Direction: Choose the letter of the correct answer.
By: J. J Gonzales
Wednesday, January 30, 2013
BASIC ACCOUNTING TERMS
ASSETS.
These are the economic resources that are owned
by the business and are expected to benefit future operations.
Cash
- includes money and any medium of exchange acceptable by bank for deposit such
as coins, checks and money order.
Accounts
Receivable – due from customers for services rendered on
account or sales make on credit.
Notes
Receivable – due from customers evidenced by a written
promise to pay a definite sum of money for a specified period of time.
Supplies
– includes all types of supplies or more specifically as Office Supplies for
bond paper, duplicating paper, ribbons and ink for computer, paper clips, and
many more; Store Supplies for paper or plastic bags, wrapping papers, packing
tape, string or straw and many more; Cleaning Supplies for soap, disinfectant,
floor maps, floor polishing and many more.
Prepaid
Expenses – these are prepayments of future expenses like
prepaid rent, prepaid insurance (normally insurance premium is paid in advance
for six months or one year) and other item of expenses paid in advance.
Office
Equipment - include computers, printers, check writers,
duplicating machines, desk calculators, and other electronically operated
equipment.
Furniture
and Fixtures – includes office table and chairs, filling
cabinets, computer tables, shelves and paintings.
Building
– such as office building, warehouse, factory
building, store building and other structures used in business.
Building
Improvements – improvements done on buildings and
offices.
Land -
land owned and being used in business.
LIABILITIES. These are financial obligation or debts of
the enterprise.
Accounts
Payable – for the cost of purchases on credit.
Notes
Payable – for liabilities evidenced by a written
promised to pay a specific amount of money in the future.
SSS
Premium Payable – for contributions of employer and
employee to be remitted to the Social Security System.
WHT
Payable – for taxes withheld from salaries of employees
to be remitted to the Bureau of Internal Revenue.
Vat
Payable – due to Bureau of Internal Revenue
representing 12% tax on purchases/sales.
Unearned
Revenue – Advance payments by customers for services to
be rendered in the future.
OWNER’S EQUITY OR CAPITAL. This
represents owner’s claims on the assets of the business. Owner’s equity is also
residual equity because the owner get only what is left after the creditors
have been satisfied in full. This
account includes the original investment by the owner, additional investment,
personal withdrawal, revenues earned and costs and expenses incurred to match
the revenues.
Source:
Fundamentals of Accounting P-1 (Accounting for service, Merchandising and Manufacturing)
Fundamentals of Accounting P-1 (Accounting for service, Merchandising and Manufacturing)
By: Gloria Ardaniel Rante
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