2. Read and translate the text: types of account

(continuation)

Liabilities. Recall that a liability is a debt. A business generally has fewer liability accounts than asset accounts because a business' liabili­ties can be summarized under relatively few categories.

Notes Payable. This account is the opposite of the Notes Receiva­ble account. Notes Payable records the amounts that the business must pay because it signed a promissory note to purchase goods or services.

Accounts Payable. This account is the opposite of the Accounts Receivable account. The oral or implied promise to pay off debts arising from credit purchases of goods appears in the Accounts Payable ac­count. Such a purchase is said to be made on account. Other liability categories and accounts are added as needed. Taxes Payable, Wages Payable, and Salary Payable are accounts that appear in many ledgers. Some other accounts may be as follows:

• Owner's Equity. The claim that the owner has on the assets of the business is called owner's equity. In a proprietorship or a partnership, owner's equity is often split into separate accounts for the owner's capi­tal balance and the owner's withdrawals.

• Capital. This account shows the owner's claim to the assets of the business. After total liabilities are subtracted from total assets, the remainder is the owner's capital. The balance of the capital ac­count equals the owner's investments in the business plus its net in­come and minus net losses and owner withdrawals. In addition to the capital account, the following accounts also appear in the owner's equity section of the ledger.

• Withdrawals. When the owner withdraws cash or other assets from the business for personal use, its assets and its owner's equity both decrease. The amounts taken out of the business appear in a separate account entitled Withdrawals, or Drawing. If withdrawals were re­corded directly in the capital account, the amount of owner withdrawals would be merged with owner investments. To separate these two amounts for decision making, businesses use a separate account for Withdrawals. This account shows a decrease in owner's equity.

• Revenues. The increase in owner's equity from delivering goods or services to customers or clients is called revenue. The ledger contains as many revenue accounts as needed. If the business loans money to an outsider, it will also need an Interest Revenue account. If the business rents a building to a tenant, it will need a Rent Revenue account. Increas­es in revenue accounts are increases in owner's equity.

• Expenses. The cost of operating a business is called expense. Ex­penses have the opposite effect of revenues, so they decrease owner's equi­ty. A business needs a separate account for each category of its expenses, such as Salary Expense, Rent Expense, Advertising Expense, and Utili­ties Expense. Expense accounts are decreases in owner's equity.

3.Speak about: Accounts payable,

Capital,

Withdrawals,

Revenues,

Expenses.

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