FABM 1(Classification of accounts)

• CLASSIFICATIONS OF ACCOUNTS

  1. Assets
  2. Liabilities
  3. capital
  4. revenue/income
  5. expense
• ASSETS

  • Cash
  • accounts receivable
  • notes receivable
  • supplies
  • prepaid expense
  • merchandise inventory
  • equipment
  • furniture & fixtures
  • automobile/truck
  • building
  • land
• LIABILITIES

  • accounts payable
  • notes payable
  • taxes payable
  • salaries payable
  • mortgage payable
• CAPITAL

  • name of owner, capital
  • name of owner, drawing
• ASSETS

  • properties owned by the business
• CASH

  • any medium of exchange that the bak will accept at face value
• ACCOUNTS RECEIVABLE

  • these are amounts due from customers arising from the sales of goods or from rendering services on accounts.
• NOTES RECEIVABLE

  • if the customer is not willing to pay, the owner will receive a written promise to pay
• SUPPLIES

  • purchased for use in the operation of the business
• PREPAID EXPENSE

  • it is an advance payment
• MERCHANDISE INVENTORY

  • goods held for sale
• EQUIPMENT

  • purchased for use rather than for resale
• FURNITURE & FIXTURES

  • made up of plastics, metal, and wood
• AUTOMOBILE/TRUCK

  • can use for deliveries, for business(truck)
  • attending convention, service, personal(automobile)
• BUILDING

  • use in the operation of the business
• LAND

  • the most important
  • there will be no building, if there's no land
  • not depreciable asset
• LIABILITIES

  • these are the obligations of the business
• ACCOUNTS PAYABLE

  • amounts due against debtors
  • from creditors
  • the payment that the creditor needed to pay
• NOTES PAYABLE

  • the customer gives an issued a written promise to pay or promisory
• TAXES PAYABLE

  • unpaid taxes
• SALARIES PAYABLE

  • unpaid salaries of the employer
• MORTGAGE PAYABLE

  • long term liability, secured by collateral
• CAPITAL

  • it is the right to property
• REVENUE/INCOME

  • It is the inflow of assets
• expense are incurred in producing revenues be deducted from the revenue they generated during the accounting period