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Accounting Terminologies: Elements of Accounts

Assets are property or rights owned by a business. Current assets are easily converted to cash within a year and include cash, accounts receivable, inventory. Fixed assets are long-term, physical assets like property, equipment, vehicles. Liabilities are obligations owed, and include current liabilities due within a year like accounts payable, and long-term liabilities due beyond a year like mortgage payable. Elements of accounts provide definitions for basic accounting terms used for assets, liabilities, and other elements.

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156 views12 pages

Accounting Terminologies: Elements of Accounts

Assets are property or rights owned by a business. Current assets are easily converted to cash within a year and include cash, accounts receivable, inventory. Fixed assets are long-term, physical assets like property, equipment, vehicles. Liabilities are obligations owed, and include current liabilities due within a year like accounts payable, and long-term liabilities due beyond a year like mortgage payable. Elements of accounts provide definitions for basic accounting terms used for assets, liabilities, and other elements.

Uploaded by

Joy Santos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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ACCOUNTING

TERMINOLOGIES
ELEMENTS OF ACCOUNTS
ASSETS ARE PROPERTY OR RIGHTS ON PROPERTY OWNED BY THE BUSINESS.
IN OTHER WORDS, ANYTHING OF VALUE OWNED BY THE BUSINESS.

• Current asset refer to cash and other assets that are easily converted into cash or
consumed during the accounting period usually one year.

• Property and Equipment refers to assets that have the following characteristics
• A. more or less permanent in nature
• They possess physical existence
• They are not for sale
• They are intended for use in operation
CASH ON HAND

• It refers to cash and other items which are not yet deposited in the bank. It includes coins,
currencies, checks, money orders and other equivalents.
Cash in bank- is money deposited in the bank
Marketable securities- is a term that refers to company securities, usually stocks that
are sold for cash
Notes receivable- are claims of the business from anyone evidenced by note.
INTEREST RECEIVABLE- IS INTEREST BEARING
NOTE NOT YET COLLECTED
• Accrued interest income- is a term synonymous with interest receivable.
Accounts receivables- refers to claims of the business from anyone for sales made or
services rendered on account.
Estimated uncollectible account- is sometimes called allowance for bad debts. It refers to a
provision for accounts that may not be collected in the future. This is a deduction from the
accounts receivables.
ADVANCES TO OFFICERS AND EMPLOYEES- IS A
TERM THAT REFERS TO AMOUNTS GIVEN TO
OFFICERS AND EMPLOYEES USUALLY
•DEDUCTIBLE
Merchandise inventoryFROM THEIR
refers to goods unsold atSALARIES
the end of the accounting period or on
hand at the beginning of the year.
• Prepaid expenses- are expenses paid in advance or items that are bought which will be
used during the accounting period. Examples are supplies, prepaid insurance , prepaid
rent.
MERCHANDISE INVENTORY- REFERS TO GOODS
UNSOLD AT THE END OF THE ACCOUNTING PERIOD
OR ON HAND AT THE BEGINNING OF THE YEAR.
• Prepaid expenses- are expenses paid in advance or items that are bought which will be
used during the accounting period.
• Tools refers to all small items like pliers, hammer, scredrivers
• Land- refers to land space owned by the business.
• Building- refers to building or edifice constructed , owned and intended for use by the
business.
FURNITURES AND FIXTURES- ARE TERMS USED TO INCLUDE TABLES AND CHAIRS, CABINETS, COUNTERS, AND
OTHER PIECES OF FURNITURE USED IN THE BUSINESS.

DELIVERY EQUIPMENT- IS A TERM THAT INCLUDES CARS, JEEPS, TRUCKS, VANS, AND OTHER TRANSPORTATION
VEHICLES OWNED BY THE BUSINESS.
ACCUMULATED DEPRECIATION- IS A CONTRA ASSET ACCOUNT. IT IS A DEDUCTION FROM A PARTICULAR
FIXED ASSET ACCOUNT. ALL FIXED ASSETS EXCEPT LAND ARE SUBJECT TO DEPRECIATION.

INTANGIBLE ASSETS- ARE ASSETS THAT DO NOT HAVE PHYSICAL EXISTENCE OWNED BY THE BUSINESS
CURRENT LIABILITIES- ARE OBLIGATIONS AND DEBTS OF THE BUSINESS WHICH WILL BE PAID DURING THE
ACCOUNTING PERIOD BY MEANS OF PAYMENT OF CURRENT ASSETS OR CREATION OF ANOTHER CURRENT LIABILITY.

ACCOUNTS PAYABLE- IS A CURRENT LIABILITY WHICH REFERS TO DEBTS OR OBLIGATIONS THAT ARISE FROM THE
PURCHASE OF GOODS AND SERVICES ON ACCOUNT.
NOTES PAYABLE- IS A CURRENT LIABILILITY. IF THE NOTE IS
PAYABLE BEYOND ONE YEAR, IT IS CLASSIFIED AS A LONG TERM
LIABILITY.

• Interest payable- is the interest due to an interest bearing note. Accrued interest expense is
synonymous with interest payable.

• Taxes payable- are taxed due to the government but is not yet paid by the business.
• Salaries payable- are salaries not yet paid by the business to its employees or workers.
Other examples of expenses not yet paid by the business are rent payable, light and water
payable.
LONG TERM LIABILITIES- ARE OBLIGATIONS OR DEBTS OF THE
BUSINESS THAT WILL BE DUE AND PAYABLE BEYOND ONE YEAR.

• Mortgage payable- is along term liability account that refers to debt secured by a
mortagage on real estate.

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