The Five (5) Major Accounts

in Accounting
OBJECTIVE:
At the end of the period,
the students are expected
to define, identify, and
classify accounts to the
five major accounts in
accounting.
 REVIEW:
Asset = Liabilities + Equity

Owner’s Equity=Asset - Liabilities

SOLVE:
How much is the company’s
total asset using the following
data:

 Total Liabilities: P120 million

 Total Equity: P50 million
SOLUTION:

Asset = Liabilities + Equity

Asset= P120 million + 50 million
Asset= P170 million
Have you heard
about…
What are the
five (5) major
accounts?
5 Major Accounts
Asset Account
Liabilities Account
Equity Account
Expenses Account
Revenue/Income
Account
Asset Account includes everything
that your company owns.
 Tangible assets are physical entities that
the business owns such as land, buildings,
vehicles, equipment, and inventory.

 Intangible assets are things that represent

money or value.

 Current assets are items that are

completely consumed, sold, or converted
into cash in 12 months or less.

 Fixed assets are tangible assets with a life

span of at least one year and usually longer.
 Typical Assets Account
 Cash (main checking account)
 Cash (payroll account)
 Petty Cash
 Marketable Securities
 Accounts Receivable
 Allowance for Doubtful Accounts (contra account)
 Prepaid Expenses
 Inventory
 Property, Plant and Equipment
 Accumulated Depreciation (contra account)
 Other Assets
Liabilities Account include the debts or
obligations payable to creditors and other outsiders
to which your company owes money .
 Current liabilities are debts that are
paid in 12 months or less, and consist
mainly of monthly operating debts.
Current liabilities are usually paid with
current assets; i.e. the money in the
company's checking account.

 Long-term liabilities are typically

mortgages or loans used to purchase
or maintain fixed assets, and are paid
off in years instead of months.
Typical Liabilities Account
 Accounts Payable
 Accrued Liabilities
 Unearned Income
 Taxes Payable
 Wages Payable
 Notes Payable (Long-term)
 Mortgage Payable
 Bonds Payable
Equity Account
It defines how much your
business is currently worth.
It's the residual interest in
your company's assets after
deducting liabilities.
Typical Equity
Account
Common Stock
Preferred Stock
Retained Earnings
Expenses Accounts
Any product or service
that your company
purchases to generate
income or manufacture
goods is considered an
expense.
Typical Expenses Accounts
 Cost of Goods Sold
 Advertising Expense
 Bank Fees
 Depreciation Expense
 Payroll Tax Expense
 Rent Expense
 Supplies Expense
 Utilities Expense
 Wages Expense
 Other Expenses
Revenues or Income
Account
Revenue, one of the primary types
of accounts in accounting,
includes the money your company
earns from selling goods and
services. This term is also used to
denote dividends and interest
resulting from marketable
securities.
Typical Revenue Accounts
 Sales Revenue
 Sales returns and allowances

(contra account)
 Service Income
 Rent Income
 Other Income
Oral Recitation…
Evaluation…
Assignment/Agreement:
Cite one (1) example of
Balance Sheet and Income
Statement, and
identify/categorize all the
accounts under the five
(5) major accounts.
Thank You!