The document defines the five major types of accounts: assets, liabilities, equity, income, and expenses. Assets are resources owned by a business. Liabilities are obligations of a business. Equity represents the owner's claim and is a residual interest calculated by deducting liabilities from assets. Income increases equity and expenses decrease equity. Current assets are expected to convert to cash within one year while non-current assets are long-term. Similarly, current liabilities are due within one year and non-current liabilities are long-term.

1. Types of Major Accounts

2. Types of Major Accounts
CONTENT STANDARDS
The learners demonstrate an
Understanding of the five major accounts, namely:
assets, liabilities, capital, income and expenses.

3. Types of Major Accounts
PERFORMANCE STANDARDS
The learners shall be able to define,
Identify, and classify accounts according
To five major types.

4. OVERVIEW OF THE ACCOUNTING
EQUATION
• The accounting equation is Assets = Liabilities +Equity
• For every transaction, the accounting equation should always be
balanced.
• Assets are resaurces owned by the business.
• Liabilities are obligations by the business.
• Equity is the residual interest of the owner of the businesses
• There are four elements that affect equity: (1) investment;
(2) Withdrawal; (3) Revenue, and; (4) Expenses.

5. THE ACCOUNTING EQUATION
Assets Liabilities
Owner’s
Equity
= +

6. TYPES OF MAJOR ACCOUNTS
ASSETS
• The resaurces owned and controlled by the firm.
LIABILITIES
• Obligation of the firm arising from past events which are to be settled in the future
EQUITY OF OWNER’S EQUITY
• The Owner’s claims in business. It is the residual interest in the assets of the enterprise
after deducting all its liabilities .
INCOME
• The increase in economic benefits during the accounting period in the form of inflows
of cash or other assets of decreases of liabilities that result in increase in equity.
EXPENSES
• Decreases in economic benefits during the accounting period in the form of outflows
Of assets or incidents of liabilities that results in decreases in equity.

7. 5 TYPES OF MAJOR ACCOUNTS
Assets
Liabilities
Owner’s Equity
Income
Expenses
The resaurces owned and controlled by the firm
Obligation of the firm arising from past events which are to be
settled in the future
The Owner’s claims in the business. It is the residual interest in the assets of the
enterprise after deducting all its liabilities.
The Increase in economic benefits during the accounting period in the form of inflows of cash or
other assets of decreases of liabilities that result in increase in equity.
Decreases in economic benefits the accounting period in the form of outflows of assets or in
incidence of liabilities that result in decreases in equity

8. Assets
The resaurces owned by
the firm

9. Current Assets
vs
Non-current
Assets

10. Tangible Assets
vs
Intangible Assets

11. Current Assets
• Cash is money on hand, or in banks, and other Items considered as medium of exchange in business transactions.
• Accounts Receivables are amounts due from customer arising from credit sales or credit services.
• Note Receivables are amounts due from clients supported by promissory notes.
• Inventories are assets held for resale
• Supplies are I terms purchased by an enterprise which are unused as of the reporting date.
• Prepaid Expenses Are expenses paid in advance. They are assets at the time of payment and become expenses
through the passage of time.
• Accrued Income is revenue earned but not yet collected.
• Short term investments are the investments made by the company that are intended to be sold

12. Non-current Assets
• Property, Plant and Equipment are long-lived assets which have
been acquired for use in operations
• Long term investment are the investments made by the company for
long-term purposes
• Intangible Assets are assets without a physical substance. Examples
include franchise and copyright.

13. Liabilities
Obligation of the firm arising
from past events which are to
be settled in the future.

14. Current Liabilities
vs
Non-current
Liabilities

15. Current Liabilities
• Current Liabilities
• Accounts Payables are amounts due, or payable to, suppliers for goods purchased on
account or for services received on account.
• Notes Payable are amounts due to third parties supported by promissory notes.
• Accrued Expenses are expenses that are incurred but not yet paid
(examples: salaries payable, Tax payable)
• Unearned income is cash collected in advance ; the liability is the services to be
performed or goods to be delivered in the future

16. Non-Current Liabilities
• Loans Payable
• Mortgage Payable

17. Owner’s Equity
The residual of the owner
from the business. It can be
derived by deducting
liabilities from assets.

18. Equity Accounts
• Capital is the value of cash and other assets invested in the
business by the owner of the busines
• Drawing is an account debited for assets withdrawn by the owner for
personal use from the business.

19. Income
The increase in resaurces
resulting from performance of
Services or selling of goods.

20. Income Accounts
• Services Revenue for service entities.
• Sales for merchandising and manufacturing companies.

21. Expenses
The decrease in resaurces
resulting from the operation
of business

22. Income Accounts
• Salaries Expense
• Interest Expense
• Utilities Expense

23. Charts of Accounts
The chart of accounts is the
foundation of the financial
statements.

24. Income Accounts
• 1. Create two columns.
• 2. Prepare the assets first, then
liabilities, then Equity, then revenue
and expenses.
• 3. List all assets, Liabilities, Equity,
Revenue and expenses account in
the first column.
• 4. On the second column, choose an
account code (discretion of the
company).