A.

Chart of Accounts

Chart of accounts were design to facilitate recording and summarization of the transactions of
Com-Ba Ltd. and for easier and faster preparations of financial reports.

A block number is assigned to each to each account so that referencing will be more efficient and
accounts are grouped into assets, liabilities, capitals, revenues, and expenses.

ACCOUNT TITLE ACCOUNT CODE

ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 101

Prepaid Rent 102

NON-CURRENT ASSETS
Tools and Equipment 103

Furniture and Fixtures 104

CONTRA-ASSET ACCOUNTS
Accumulated Depreciation- Tools and Equipment 105

Accumulated Depreciation- Furniture & Fixtures 106

LIABILITIES
CURRENT LIABILITIES
Income Tax Payable 107

Utilities Payable 108

Salaries Payable 109

 PARTNERS' EQUITY
PARTNERS' CAPITAL
SIMON, Capital 110
KILING, Capital 111
PIHAYON, Capital 112
SORIANO, Capital 113
SOTELO, Capital 114
PARTNERS' WITHDRAWAL
SIMON, Capital 115
KILING, Capital 116
PIHAYON, Capital 117
SORIANO, Capital 118
SOTELO, Capital 119
REVENUE
Sales Revenue-Cash 120
EXPENSES
Purchases 121
Salaries expense 122
Utilities Expense 123
Taxes and Licenses 124
Office Supplies 125
Miscellaneous Expense 126
Cleaning Supplies Expense 127
Definition of Accounts BALANCE SHEET ACCOUNTS

I. ASSETS

An item of economic value that is expected to yield a benefit to the entity in future periods.

A. CURRENT ASSETS

These are assets that are expected to be realized within the current operating cycle or within one

year.

1. CASH AND CASH EQUIVALENTS is presented as one line item on the balance sheet.

This includes cash on hand, cash in bank and petty cash fund.
2. RAW MATERIALS. These are the resources used for the manufacturing of the product.

 Debited for: purchases of raw materials

 Credited for: raw materials used in the production

3. PREPAID RENT. It is an amount paid prior to the rental period.

 Debited for: amount paid in advance

 Credited for: when the amount has used up for a corresponding period.

B. NONCURRENT ASSETS

These are assets that do not meet the criteria of current assets. Generally, they include tangible,

intangible, operating and financial assets of long term nature.

1. FURNITURE AND FIXTURES are expenditures that are movable that they are not attached

to the building.

 Debited for: acquisition cost of furniture and fixtures

 Credited for: sale or disposition of furniture and fixtures

C. CONTRA-ASSET ACCOUNT includes the accumulated depreciation of building,

equipment, and furniture and fixtures.

1. ACCUMULATED DEPRECIATION – TOOLS AND EQUIPMENT. This contra-asset

account represents the expired cost of the equipment.

 Debited for: sale or disposition of equipment

 Credited for: recognition of depreciation expense for equipment

2. ACCUMULATED DEPRECIATION – FURNITURE AND FIXTURES. This contra-

asset represents the expired cost of furniture and fixtures.

 Debited for: sale or disposition of furniture and fixtures

 Credited for: recognition of depreciation expense for furniture and fixtures

II. LIABILITIES

Entity’s legal debts or obligations that arise during the course of business operations.

A. CURRENT LIABILITIES

A liability that are expected to be settled in the normal course of the enterprise, it is due to be

settled within twelve months of the balance sheet date.

1. INCOME TAX PAYABLE. It refers to the obligation of the partnership to the government

to pay its income taxes.

 Debited for: settlement of income tax payable

 Credited for: unpaid income taxes

2. SALARIES PAYABLE. It contains the amounts of any salaries owed to employees, which
have not yet been paid to them.
B. PARTNERS’ CAPITAL is used for the permanent capital contribution of the partners,

share in income and loss from operations and permanent withdrawal of capital.

 Debited for: partners‟ share in net loss, closing of partners‟ drawing account at the end of

each accounting period, permanent withdrawal of capital

 Credited for: original investment of partners, additional investment of partners, and partners‟

share in the partnership net income.

1. SIMON, CAPITAL

2. KILING, CAPITAL

3. PIHAYON, CAPITAL

4. SORIANO, CAPITAL

5. SOTELO, CAPITAL

C. PARTNERS’ WITHDRAWAL is used to record the amount

withdrawn by the partners from their investment.

 Debited for: temporary withdrawals of partnership resources for personal use

of partners, withdrawal of share in the partnership income, personal liabilities of

the partner paid by the partnership, receivables of funds of the partnership

collected and retained by the partner.

 Credited for: share in the net income including salaries, interest and bonus;

debts of the firm paid by the partner; and the partners‟ personal receivable

collected and retained by the partnership.

1. SIMON, WITHDRAWAL

2. KILING, WITHDRAWAL

3. PIHAYON, WITHDRAWAL

4. SORIANO, WITHDRAWAL

5. SORIANO, WITHDRAWAL

D. INCOME SUMMARY is a temporary account used to close the revenue

and expense accounts.

1. REVENUE

 Debited for: Sales

 Credited for: Income Summary

2. EXPENSE

 Debited for: Income Summary

 Credited for: Expenses

INCOME STATEMENT ACCOUNTS

I. REVENUE refers to increase in owners‟ equity resulting from selling of

goods to the customer.

A. SALES – CASH. Represents the cash received from selling of the product.

 Debited for: overstatement of sales and closing entry at the end of the period

 Credited for: fees received from the customer

II. EXPENSE is the decrease in economic benefit during the accounting period

in the form of outflow of decrease in the asset or increase in liability those results

in decrease in capital, other that distribution to equity participants.

A. PURCHASES. Represents the purchases of raw materials used for the production of the

product.

 Debited for: acquisition of raw materials

 Credited for: adjustments to the amount recorded due to errors

B. SALARIES EXPENSE. Represents the amount of salaries paid to the employees as the

compensation for the services they have rendered.

 Debited for: salaries paid to the employees

 Credited for: adjustments; closing the account

C. UTILITIES EXPENSE. It represents the payment of electricity, landline services and water.

 Debited for: incurrence of utilities expense

 Credited for: adjustments; closing to income summary

D. TAXES AND LICENSES. It refers to the licenses and other fees due to the government.

 Debited for: payment for renewal of permits and licenses

 Credited for: closing to income summary account

E. OFFICE SUPPLIES. It represents the used or exhausted portion of the amount paid for

supplies.

 Debited for: cost of used-up office supplies

 Credited for: adjustments; closing to income summary

F. MISCELLANEOUS EXPENSE. It is a general ledger account that may contain a large

number of minor transactions.
 Debited for: cost of used up miscellaneous expenses
 Credited for: adjustments; closing to income summary account

G. CLEANING SUPPLIES EXPENSE. It refers to the cost of cleaning consumables used

during a period.
 Debited for: cost of used up cleaning supplies
 Credited for: adjustments; closing to income summary account

H. FINANCIAL REPORTS

The financial reports are prepared in accordance with the Generally Accepted Accounting

Principles (GAAP) and is intended to meet the needs of users within and outside of the company

for making economic decisions. These includes Statement of Financial Position, Income

Statement, Statement of Changes in Equity, and Statement of Cash Flows.

Statement of Financial Position

The Statement of Financial Position aims to evaluate the liquidity, solvency, and the need of the

entity for additional financing by analyzing the three elements, namely assets, liabilities, and

capital. The assets display resources controlled by the entity; liabilities indicate present

obligations and settlements resulting to outflows in the entity; and capital displays the partners‟

investment over assets of the entity.

 COM-BA LTD.
STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 20XX

ASSETS:
Current Assets
Cash and cash equivalents xx
Prepaid Rent xx
TOTAL CURRENT ASSETS xx
Non-Current Assets
Tools and Equipment, net xx
Furnitures and fixtures, net xx
TOTAL NON-CURRENT ASSETS xx

TOTAL ASSETS xx

LIABILITIES AND PARTNER’S EQUITY:

Income Tax Payable xx
Utilities Payable xx
Salaries payable xx
TOTAL CURRENT LIABILITIES xx
TOTAL PARTNER’S EQUITY xx

TOTAL LIABILITIES AND PARTNER’S EQUITY xx

Income Statement

The Income Statement indicates the financial performance of an entity. Financial performance is

assessed by giving a summary of how the business incurs its revenues and expenses through both

operating and non-operating activities.

COM-BA LTD.
INCOME STATEMENT
FOR THE YEAR 20XX

Net sales xx
Less: Cost of goods sold xx
Gross Profit xx
Less: Operating Expenses xx
Earning before income tax xx
Less: Income Tax Expense xx
NET INCOME xx
Statement of Changes in Owner’s Equity

The statement of owner‟s equity is a financial statement that reports the changes in the equity section of
the balance sheet over an accounting period by presenting the movement, whether increase or decrease, in
reserves comprising the shareholder‟s equity.

COM-BA LTD.
STATEMENT OF PARTNER’S EQUITY
AS OF JANUARY 1, 20XX

SIMON, beginning capital xx

Add: Share in net income xx
Total xx
Less: Withdrawal xx
Ending Capital xx

KILING, beginning capital xx

Add: Share in net income xx
Total xx
Less: Withdrawal xx
Ending Capital xx

PIHAYON, beginning capital xx

Add: Share in net income xx
Total xx
Less: Withdrawal xx
Ending Capital xx

SORIANO, beginning capital xx

Add: Share in net income xx
Total xx
Less: Withdrawal xx
Ending Capital xx

SOTELO, beginning capital xx

Add: Share in net income xx
Total xx
Less: Withdrawal xx
Ending Capital xx

TOTAL PARTNER’S EQUITY xx

 Statement of Cash Flow

The Statement of Cash Flow reflects the company's sources and uses of its funds over a specified time
period. It also shows how changes in balance sheet accounts and income affect cash and cash equivalents,
and breaks the analysis down to operating, investing and financing activities.

COM-BA LTD.
STATEMENT OF CASH FLOWS
AS OF JANUARY 1, 20XX

Net Income xx
Depreciation xx
Increase in income tax payable xx
Increase in utilities payable xx
Increase in salaries payable xx
NET CASH INFLOWS FROM OPERATING ACTIVITIES xx

Tools and equipment xx

Furnitures and fixtures xx
Prepaid rent xx
NET CASH INFLOWS FROM INVESTING ACTIVITIES xx

Capital investment by partners xx

Withdrawals xx
NET CASH INFLOW FROM FINANCING ACTIVITIES xx

Net increase (dercrease) in cash xx

Add: cash beginning xx
Total xx
Less: withdrawals xx
Cash ending xx