Classification of Accounts in Accounting

Learning Objective: After watching this lesson, you should be able to:
Demonstrate understanding on the different accounts or terminologies in accounting.

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1. Divine Grace C. Martinez, LPT
Faculty, Business High School

2. ASSET ACCOUNTS
Cash in Bank –denotes to the money
of the company that is in the bank.
Accounts receivable –refers to
customers’ account arising from
selling activities.

3. ASSET ACCOUNTS
Notes receivable–refers to
collectible of the company and is
supported by a promissory note.
Merchandise inventory–refers to
the merchandise of the company
intended for sale.

4. ASSET ACCOUNTS
Prepayments–advance payment made
by the company. Example: Prepaid
rent, prepaid insurance, prepaid
advertising.
Land–the land owned by the company
that is being used in business. It is
classified as investment.

5. ASSET ACCOUNTS
Building–the infrastructure owned by
the company that is used in business.
Furniture and Fixtures–represents the
chairs, tables, air conditioners,
cabinets, electric fans

6. ASSET ACCOUNTS
Office equipment–includes computer,
calculator, typewriter, fax machine,
photocopier, telephone units, store
equipment
Delivery equipment–account that is
used instead of transportation
equipment.

7. LIABILITY ACCOUNTS
Accounts payable–represent the
liability accounts of the company
arising from purchase of merchandise
that is intended for sale.
Notes payables–liability accounts
supported by a promissory notes.

8. LIABILITY ACCOUNTS
Loans payable–represent the liability
accounts of the company arising from
debt.

9. EQUITY ACCOUNTS
X, Capital–refers to the capital amount of the
owner. The letter X represents the name of the
owner. Ex: Henry Sy, Capital
Withdrawal –refers to the withdrawal made by
the owner. Ex: Henry Sy, Withdrawal ; Henry
Sy, Drawings

10. EQUITY ACCOUNTS
Investment –the resources that the owner
has transferred to his business as a start up
or additional. These may be in cash or
tangible assets that can readily be used in
the business. (Ex: land, building, furniture,
equipment, etc.)

11. REVENUE ACCOUNTS
Service income–the income earned for rendered
services. (income like the services rendered by
beauty parlor, barber shop, repair shop)
Interest income–company income earned out of
lending its money or depositing money with a
banking institution.

12. REVENUE ACCOUNTS
Sales–a revenue account for
merchandising type of business
organization that is used in selling
merchandise.
Professional income–the income earned
by a professional for rendered services.

13. EXPENSE ACCOUNTS
Purchases–are merchandise purchase which are
intended for sale.
Salaries and wages–represent the labor
payments to employees of the company.
Employees benefits –represent the labor
payments to the employees other than the basic
payment. (Ex: Bonuses, meal allowances,
vacation & sick leave credits, uniforms)

14. EXPENSE ACCOUNTS
Office supplies expense–represents various
office supplies used by the office like bond
papers, ballpens, paper clips, etc.)
Utilities expense–expenses arising from light,
water, and telephone expenses.
Rent expense–the rental expenses of the
business.

15. EXPENSE ACCOUNTS
Advertising expense–the cost of promotion
and advertising the products or services of
the business.
Insurance expense–represents fire and
burglary insurance of the various assets of
the business.

16. Individual Activity: 3 minutes
Create an acrostic of the 3 ending letter of
your given name that is related to
accounting.

17. Small Group Activity: Maximized
Cooperation / 5 minutes)
Create hugotlines, banat, knock knock
joke related saaccounting