Entrepreneurship

Name: Score:
Teacher: Mr. Windell Arth Mercado Date:01/03/24

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 ,s 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 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 Goo.
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 Investment
 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.
3. Income Tax Payable - current income tax obligation of the
company payable to the government.
4. 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.
5. 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.
6. Unearned Revenues - represents advanced payments from
customers which requires settlement through delivery of goods
or services in the future.
7. 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
tor 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 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 - 10f 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 a. Attorney Fees, etc. Expenses are
deducted from revenues to arrive at the company's net income.