used by the business and serves as a guide to the bookkeeper.
• The chart of accounts is divided into sections and each title has a given code number.
• Assets in the chart of accounts include Cash on Hand, Cash in Bank, Notes Receivable, Interest Receivable, Accounts Receivable, and Allowance for bad debts.
• Liabilities in the chart of accounts are Accounts Payable, Notes Payable, Interest Payable, Taxes and Payable, and Salaries Payable.
• Proprietorship accounts in the chart of accounts are Owner’s Capital and Owner’s Drawing.
• Income accounts in the chart of accounts are Service Income and Professional Fee Income.
• Expenses in the chart of accounts are Advertising Expense, Salaries Expense, Rent Expense, Supplies Expense.
• Assets, liabilities, and proprietorship accounts are also called real accounts, balance sheet accounts or permanent accounts.
• Income and expense accounts are sometimes called nominal accounts, profit and loss accounts, or temporary accounts.
• Cash on Hand in the chart of accounts includes Coins, currency, and other cash equivalents owned by the business and not yet deposited in the bank.
• Cash in Bank in the chart of accounts includes unwithdrawn deposits in the bank, usually, the name of the bank is used as the account title.
• Accounts Receivable in the chart of accounts include claims from customers arising from goods sold or services rendered on credit.
• Notes Receivable in the chart of accounts are amounts collectible from customers for goods sold and services rendered on credit or from others for loans granted, such claims are evidenced by a promissory note.
• Equipment includes typewriters, calculators, cash registers, and other similar assets.
• Proprietorship titles include owner’s capital, which is the amount of capital contributions of the owner/s to the business, and owner’s drawing, which is the amount withdrawn by the owner from the assets of the business for personal use.
• Accounts payable are amounts due to creditors for the goods or services bought on credit.
• Allowance for Bad Debts in the chart of accounts is a contra-asset account to provide for uncollectible amounts, it is deducted from Accounts Receivable to present the amount still collectible from debtors.
• Prepaid insurance are already paid insurance premiums which are applicable in the future periods.
• Interest payable is interest incurred but not yet paid.
• Salaries payable are amounts due to the employees for services they have rendered.
• Notes payable are amounts due to the creditors which are supported by a promissory note.
• Supplies are unused miscellaneous supplies bought for office use but are still unused as of the balance sheet date.
• Accumulated depreciation is a valuation account that reduces the total cost of the fixed asset.
• Land is land owned by the business used for building sites and other business purposes.
• Income titles include sales, which is the total sales of merchandise sold, and professional fee income, which are amounts earned by professionals such as CPAs, doctors, lawyers, etc. for services they render.
• Depreciation expense is allocated cost of fixed asset in the current period.
• Salaries and wages are compensation given to sales agents.
• Expense titles include cost of sales, which is the cost of goods purchased and sold, or materials manufactured and sold, and advertising expense, which are expenses incurred to promote the product of the business.
• Taxes include duties incurred in the current period.
• Buildings are buildings owned and used by the business in its operation.
• Bad debts are estimated amount of losses from uncollectible accounts of the business.
• Expense titles also include utilities expense, which is the amount of light and water consumed by the business, and repairs and maintenance, which are expenses incurred for repairing the assets of the business.
• Delivery equipment includes assets used for transporting merchandise.
• Supplies expense is the amount of supplies used.
• Merchandise Inventory in the chart of accounts includes goods purchased by the business to be sold at a profit.
• Furniture and fixtures include tables, chairs, showcases, counters, and other similar assets owned and used by the business in its operation.