FABM1 WEEK 4 finalOKCHECKED

Senior High School
Fundamentals of Accountancy, Business

and Management 1
TYPES OF MAJOR ACCOUNTS

Quarter 1 – Module 4: Week 4
What I Need To Know
In this module, you will understand the five major accounts

in accounting. You will get to apprehend more about Assets,
Liabilities and Owner’s Equity / Capital, Income/Revenue and
Expense. At the end of this lesson, you will not only obtain
knowledge on the types of accounts but you will also get to make
your own Chart of Accounts.
Learning is fun! So enjoy your journey as you unfold the

most interesting and worthwhile activities in accounting.
These are the competencies included in this module:

• Discuss the five major accounts (ABM_FABM11- IIId-e-19)
• Prepare a chart of accounts (ABM_FABM11- IIId-e-21)
What I Know
Activity 1. Choose the letter that best describe the statement. Write
your answer in a separate sheet of paper.
1. Which of the following accounts is NOT a current asset?

A. Property, Plant and Equipment B. Cash in bank
C. Cash on Hand D. Accounts Receivable
2. Which of the following accounts is NOT considered as liabilities?

A. Account Payable B. Notes Receivable
C. Unearned Income D. Prepaid Expenses
3. In the presentation of financial statements, the order of the elements
of accounting is:
A. Assets, Owner’s Equity, Liabilities
B. Liabilities, Assets, Owner’s Equity
C. Assets, Liabilities, Owner’s Equity
D. Owner’s Equity, Liabilities, Assets
4. Which of the following is NOT an example of an expense account?

A. Utilities Expense B. Accrued Expense
C. Salaries Expense D. Interest Expense
5. Which of the following terms describes as the bedrock of the

financial statements?
A. Chart of Accounting B. Chart of Accounts
C. Chart of Finance D. Chart of Accounting books
Activity 2. Identify the statement below. Choose your answer from the
box. Write your answer on the space provided for before each number.
Assets Accounts Receivable Intangible Assets

Liabilities Notes Receivable Property,
Plant and Equipment
Owner’s Equity Rent Expense Cash
Prepaid Expense
____________ 1. It is the obligations of the company payable in

money, goods or services.
____________ 2. These are non-current tangible assets.
____________ 3. These assets are identifiable, non-monetary assets

without physical substance.
____________ 4. It is the claim of the owner also known as the capital.

___________ 5. It is the most liquid asset and is the medium of
exchange for business transactions.
____________6. It is an expense for leased office space, equipment or

assets rented from others.
____________ 7. Examples of this are cash, account receivable and

prepaid expenses.
____________ 8. It is a written promise from the customer to pay his

receivables on a certain future date.
Week 4 TYPES OF MAJOR ACCOUNTS
According to the Commission on Higher Education in collaboration

with the Philippine Normal University, Teaching Guide for Senior High
School FUNDAMENTALS ON ACCOUNTANCY, BUSINESS, AND
MANAGEMENT 1 SPECIALIZED SUBJECT│ABM, published by the
Commission on Higher Education (CHED, 2016) the following are the
definition and some examples of the accounts under Assets, Liabilities,
Owner’s Equity, Income and Expense:
ASSETS
Current Assets
• Cash is money on hand, or in banks, and other items considered as medium
of exchange in business transactions.
• Accounts Receivable is amounts due from customers arising from credit
sales or credit services.
• Notes Receivable is amounts due from clients supported by promissory
notes.
• Inventories are assets held for resale
• Supplies are items 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 immediately
Non-Current Assets
• Property, Plant and Equipment are long-lived assets which have been
acquired for use in operations.
• Long term Investments are the investments made by the company for long-
term purposes
• Intangible Assets are assets without a physical substance. Examples
include franchise and copyright.
LIABILITIES
Current Liabilities
• Accounts Payable is 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, taxes payable)l
• Unearned Income is cash collected in advance; the liability is the services
to be performed or goods to be delivered in the future
Non-Current Liabilities
• Loans Payable
• Mortgage Payable
OWNER’S EQUITY
• Capital is the value of cash and other assets invested in the business
by the owner of the business.
• Drawing is an account debited for assets withdrawn by the owner for

personal use from the business.
INCOME
Income is the increase in resources resulting from performance of

service or selling of goods. Examples are Service revenue for service
entities, Sales for merchandising and manufacturing companies
EXPENSE
Expense is the decrease in resources resulting from the operations of

business Examples are Salaries Expense, Interest Expense, Utilities
Expense
Moreover, the Commission on Higher Education in collaboration
with the Philippine Normal University, Teaching Guide for Senior
High School FUNDAMENTALS ON ACCOUNTANCY,
BUSINESS, AND MANAGEMENT 1 SPECIALIZED
SUBJECT│ABM, published by the Commission on Higher Education
(CHED, 2016) discussed the Chart of Accounts as follows:
• A chart of accounts is a listing of the accounts used by companies in

their financial records.
• The chart of accounts helps to identify where the money is coming

from and where it is going.
• The chart of accounts is the foundation of the financial statements.
The following are the steps in the preparation of a basic chart of

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).
5. On the third column, write the description for each account on when
to use it.
An example of a chart of accounts is given below:
Fundamentals of Accountancy, Business and Management 1

(Quarter 1, Week 4)
Assessment
I. Identify the following statements. Write your answer on the space

provided before each item.
_________________ 1. Resources of a business enterprise
_________________ 2. Account title used to denote money awaiting
deposit in the bank
_________________ 3. Account title used to denote amount collectible
from customers of the business secondary to rendering of service or selling
of goods on account
_________________ 4. Account title used to denote income earned by
lending out money or depositing money in the bank
_________________ 5. Account title used to denote amounts payable to
suppliers arising from purchase of goods or services on account
_________________ 6. Account title used to denote money in the bank,
usually in the form of a checking account, to be used to pay expenses or
liabilities
_________________ 7. Account title used to denote expense incurred in
connection with borrowing money
_________________ 8. Account title used to denote amount collectible
from customers of the business secondary to rendering of service or selling
of goods evidenced by a promissory note
_________________ 9. Account title used to denote amounts payable to
suppliers arising from purchase of goods or services evidenced by a
promissory note
_________________ 10. Account title used to denote money set aside for
small expenses like postage stamps purchase or transportation
_________________ 11. Account title used to denote advance payments
made by the business for certain expenses
_________________ 12. Revenue account of a business like laundry shops,
beauty shops, barber shops, etc.
_________________ 13. Revenue account of a trading or manufacturing
firm
_________________ 14. Interest of owner in the business
_________________ 15. Account title used to denote the structure
occupied and owned by the business.
II. Imagine that you are the owner of your own business. Prepare your own
Chart of Accounts.
Name of Business: _________________________________

Nature of Business: ________________________________
Chart of Accounts
Assets
Code Account Description
1
2
3
4
5
Liabilities
1
2
3
Capital
1
2
ANSWER KEY
Activity 1
1. a
2. b
3. c
4. b
5. b
Activity 2.
1. Liabilities
2. Property, Plant and Equipment
3. Intangible Assets
4. Owner’s Equity
5. Cash
6. Rent Expense
7. Assets
8. Notes Receivable
Assessment 1
1. Assets
2. Cash on Hand
3. Accounts Receivable
4. Interest Income
5. Accounts Payable
6. Cash in Bank
7. Interest Expense
8. Notes Receivable
9. Notes Payable
10. Petty Cash Fund
11. Prepaid Expenses/Prepayments
12. Service Income
13. Sales
14. Owner’s Equity/Capital
15. Building
References
Florendo, J. 2016. Fundamentals of Accountancy, Business, and Management 1. Manila: Rex

Book Store, Inc.
Commission on Higher Education. 2016. Fundamentals of Accountancy, Business, and
Management 1(Teaching Guide for Senior High School). Quezon City

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Senior High School

Fundamentals of Accountancy, Business

TYPES OF MAJOR ACCOUNTS

In this module, you will understand the five major accounts

Learning is fun! So enjoy your journey as you unfold the

These are the competencies included in this module:

1. Which of the following accounts is NOT a current asset?

2. Which of the following accounts is NOT considered as liabilities?

4. Which of the following is NOT an example of an expense account?

5. Which of the following terms describes as the bedrock of the

Assets Accounts Receivable Intangible Assets

____________ 1. It is the obligations of the company payable in

____________ 2. These are non-current tangible assets.

____________ 3. These assets are identifiable, non-monetary assets

____________ 4. It is the claim of the owner also known as the capital.

____________6. It is an expense for leased office space, equipment or

____________ 7. Examples of this are cash, account receivable and

____________ 8. It is a written promise from the customer to pay his

Week 4 TYPES OF MAJOR ACCOUNTS

According to the Commission on Higher Education in collaboration

• Drawing is an account debited for assets withdrawn by the owner for

Income is the increase in resources resulting from performance of

Expense is the decrease in resources resulting from the operations of

• A chart of accounts is a listing of the accounts used by companies in

• The chart of accounts helps to identify where the money is coming

• The chart of accounts is the foundation of the financial statements.

The following are the steps in the preparation of a basic chart of

1. Create two columns.

4. On the second column, choose an account code (discretion of the

Fundamentals of Accountancy, Business and Management 1

I. Identify the following statements. Write your answer on the space

Name of Business: _________________________________

Florendo, J. 2016. Fundamentals of Accountancy, Business, and Management 1. Manila: Rex

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