Account Titles with Definition

Current Assets
1. Cash and Cash Equivalents
1. Cash on Hand - consists of un-deposited collections
2. Cash in Bank - made up of bank accounts that are unrestricted as to
withdrawal
3. Short-term cash funds such as Petty Cash Fund, Payroll Fund, Tax Fund, etc.
4. Cash Equivalents are short-term investments with very near maturity dates
making them assets that are "as good as cash".
2. Trading Securities or "Financial Assets at Fair Value"
5. Trading Securities are investments in stocks that are held with the purpose of
trading (speculative investments)
3. Trade and Other Receivables
6. Accounts Receivable - receivables from customers arising from rendering of
services or sale of goods
7. Notes Receivable - receivables from customers which are backed up by
promissory notes
8. Other receivables representing claims from other parties such as: Rent
Receivable, Interest Receivable, Dividend Receivable, etc.
9. Allowance for Bad Debts - a contra-asset account deducted from Accounts
Receivable. It represents the estimated uncollectible amount of the receivable.
4. Inventories
Inventories are assets that are held for sale in the normal operations of the business. A
service business normally has no inventory account.
10. Merchandising businesses normally maintain one inventory account
– Merchandise Inventory.
11. Manufacturing businesses have several inventories: Raw Materials
Inventory, Work in Process Inventory, Finished Goods Inventory, and Factory Supplies
Inventory.
5. Prepaid Expenses or Prepayments
12. Prepayments consist of costs already paid but are yet to be used or incurred.
Common prepaid expense accounts include: Office Supplies, Service
Supplies, Prepaid Rent, and Prepaid Insurance.
Non-Current Assets
1. Property, Plant, and Equipment (PPE) also known as Fixed Assets
PPE includes tangible assets that are expected to be used for more than one year. PPE
accounts include: Land, Building, Machinery, Service Equipment, Computer
Equipment, Delivery Equipment, Furniture and Fixtures, Leasehold Improvements, etc.
Take note, that land that is not used by the business in its operations but is rather held for
appreciation is not part of PPE but of investments.
 Accumulated Depreciation - a contra-asset account deducted from the related PPE
account. It represents the decrease in value of the asset due to continuous use, passage
of time, wear & tear, and obsolescence.
2. Long-Term Investments
Investment in Long-Term Bonds, Investment in Associate, Investment in
Subsidiary, Investment Property, Long-Term Funds; these are investments that are
intended to be held for more than one year.
3. Intangibles
An intangible has no physical form but from which benefits can be derived and its cost can
be measured reliably.
Intangibles include Patent for inventions, Copyright for authorship, compositions and other
literary works, Trademark, Franchise, Lease Rights, and Goodwill.
4. Other Non-Current Assets
Assets which cannot be classified under the usual non-current asset categories
Includes: Advances to Officers, Directors, and Employees not collectible within one
year, Cash in Closed Banks, and Abandoned or Idle Property
Current Liabilities
1. Accounts Payable - refers to indebtedness that arise from purchase of goods, materials,
supplies or services and other transaction in the normal course of business operations
2. Notes Payable - obligations that are evidenced by promissory notes that are to be paid
within 1 year
4. Income Tax Payable - current income tax obligation of the company payable to the
government
5. Withholding Tax Payable - includes wage taxes withheld from employees that will be
remitted to the appropriate government agency. Separate accounts for Social Security
Payable and Medicare Payable are also often used
6. Accrued Expenses - expenses already incurred but not yet paid. Accrued expense
accounts include: Salaries Payable, Rent Payable, Utilities Payable, Interest
Payable, Telecommunications Payable, and other unpaid expenses
5. Unearned Revenues - represents advanced payments from customers which requires
settlement through delivery of goods or services in the future
6. Any other short-term payable, i.e. any obligation that is to be paid within 1 year after the
balance sheet date
Non-Current Liabilities
1. Long-Term Notes Payable - obligations evidenced by promissory notes which are to be
paid beyond 1 year; also commonly referred to as Loans Payable
2. Bonds Payable - liabilities supported by a formal promise to pay a specified sum of money
at a future date and pay periodic interests. A bond has a stated face value which is usually
the final amount to be paid. Bonds can be traded in bond markets.
 For serial bonds (bonds paid in installments), the portion which is to be paid within one year
is considered as a current liability; the rest are non-current. The same rule applies to other
long-term obligations paid in installments.
3. Mortgage Payable - long-term obligation to a bank or other financial institution, secured by
real properties of the business
4. Any other long-term payable, i.e. any obligation that is to be paid beyond 1 year
Capital Stock or "Share Capital"
1. Common Stock - also known as Ordinary Shares. It represents ownership in a corporation.
Common stockholders are given rights to receive dividends and voting rights in electing a
board of directors.
2. Preferred Stock - also known as Preference Shares. Preferred stockholders enjoy fixed
dividend rates and are paid first before the common stockholders. Preferred stocks normally do
not possess voting rights, unless stated.
3. Subscribed Capital Stock - common or preferred stocks subscribed but not yet paid, hence
not yet issued
Reserves
1. Additional Paid-in Capital - also known as Share Premium; contribution from stockholders
in excess of the par or stated value of the stocks issued
2. Unrealized Gains and Losses - gains and losses that cannot be included in the income
statement as per accounting standards, such as Unrealized Gain/Loss on Financial
Assets and Unrealized Gain/Loss on Translation Adjustment
3. Revaluation Surplus - increase in the value of a fixed asset after appropriate appraisal
4. Appropriated Retained Earnings - company's earnings set aside for a specific purpose
(such as Retained Earnings Appropriated for Plant Expansion), hence cannot be distributed as
dividends to the stockholders
Retained Earnings
The Retained Earnings account represents the accumulated earnings of the business from
the time it first started. It is also known as Accumulated Profits. The amount presented in
the balance sheet at the end of the year is computed using this formula: Retained Earnings
at the beginning of the year (after adjustments, if any) plus net income, minus
appropriations made for specific purposes, and minus dividends declared during the year.
Treasury Stock
Treasury stocks are shares of the corporation that have been issued and then were
reacquired but not cancelled. In the balance sheet, the cost of treasury stock is shown as a
deduction to Stockholders' Equity.
List of Revenue Accounts
1. Service Revenue - revenue earned from rendering services. Other account titles may be
used depending on the industry of the business, such as Professional Fees for professional
practice and Tuition Fees for schools.
2. Sales - revenue from selling goods to customers. It is the principal revenue account of
merchandising and manufacturing companies.
Sales Discounts - a contra-revenue account that represents reduction in the amount paid
by customers for early payment. It is shown in the income statement as a deduction to
Sales.
Sales Returns and Allowances - also a contra-revenue account and therefore shown as
a deduction to Sales. Sales return occurs when there is actual return of a defective
item. Sales allowance happens when the customer is willing to keep the item with a
reduction in its selling price.
3. Rent Income - earned from leasing out commercial spaces such as office space, stalls,
booths, apartments, condominiums, etc.
4. Interest Income - revenue earned from lending money
5. Commission Income - earned by brokers and sales agents
6. Royalty Income - earned by the owner of a property, patent, or copyrighted work for
allowing others to use such in generating revenue
7. Franchise Fee - earned by a franchisor in a franchise agreement
List of Expense Accounts
1. Cost of Sales - also known as Cost of Goods Sold, it represents the value of the items
sold to customers before any mark-up. In merchandising companies, cost of sales is normally
the purchase price of the goods sold, including incidental costs. In manufacturing businesses,
it is the total production cost of the units sold. Service companies do not have cost of sales.
 Purchases - cost of merchandise acquired that are to be sold in the normal
course of business. At the end of the period, this account is closed to Cost of Sales.
 Freight in - If the business shoulders the cost of transporting the goods it
purchased, such cost is recorded as Freight-in. This account is also closed to Cost of
Sales at the end of the period.
2. Advertising Expense - costs of promoting the business such as those incurred in
newspaper publications, television and radio broadcasts, billboards, flyers, etc.
3. Bank Service Charge - costs charged by banks for the use of their services
4. Delivery Expense - represents cost of gas, oil, courier fees, and other costs incurred by
the business in transporting the goods sold to the customers. Delivery expense is also known
as Freight-out.
5. Depreciation Expense - refers to the portion of the cost of fixed assets (property, plant,
and equipment) used for the operations of the period reported
6. Insurance Expense - insurance premiums paid or payable to an insurance company who
accepts to guarantee the business against losses from a specified event
7. Interest Expense - cost of borrowing money
8. Rent Expense - cost paid or to be paid to a lessor for the right to use a commercial
property such as an office space, a storeroom, a building, etc.
9. Repairs and Maintenance - cost of repairing and servicing certain assets such as building
facilities, machinery, and equipment
10. Representation Expense - entertainment costs for customers, employees and owners. It
is often coupled with traveling, hence the account title Travel and Representation Expense.
11. Salaries Expense - compensation to employees for their services to the company
12. Supplies Expense - cost of supplies (ball pens, ink, paper, spare parts, etc.) used by the
business. Specific accounts may be in place such as Office Supplies Expense, Store
Supplies Expense, and Service Supplies Expense.
13. License Fees and Taxes - business taxes, registration, and licensing fees paid to the
government
14. Telecommunications Expense - cost of using communication and telephony
technologies such as mobile phones, land lines, and internet.
15. Training and Development - costs for the enhancement of employee skills
16. Utilities Expense - water and electricity costs paid or payable to utility companies
And other expenses, such as Accounting or Bookkeeping Fees, Legal and Attorney
Fees, etc. Expenses are deducted from revenues to arrive at the company's net income.