Hello mga students! For you to be familiar with the account titles and their account descriptions, lalong-lalo na kasi magagamit ninyo ito later on when you do the journal entries. Kapag nag-record na tayo, nag-post na tayo sa mga ledger accounts, and then we prepare the trial balance, it is important that you are familiar with some of the common or basic account titles na ginagamit, especially when we are dealing with basic financial accounting.
now please take note that these are only examples Hindi po ito comprehensive because in reality sanda makmak po ang mga accounts na ginagamit natin and the accounts will depend on the nature of the company ano ba yung kanilang industry pero for to simplify everything para maging familiar kayo sa mga usual na mga account titles na ginagamit eto po ang mga example natin For the assets, meron tayong cash. accounts receivable, merchandise inventory, you have your prepaid expenses, yung supplies, the furniture and fixtures, you have your computer, equipment, vehicle, building, and land. Please take note, wala pa tayong classification dito. Kasi later on, matututunan ninyo.
Pagdating sa assets and liabilities, meron tayong current and non-current classification. Pero separate video lecture po tayo dyan. Our objective here is to be familiar and aware of basic account titles.
So let's look at all of these assets first. When it comes to liabilities, I have here four common examples. We have your accounts payable, your accrued expense, you have your unearned revenue, and then the bank loan.
When it comes to equity, on a sole proprietor perspective, we have the owner's capital and then the owner's drawing now so income meron po tayong sales or yung revenue yung sales well usually mas ginagamit po ito sa ating mga merchandising operations pero pag sinabi kasi natin na sales benta po ito pero kasi pag sa service type of business ang tagging nila dun service revenue or service income anyway it's more of the naming, the account title used. And then, we also have here other income. In expenses, we have your salaries expense, utilities expense, representation expense, rent expense, depreciation expense, and miscellaneous expense. Again, this is just an example. But later on, depending on the questions, depending on the problem, you will encounter different terminologies.
And I hope that in your reference books or materials that you use in school, you have account descriptions there. Describing what the account title means. Okay, let's just go through this quickly so that you will be aware of the nature of these accounts and where they are used for. Or the cash, we don't need to explain anything about that.
because when we talk about money, we are alert, right? But when we are talking about cash, this is money that could be stored in a bank. What we call there is cash in bank or cash on hand, money that we hold.
We have cash funds, you have your petty cash fund, revolving fund. This is set aside for a specific purpose. I have a separate video lecture on the petty cash fund and how to account for it.
Next, accounts receivable. Pag sinabi po nating accounts receivable, eto yung contractual right. Eto yung karapatan mo na mangolekta, makatanggap ng pera in the future, kasi nagpa-utang ka. Usually, eto accounts receivable, pag trade receivable eto, eto po ay nanggagaling sa mga benta natin na ipinautang.
Okay? Yung mga sales on account na tinatawag. Merchandise inventory.
Merchandise inventory is the goods or items that we buy to sell. These are the stocks that you will use to sell. If you have a sari-sari store, all the merchandise you sell, candy, diapers if you're selling that. and many more. As long as you use those inventories to sell, that is merchandise inventory.
Please observe, please take note, my explanation is not technical. layman's term ibig sabihin sa madaling paraan na maintindihan ninyo ito uh but of course we have a venue for technical definitions no and i leave it to your books for them to define technically ano nga ba itong mga accounts na ito next prepaid expenses ang prepaid expenses ito po yung ating mga expenses paid in advance meron tayong binayaran we have already advanced the payment but we will use it for a long time let's say for a few months but we already paid it in the beginning that's why it's called prepaid expenses we will expense it but we will also prepaid it for example, prepaid rent you paid for 6 months for the rental you already paid you already gave the lessor This is my monthly payment of 10,000 pesos, this is 60,000 pesos. We consider it as a prepaid expense.
Because instead of paying monthly, you can pay it if you have money. Okay? You will encounter a lot of prepaid expenses. Supplies.
These are the bad papers, ball pens, calculators that are used for work-related purposes. or whatever the purpose of consumption is. So, we buy or use this to utilize, to consume this. Okay, let's say store supplies or office supplies.
Of course, there are many paper works, that's why we usually use band papers, inks, ball pens. Of course, we utilize that. kung ano man yung purpose ng trabaho mo, we consider it as a supply.
Okay? Next, furniture and fixture. Ito pong mga furniture and fixtures, ito po yung mga cabinets, mga desks, mga upuan, mga movable, mga items sa opisina.
Pero usually kasi, ito ay pumapasok sa isang category ng asset na tinatawag natin na property and equipment. Kasama ni computer. equipment, vehicle, building. Because these are long-term assets.
And usually, it has a little cost. The threshold, the limit, how we can consider it as furniture and fixture, or the others, depends on the company. But normally, when it's tables, chairs, cabinets, we consider it as furniture and fixture. Computer, you already know this.
It can be a desktop, it can be a laptop. Our tagging here is computer. Office computer, store computer, the extension of their name depends on where to use it.
Okay? For proper tagging only. But in general, it's a computer.
Next, equipment. This is for segregation of accounts. because the equipment may still be electronics, computers, technically.
But let's say that fax machines, printers, photocopies, we can consider it as equipment. When it comes to manufacturing in plants, either the tagging is equipment or sometimes they use the term machineries. Okay, machineries. Next, vehicle.
Vehicle, ito yung mga sasakyan na pagmamayari ng kumpanya na ginagamit para sa company. Okay, that is vehicle. Building, kung meron kang building, sabihin na natin na meron kang store building, pagmamayari mo yun, tawag nito para sa pagbibenta mo, meron kang office space, that is building.
Ayan, building po ang tawag natin dyan. Next, land or lupa. Lupang nakatiwangwang. no building there so this is just land that is land later on you will know that there is a difference this land in terms of the depreciation because the land we have deposited is depreciating okay oh let's go to liabilities when accounts payable this is the opposite of accounts receivable accounts payable we borrowed we bought we borrowed this first so we have to pay yung babayaran na yun that is your accounts payable usually at the mga ano natin e mga purchases from our suppliers at meron kasi itong mga credit terms Sabihin na natin na bayaran mo ito within 30 days. So, ito yung aking credit term.
So, trade payable or accounts payable na lang ang gamitin natin dito. Okay? Accrued expenses. Ang mga accrued expenses or accrued expense, ito yung mga expenses na na-incurred na, pero hindi pa natin napabayaran.
Ito naman yung kabalit-tara ng prepaid expenses. Sa prepaid expenses, expenses paid in advance. These are expenses that happened but still can't be paid. Remember your accrual basis of accounting, revenue and expense recognition principle.
As we said in expense recognition principle, we recognize the expense when it's incurred, not when it's not paid. So accrued expenses, our common example is to pay in Meralco. Okay?
or Manila water, accrued expenses. So, this is where it comes in. Or it means, to be as an additional, accrued expenses also include, and this is usually what we use here, if we have expenses that we know we incurred, but we haven't yet received the billing statement or the statement of account.
Usually, when accounts are payable, these are our suppliers. Then, we already have receipts. Okay, this is what we will pay.
But for accrued expenses, you may already know the expenses that will be paid, but it has not yet arrived. So, we can enter that here in accrued expense. Now, please take note because it may be a problem specifically to say, Okay. It may not be accrued expense but it's already included in the accounts payable. So it's a case-to-case basis.
Please be aware. Please be careful with the problems. Okay.
Next, unearned revenue. Unearned revenue is when we received money but we haven't received it yet because we have a sale. So they paid in advance but we haven't delivered the service or the goods that we will sell. And this is also included in the accrual basis of accounting and in particular in the revenue recognition principle.
Because what is said in the revenue recognition principle, let's consider it as a sale if that happened, not if we have collected money. Well, here, we collected money in advance but we haven't sold it yet. So, we shouldn't have earned it.
We haven't earned it. You sell milk tea, Nakatanggap ka 500 pesos, bukas pa naman yung order, unearned revenue. Hindi mo pa yan benta ngayon.
Benta mo yan kapag na-deliver mo na. So nakatanggap ka ng pera, meron kang obligasyon. Nahawakan mo na yun. At yung obligasyon mo is i-provide yung service or i-deliver yung goods.
So that is why unearned. Kasi hindi pa kinita. Pag earned na yan, dito na po yan sa income. Okay?
Unearned revenue. O next, bank loan. What is bank loan?
Utang sa bangko. Karamihan ng mga entrepreneurs or regardless of the type of business organization, minsan kinakailangan nila umutang sa bangko kasi kulang sila sa pera. So kapag nangutang sila sa bangko, bank loan po ang ginagamit dito.
Minsan may short-term loans or borrowings. It really depends. Pero sabihin na natin na bank, clone shop to simplify the explanation so that the point a chemo example so liabilities next no mind it attires equity Merrill and welcome the lava detour no considering a sole proprietor set up owners capital at Chicago owners drawing you owners capital at the investment by the owner okay remember that I know you manga a bug ng may-ari. If it's an owner's drawing, these are temporary money for personal use.
We can enter here. Remember here the entity concept or the economic entity. That the transactions of the owner should not be mixed with the transactions of the business. But if you're the owner, you're the one who is the one who is the sole proprietorship, sometimes it's not possible to avoid getting money from the business.
Okay, you will use it. mo for personal use in that way pwede natin to correct ano para maitama natin yung entries kasi minsan or hindi na account no it's either in account sya pero mali yung entry or kaya naman unaccounted for kung sakali man dapat dito natin sya ipasok If there are things that are used, the area for personal use, that's an owner's drawing. Okay? Next, let's go to the statement of profit or loss of accounts. We have the income.
I have two categories here just to emphasize. If sales or revenue, it arises in the ordinary course of business. This is your business. Your sales.
Right? What is the nature of your business? You sell milk tea.
That's it. This is your main operations arising from the ordinary course of business, revenue or sales. Other income is the things that are not included in the sales.
For example, you have a old office computer. The owner of the company is not a personal. You sold it and it was worth 30,000. You sold 35,000 or the 5,000 difference, that's other income. That's your income.
okay okay next uh so that here oh salaries expenses utilities expense Sometimes, communication expenses are included here. To PLDT, Globe, Smart, Converge. But sometimes, it's separated. Representation expense. These are the meals for meetings, for snacks, for meals.
Okay? Related to business. You go out with your boss, he gives you free food, you eat, because you have a meeting client. Representation expense.
rent expense, upa okay depreciation expense or this is what is included in the property and equipment the furniture and fixture the computer the equipment vehicle and building because the depreciation is the periodic allocation because this is the furniture to building we use it for more than one year the depreciation expense is the equivalent expense for that year or for that period because we can't expense everything because we need to allocate. This is still a cruel basis, expense recognition. We chop it up because the use of these assets is for the long term. So, let's say for one year, the equivalent expense is what we will recognize, not the whole five years if the life of our assets is five years. so that is your depreciation expense periodic allocation of expenses I will explain this in detail in a separate video lecture miscellaneous expenses are the other expenses that may not fall in the other expense category we can include notary fees and other small expenses that may not fall here So, that's all for our explanation for the basic account titles and then account descriptions.
Now, if you have any questions, I am very happy to accommodate you so that I can answer your questions. But until then, I'll see you around. Bye-bye.