Photocopy Equipment
542
Depreciation Expense,
Office Equipment
543
4-10
Commonly Used Accounts
The designation of accounts must reflect the nature of the company’s business and the needs of its management.
Assets
Liabilities
Cash (at Bank)
111
Notes Payable
211
Notes Receivable
112
Accounts Payable
212
Accounts Receivable
113
Unearned Photocopy Fees
213
Photocopy Fees Receivable 114 Wages Payable
Accounts Receivable
In accounting, some important accounts are used widely and commonly in each company.
4-11
Commonly Used Accounts
Asset Accounts Liability Accounts Owner’s Equity Accounts
4-3
Accounts
An account is the basic storage unit for accounting data. An accounting system has separate accounts for each asset, each liability, and each component of owner’s equity, including revenues and expenses.
Accumulated depreciation,
Expenses
Photocopy Equipment
145 Office Salary Expense
511
Office Equipment
146 Utility Expense
512
Accumulated Depreciation,
Telephone Expense
Building
142 Income Summary
313
Accumulated depreciation,
Building
143 Revenues
Photocopy Equipment
144 Photocopy Fees Earned
411
4-9
Chart of Accounts for George Ross Photocopy
513
Office Equipment
147 Rent Expense
514
Insurance Expense
515
Photocopy Supplies Expense 516
Office Supplies Expense
517
Depreciation Expense,
Buildings
541
Depreciation Expense,
In most cases, a three-digit system is used in a business.
4-6
Accounts
In a three-digit system, the first digit refers to the major financial statement classifications.
214
Photocopy Supplies
115 Mortgage Payable
221
Office Supplies
116
Prepaid Rent
117 Owner’s Equity
Prepaid Insurance
118 George Ross, Capital
311
Land
141 George Ross, Withdrawals 312
Accounts for the purchase of its stock merchandise
4-5
Accounts
To be able to find an account in the ledger easily and to identify accounts, an accountant often numbers them.
4-12
Asset Accounts
Asset accounts
4-13
Asset Accounts
Asset Accounts
Current Assets
Long-term Assets
Cash
Physical substance
Notes Receivable
Intangible assets
1
Assets
4 Revenues
2
Liability
5 Expenses
3
Owner’s equity
4-7
Accounts
Now, let’s look at an example of
George Ross Photocopy Company
…
4-8
Chart of Accounts for George Ross Photocopy
4-1
CHAPTER 4
Acciness transactions should be sorted out and classified.
To record the transactions in the accounts can make financial statements and other reports prepared quickly and easily.
4-4
Accounts
Different types of businesses will have different accounts.
Manufacturing business
A retailer
Accounts for its various manufacturing costs to report the cost of goods sold