Selected List of Accounts

Kimmel, Weygandt, Kieso, Trenholm, Irvine

Financial Accounting: Tools for Business Decision-Making, Fifth Canadian Edition

The following is a sample of account titles. It does not represent a comprehensive chart of all the accounts used in the textbook but rather those accounts that are
commonly used. This sample chart of accounts is for a company that generates both service revenue as well as sales revenue. It uses a perpetual inventory
system. Accounts used in a periodic inventory system follow at the end of this chart of accounts.

ACCOUNT CLASSIFICATION AND PRESENTATION

Account Title Classification Financial Statement Normal Balance
A

Accounts Payable Current Liabilities Statement of Financial Position Credit

Accounts Receivable Current Assets Statement of Financial Position Debit

Accumulated Amortization Intangible Assets and Goodwill Statement of Financial Position Credit (contra asset account)

Accumulated Depreciation Property, Plant, and Equipment Statement of Financial Position Credit (contra asset account)

Accumulated Other Comprehensive Statement of Changes in Equity;

Shareholders' Equity Credit (if income) or Debit (if loss)
Income (Loss) Statement of Financial Position

Allowance for Doubtful Accounts Current Assets Statement of Financial Position Credit (contra asset account)

Allowance for Doubtful Notes Current Assets Statement of Financial Position Credit (contra asset account)

Amortization Expense Operating Expenses Income Statement Debit

Bad Debts Expense Operating Expenses Income Statement Debit

Bank Charges Expense Operating Expenses Income Statement Debit

Selected List of Accounts Kimmel 5e Page 1 of 17

 ACCOUNT CLASSIFICATION AND PRESENTATION

Selected List of Accounts Kimmel 5e Page 2 of 17

 Account Title Classification Financial Statement Normal Balance
Bank Loan Payable Current or Non-Current Liabilities Statement of Financial Position Credit

Bonds Payable Non-Current Liabilities Statement of Financial Position Credit

Buildings Property, Plant, and Equipment Statement of Financial Position Debit

Cash Current Assets Statement of Financial Position Debit

Statement of Changes in Equity;

Common Shares Shareholders' Equity (Share Capital) Credit
Statement of Financial Position
Contributed Capital─Reacquisition of Shareholders' Equity (Additional Statement of Changes in Equity;
Credit
Shares Contributed Capital) Statement of Financial Position

Copyrights Intangible Assets and Goodwill Statement of Financial Position Debit

Cost of Goods Sold Cost of Goods Sold Income Statement Debit

CPP Payable Current Liabilities Statement of Financial Position Credit

Credit Card Expense Operating Expenses Income Statement Debit

Credit Card Receivables Current Assets Statement of Financial Position Debit

Debit Card Expense Operating Expenses Income Statement Debit

Depreciation Expense Operating Expenses Income Statement Debit

Development Costs Intangible Assets and Goodwill Statement of Financial Position Debit

Development Expense Operating Expenses Income Statement Debit

Selected List of Accounts Kimmel 5e Page 3 of 17

 ACCOUNT CLASSIFICATION AND PRESENTATION
Account Title Classification Financial Statement Normal Balance
Statement of Changes in Equity
Shareholders' Equity (deduction from
Dividends (Statement of Retained Earnings─ Debit
Retained Earnings)
ASPE)

Dividends Payable Current Liabilities Statement of Financial Position Credit

Dividend Revenue Other Revenues and Gains Income Statement Credit

EI Payable Current Liabilities Statement of Financial Position Credit

Employee Benefits Expense Operating Expenses Income Statement Debit

Equipment Property, Plant, and Equipment Statement of Financial Position Debit

Fees Earned Revenue Income Statement Credit

Freight Out Operating Expenses Income Statement Debit

Franchise Intangible Assets and Goodwill Statement of Financial Position Debit

Gain on Disposal (e.g., property, plant,

Other Revenues and Gains Income Statement Credit
and equipment)

Goodwill Intangible Assets and Goodwill Statement of Financial Position Debit

Impairment Loss Operating Expenses Income Statement Debit

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 ACCOUNT CLASSIFICATION AND PRESENTATION
Account Title Classification Financial Statement Normal Balance
Temporary account closed to Retained
Income Summary Not Applicable Credit (if profit) or Debit (if loss)
Earnings

Income Tax Expense Income Tax Expense Income Statement Debit

Income Tax Payable Current Liabilities Statement of Financial Position Credit

Insurance Expense Operating Expenses Income Statement Debit

Interest Expense Operating Expenses Income Statement Debit

Interest Payable Current Liabilities Statement of Financial Position Credit

Interest Receivable Current Assets Statement of Financial Position Debit

Interest Revenue Other Revenues and Gains Income Statement Credit

Investment in Associates Investments Statement of Financial Position Debit

Land Property, Plant, and Equipment Statement of Financial Position Debit

Land Improvements Property, Plant, and Equipment Statement of Financial Position Debit

Long-Term Investments Investments Statement of Financial Position Debit

Loss on Disposal (e.g., property, plant,

Operating Expenses Income Statement Debit
and equipment)

Merchandise Inventory Current Assets Statement of Financial Position Debit

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Mortgage Payable Non-Current Liabilities Statement of Financial Position Credit

ACCOUNT CLASSIFICATION AND PRESENTATION

Account Title Classification Financial Statement Normal Balance
N

Notes Payable Current or Non-Current Liabilities Statement of Financial Position Credit

Notes Receivable Current or Non-Current Assets Statement of Financial Position Debit

Office Expense Operating Expenses Income Statement Debit

Other Comprehensive Income (Loss)

(e.g., revaluation of property, plant, and Statement of Comprehensive Income;
Other Comprehensive Income (Loss) Credit (if income) or Debit (if loss)
equipment) Statement of Changes in Equity

Patents Intangible Assets and Goodwill Statement of Financial Position Debit

Statement of Changes in Equity;

Preferred Shares Shareholders' Equity (Share Capital) Credit
Statement of Financial Position
Prepaid Expenses (e.g., property tax,
Current Assets Statement of Financial Position Debit
insurance, rent)

Professional Fees Expense Operating Expenses Income Statement Debit

Property Tax Expense Operating Expenses Income Statement Debit

Property Tax Payable Current Liabilities Statement of Financial Position Credit

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Realized Gain (e.g., trading investments) Other Revenues and Gains Income Statement Credit

Realized Loss (e.g, trading investments) Other Expenses and Losses Income Statement Debit

ACCOUNT CLASSIFICATION AND PRESENTATION

Account Title Classification Financial Statement Normal Balance
Rent Expense Operating Expenses Income Statement Debit

Rent Payable Current Liabilities Statement of Financial Position Credit

Rent Revenue Other Revenues and Gains Income Statement Credit

Repairs and Maintenance Expense Operating Expenses Income Statement Debit

Research Expense Operating Expenses Income Statement Debit

Shareholders' Equity (Retained Statement of Changes in Equity; Credit (if retained earnings) or Debit (if
Retained Earnings (Deficit)
Earnings) Statement of Financial Position deficit)

Revenue from Investment in Associates Other Revenues and Gains Income Statement Credit

Salaries Expense Operating Expenses Income Statement Debit

Salaries Payable Current Liabilities Statement of Financial Position Credit

Sales Revenue Income Statement Credit

Sales Discounts Revenue Income Statement Debit (contra revenue account)

Sales Returns and Allowances Revenue Income Statement Debit (contra revenue account)

Sales Tax Payable Current Liabilities Statement of Financial Position Credit

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Service Revenue Revenue Income Statement Credit

Statement of Changes in Equity

Shareholders' Equity (deduction from
Stock Dividends (Statement of Retained Earnings─ Debit
Retained Earnings)
ASPE)

ACCOUNT CLASSIFICATION AND PRESENTATION

Account Title Classification Financial Statement Normal Balance
Statement of Changes in Equity;
Stock Dividends Distributable Shareholders' Equity (Share Capital) Credit
Statement of Financial Position

Supplies Current Assets Statement of Financial Position Debit

Supplies Expense Operating Expenses Income Statement Debit

Telephone Expense Operating Expenses Income Statement Debit

Trademark Intangible Assets and Goodwill Statement of Financial Position Debit

Trading Investments Current Assets Statement of Financial Position Debit

Travel Expense Operating Expenses Income Statement Debit

Unearned Revenue Current Liabilities Statement of Financial Position Credit

Union Dues Payable Current Liabilities Statement of Financial Position Credit

Unrealized Gain (e.g., trading

Other Revenues and Gains Income Statement Credit
investments under fair value model)
Unrealized Loss (e.g., trading
Other Expenses and Losses Income Statement Debit
investments under fair value model)

Selected List of Accounts Kimmel 5e Page 8 of 17

Utilities Expense Operating Expenses Income Statement Debit

Vehicles Property, Plant, and Equipment Statement of Financial Position Debit

ACCOUNT CLASSIFICATION AND PRESENTATION

Account Title Classification Financial Statement Normal Balance
PERIODIC INVENTORY SYSTEM

Freight In Cost of Goods Sold Income Statement Debit

Purchase Discounts Cost of Goods Sold Income Statement Credit

Purchase Returns and Allowances Cost of Goods Sold Income Statement Credit

Purchases Cost of Goods Sold Income Statement Debit

If a periodic inventory system is used, the above four accounts would be needed to record inventory purchases.

Current Assets

1. Cash and Cash Equivalents”

 For Cash: coins and paper money, checking accounts, undeposited receipts, money orders
 For Cash equivalents: commercial paper, preferred stocks (less than 3 mnts maturity), money market mutual funds, treasury
securities, bank certificates of deposits.
2. Marketable securities
3. Finished Goods Inventory
 Finished Goods Inventory Formula = Opening Finished Goods Inventory + Cost of Goods Manufactured – Cost of Goods Sold
4. Other Current Assets
 OCA = Total Current Assets – Cash & Cash Equivalents – Accounts Receivable – Marketable Securities – Inventory – Prepaid
Expenses

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Non-Current Assets
1. Tangible Assets: Cash, building, plant, investment, stocks, machinery, inventory, etc.
Intangible: Goodwill, copyright, patent, trademark, intellectual properties, etc.

Retained earnings can be calculated

 Beginning RE + Net Income (Profit or Loss) – Dividends = Ending RE

Shareholders’ Equity

Common Stock: Common Stock = Number of shares issue * Par value per share
Additional paid-up capital: Additional paid-up capital = (Share Price – Par Value) * Number of shares issued

Preferred Stock: Preferred Stock = Number of preferred shares issued * Par Value per share
Net Worth/Assets = Total Assets - Total Liabilities

Retained Earnings

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Treasury shares: must deduct from all equity components

Accumulated Other Comprehensive Income:

Minority interest: Minority Interest = Total Equity – Shareholders Equity attributed to the parents
Example # 3 Mr. T has the following information about Company W

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Calculate the shareholder’s equity for Mr. T.
calculation of retained earnings first
Retained Earnings at the beginning 200K

(+) Net Income for the year 500K

(-) Dividend paid (100k)

(+) Amount appreciated due to change in accounting policy 50k

Retained Earnings at the ending 650K

calculate the common Stock

Number of Common Shares (A) 80K

Par Value (Common Shares) (B) 100

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 Common Stock (A * B) 8M

calculate the preferred stock

Number of Preferred Shares (A) 20K

Par Value (Preferred Shares) (B) 100

Preferred Stock (A * B) 2M

calculate the additional paid-up capital: Common and Preferred, Additional paid-up capital = (Share Price –
Par Value) * Number of shares issued
Number of Common Shares (A) 80K

Share Price (Common Shares) (B) 150

Par Value (Common Shares) (C) 100

Difference (B – C) 50

Additional Paid-up Capital (Common Stock) [A * (B – C)] 4M

Number of Preferred Shares (A) 20K

Share Price (Preferred Shares) (B) 130

Par Value (Preferred Shares) (C) 100

Difference (B – C) 30

Additional Paid-up Capital (Preferred Stock) [A * (B – C)] 600K

calculate shareholder’s equity

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 Paid-in Capital:

Common Stock 8M

Preferred Stock 2M

Additional Paid-up Capital:

Common Stock 4M

Preferred Stock 600K

Retained Earnings 650K

(-) Treasury Shares (100k)

Minority Interest 300k

Total Shareholders’ Equity 15,450,000

Income Statement Example

Statement of Operation

PBT – profit before tax

EPS – earning per share

Format of IS

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 Net Sales xxx
{company’s gross sales minus its returns, allowances, and discounts}
Cost of Goods Sold (-)
{deducting closing stock from the aggregate value of the opening stock, net purchases, and
freight charges paid}
Gross Profit [NS-COGS] xxx
Operating Expenses (Salary, rent, commission insurance, etc.) (-)
Net Income from Operations [GP-OP] xxx
{difference between gross margin and operating expenses Operating Expenses Operating
expense (OPEX)}
Other Income (Commission, interest received, rent received, etc.) xxx
Other Expenses (-)
{interest paid on borrowings and depreciation. These are subtracted from net operating
income.}
Earnings Before Income Tax [NetIncome+OtherIncome-OE] xxx
Income Tax (-)
Net Profit / Net Income [EarningsBIT-IT] xxx

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