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CHART OF ACCOUNTS1

For Non-VAT Seller of Goods Sole Proprietorship

Assets
Account Account Title To Description/Explanation of
No. Increase Account
101 Cash/Cash in Checking account balance,
Bank Debit currency, coins, and checks
received from customers but
not yet deposited.

102 Petty Cash Debit Fund set aside for the


payment of small expenses
that do not necessarily need
check disbursement.

Merchandise Debit Cost of goods for resale that


Inventory have been acquired by a
distributor, wholesaler, or
retailer from suppliers.

103 Accounts Debit Amounts owed to company


Receivable for goods sold but not yet
collected from customers.

104 Supplies Debit Cost of supplies that have not


yet used.

105 Prepaid Tax Debit Taxes paid in advance


through withholding tax
system made by withholding
agent.

106 Prepaid Rent Debit Rent advances and deposits.

107 Furnitures and Debit FF are movable furniture,


Fixtures fixtures that have no

1
The account titles to be used are not limited in this chart of accounts. Appropriate changes by adding or
eliminating account title/s shall be made whenever necessary to fit business needs.
permanent connection to the
structure of a building or
utilities, e.g, vase, paintings,
plants.

108 Service Vehicle Debit Transporation vehilce used in


the conduct of business or
practice of profession, e.g,
Van, SUV, Tricycle, Jeep,
Truck, and Owner.

109 Equipment Debit Costs of equipments acquired


to be used in daily operations
of business.

110 Machinery Debit It is any mechanical device


or parts that keep something
working.

111 Land Debit Acquisition costs of land


evidenced by Certificate of
Title.

112 Building Debit Costs to construct or acquire,


including costs to prepare
prior to its intended use.

113 Leasehold Debit Costs of improvements in the


Improvements leased property prior to
actual use.

114 Accumulated Credit Accumulated costs of using


Depreciation assets, e.g., Equipment,
Building, Furnitures and
fixtures, and Leasehold
improvements that have been
charged to Depreciation
expense.

115 Trademark Debit "Mark" means any visible


sign capable of
distinguishing the goods
(trademark) or services
(service mark) of an
enterprise and shall include a
stamped or marked container
of goods.
"Trade name" means the
name or designation
identifying or distinguishing
an enterprise.
- Republic Act No. 8293, as
amended

116 Patent Debit A Patent is a grant issued by


the government through the
Intellectual Property Office
of the Philippines (IP
Philippines). It is an
exclusive right granted for a
product, process or an
improvement of a product or
process which is new,
inventive and useful. This
exclusive right gives the
inventor the right to exclude
others from making, using, or
selling the product of his
invention during the life of
the patent.
- Republic Act No. 8293, as
amended

117 Copyright Debit Copyright is the legal


protection extended to the
owner of the rights in an
original work.

“Original work” refers to


every production in the
literary, scientific and artistic
domain. Among the literary
and artistic works
enumerated in the IP Code
includes books and other
writings, musical works,
films, paintings and other
works, and computer
programs.
- Republic Act No. 8293, as
amended

118 Franchise It a right given by Franchisor


to Franchisee to operate the
former’s business.

Liabilities
Account Account Title To Description/Explanation of
No. Increase Account
201 Accounts Payable Credit Amounts owed to suppliers
of goods and/or services.

202 Salaries Payable Credit Salaries earned by employees


but not yet paid.

203 Withholding Tax Credit Amounts withheld from


Payable salaries of employees and
income payments to payees
subject to withholding tax.

204 Due To Credit Employees’ share SSS,


Government Philihealth, and Pag-ibig
withheld by employer.
205 Notes Payable Credit Amounts owed to lenders
and/or creditors that are
evidenced by promissory
note.

206 Mortgage Credit Amounts borrowed from


Payable individuals, banks, or other
financial institutions
collateralized by real
properties, e.g, Building and
Land.

207 Loans Payable Credit Bank loans that do not have


collateral.

208 Interest Payable Credit Interest earned on liabilities


but not yet paid.

Equity
Account Account Title To Description/Explanation of
No. Increase Account
301 Bumagat2, Credit Amounts the owner invested
Capital in the company (through cash
or other assets) plus earnings
and minus losses of the
company not withdrawn by
the owner.

302 Bumagat, Debit Represents amount withdrew


Withdrawal by owner of sole
proprietorship for personal
use.

Expenses
Account Account Title To Description/Explanation of
No. Increase Account
401 Purchases Debit Purchases of merchandise for
resale. Equipment and
supplies are not recorded in
this account.

402 Purchases Credit Cash discount availed when


Discounts purchases are paid within
discount period. It is a
reduction in the price of a
good.

403 Purchases Credit Goods bought and returned


2
Substitute this by your or business owner’s surname
Returns and by buyer to seller due to
Allowances deffectives and/or not of the
same quality.

404 Freight-In Debit Shipping cost paid or to be


paid by the buyer of
merchandise for resale. This
should be formed part of
Cost of Sales.

405 Bad Debts Debit Amounts owed by customers


to company that become
worthless or uncollectible.
-RR 25-2002.

406 Charitable Debit Contributions or gifts are tax


Contributions deductible if they are actually
paid or made within the
taxable year to, or they are
are made for the use of:

(a) the Government of the


Philippines or any of its
agencies or any political
subdivision thereof
exclusively for public
purposes; or

(b) accredited domestic


corporation or associations
organized and operated
exclusively for religious,
charitable, scientific, youth
and sports development,
cultural or educational
purposes or for the
rehabilitation of veterans, or
to social welfare institutions,
or to non-government
organizations. –Sec. 34 [H]
[1], NIRC
407 Commissions Debit Commissions given to sales
agent.

408 Communication, Debit Electricity, Water, and


Light and Water Telephone paid or incurred.

409 Depletion Debit For mining companies, the


depletion deduction allows
an owner or operator to
account for the reduction of a
product's reserves.

410 Depreciation Debit A reasonable allowance for


the exhaustion, wear, and
tear of depreciable
properties, e,g. Equipment,
Leasehold improvements,
Service Vehicle, and
Building, used in the
profession, trade, or business.
– RR 12-2012 and RMC 2-
2013

411 Fringe Benefits Debit Means any good, service, or


other benefit furnished or
granted by an employer in
cash or in kind, in addition to
basic salaries, to an
individual employee (except
rank and file employee as
defined in these regulations.
–RR 3-1998, as amended

412 Fuel and Oil Debit Fuel and Oil

413 Insurance Debit Cost of insurance for risk


management of assets.

414 Interest Debit The cost of money incurred


within a taxable year on
indebtedness in connection
with the taxpayer’s
profession, trade, or business.
415 Janitorial and Debit Fees paid or incurred
Messengerial janitorial and messengerial
Services services.

416 Losses Debit Losses actually sustained


during the taxable year and
not compensated for by
insurance or other forms of
indemnity shall be allowed as
deductions:

(a) If incurred in trade,


profession or business;

(b) Of property connected


with the trade, business or
profession, if the loss arises
from fires, storms,
shipwreck, or other
casualties, or from robbery,
theft or embezzlement. –Sec.
24 (D), NIRC

417 Management and Debit Fees paid or incurred to other


Consultancy Fee company for management
and consultancy services.

418 Miscellaneous Debit Expenses that do not fall to


any specific expenses.

419 Office Supplies Debit Supplies used in business,


trade or profession but not
directly used in providing
services to customers/clients.

420 Other Services Debit Outside services that are


directly used in providing
services to customers/clients,
e.g., professional fees of
professionals.

421 Professional Fees Debit Professional fees given to


professionals, e.g.,
accountant, lawyer, doctor,
and engineer, in connection
to business, trade or
profession but not directly
used in providing services to
customers/clients.

422 Rental Debit Amount paid or incurred for


use of leased property used in
trade, profession, or business.

423 Repairs and Debit Cost of repairs and


Maintenance - maintenance using labor or
Labor or Labor & labor and materials.
Materials

424 Repairs and Debit Cost of repairs and


Maintenance - maintenance using
Materials/ materials/supplies only.
Supplies

425 Representation Debit Refers to expenses incurred


and by a taxpayer in connection
Entertainment with the conduct of his trade,
business or exercise of
profession, in entertaining,
providing amusement and
recreation to, or meeting
with, a guest or guests at a
dining place, place of
amusement, country club,
theater, concert, play,
sporting event and similar
events or places.
Representation expense shall
not refer to fixed
representation allowances
that are subject to
withholding tax on wages
pursuant to appropriate
revenue regulations.
-RR No. 10-2002.

426 Research and Debit These are costs incurred to


Development develop new products or
processes that may or may
not result in commercially
viable items.

427 Royalties Debit The term "royalties" as


generally used means
payment of any kind
received as a consideration
for the use of, or the right to
use, any copyright of
literary, artistic or scientific
work including
cinematograph films, or films
or tapes used for radio or
television broadcasting, any
patent, trademark, design, or
model, plan, secret formula
or process, or for the use of,
or the right to use, industrial,
commercial or scientific
equipment, or for
information concerning
industrial, commercial or
scientific experience. The
term "use" as contained
herein shall include the
reselling or distribution of
software.
-RR 77-2003

428 Salaries and Debit In general, the term


Allowances "compensation" means all
remuneration for services
perfonned by an employee
for his employer under an
employer-employee
relationship, unless
specifically excluded by the
Code. -RR 2-1998

429 Security Services Debit Fees of security services, e.g,


security guard.

430 SSS, GSIS, Debit Government mandatory


Philhealth, contributions shouldered by
HDMF and Other employer.
Contributions

431 Taxes and Debit Business permits, licenses,


Licenses and taxes paid in connection
with business.

432 Tolling Fees Debit A payment or fee exacted by


the state, the local
authorities, etc., for some
right or privilege, as for
passage along a road or over
a bridge.

433 Training and Debit Fees paid or incurred to


Seminars attend trainings and
seminars.

434 Transportation Debit These are expenses incurred


and Travel within and outside the
country while away from
home in the pursuit of trade,
business or profession.

Notes:
1. Cost of goods sold shall include all business expenses directly
incurred to produce the merchandise to bring them to their
present location and use. - RR 12- 2007.
2. Expenses must be incurred or paid in connection with business,
trade or profession in order to be deductible expenses for
taxation purposes.
Revenues/Income
Account Account Title To Description/Explanation of
No. Increase Account
501 Sales Credit The performance of all kinds
of services in the Philippines
for others for a fee,
remuneration or
consideration, whether in
kind or in cash, including
those performed or rendered.
-RR No. 14-2005

502 Sales Returns and Debit Sales returns and allowances


Allowances for which a proper credit or
refund was made during the
month or quarter to the buyer
for sales previously recorded
as taxable sales.
-RR 16-2005
503 Sales Discounts Debit Discounts determined and
granted at the time of sale,
which are expressly indicated
in the invoice, the amount
thereof forming part of the
gross sales duly recorded in
the books of accounts. Sales
discount indicated in the
invoice at the time of sale,
the grant of which is not
dependent upon the
happening of a future event,
may be excluded from the
gross sales within the same
month/quarter it was given.
-RR 16-2005
504 Interest income Credit For purposes of RR No. 12,
the term shall include interest
and discounts earned on
loans and investment
transactions.
-RR No. 12-2003 and RR
14-2012