MODULE 1

FUNDAMENTALS OF ACCOUNTING
1|Page
PROF. ANNA MITOS J. DIZON,MM
 (IST MODULE: Preliminary Period)

Coverage:
I. OVERVIEW OF ACCOUNTING
II. ACCOUNTING CONCEPTS AND PRINCIPLES
III. OVERVIEW OF FINANCIAL STATEMENTS AND CHART OF ACCOUNTS
IV. ANALYZING
V. JOURNALIZING
VI. POSTING
VII. TRIAL BALANCE

I. OVERVIEW OF ACCOUNTING

What is accounting?

The word “Accounting” is usually associated with figures and then relate it to business.
We may not realize it but accounting is not for business only because people are involved in
some form of accounting on an almost daily basis. It may be in simple acts, like a mother buying
groceries, a student budgeting his allowance, a driver monitoring his bus fares, a doctor
calculating the dosage of medicines for his patients, a nurse implementing the prescriptions of the
doctor, a retiree computing for his post-employment benefits, and employee filing income tax
returns and many more. We can therefore say that whether formal or informal, accountability is
always a part of our life.

Definitions of Accounting
Accounting is a service activity. Its function is to provide quantitative information primarily
financial in nature, about economic entities that is intended to be useful in making economic
decisions.
Accounting is an art of recording, classifying and summarizing in a significant manner
and in terms of money, transactions and events which are , in part at least, of a financial
character, and interpreting the results thereof.

Describe the nature of accounting

The primary motive of a person engaged in business is profit. Accounting keeps the
businessman informed whether he is making a profit which happens when total income from
business is bigger than the total expenses of the business, or when the business incurs a loss
which happens when the expenses of the business is bigger than the business income, or when
the business is in breakeven which result when the income from business is equal to the
business expenses.

Illustration of the three (3) possible results of business operations:

Profit Loss Breakeven
Sales or income earned P 10,000 P 10,000 P 10,000
Less: Costs & expenses 8,000 12,000 10,000

2|Page
PROF. ANNA MITOS J. DIZON,MM
 Profit (Loss) P 2,000 (P 2,000) -0-
======= ======= ========
Functions of accounting in business

Everyday, a person in business is engaged in many activities. One of the activities of a

sari-sari store owner example is to purchase the goods and sell the same to the customers at a
mark-up. It is difficult if not impossible for a businessman to rely on memory or recall the daily
business activities. That is why it is very important that a business maintains a record of all
business activities for the day or even for a year.

History of Accounting

As early as November 1494, a Franciscan monk named Fr. Loca Pacioli had published a
book which contained the primary principles of Mathematics and incidentally a set of accounting
procedures. The title of the book was “Summa de Arithmetica, Geometria, Proportioni et
Proportionalita”. This book contains 36 short chapters on bookkeeping. Loca states that to be
successful, every merchant needs three essential things; sufficient cash or credit, a good
bookkeeper and accounting system. In his book Summa, he mentioned about the
“memoramdum” where all transactions are recorded, the “journal” which serves as the merchant’s
private book and the “ledger” which is an alphabetical listing of all business’s accounts along with
the running balance of each particular account. Pacioli never mentioned about financial
statements or the statements that are prepared to communicate the results of business activities
to interested parties because businesses are still closely controlled and monitored by owners.
However Pacioli encourage an annual balancing to determine the success and failure of the
business and to find errors. At present, recording systems has become innovative in procedure
to fit the changing need of every business.

Definition of Bookkeeping and Accounting

Bookkeeping- is the process of recording systematically the business transactions in order of their
occurrence.

Accounting – is a service activity. Its function is to provide quantitative information, primarily financial in
nature, about economic entities that is intended to be useful in making economic decisions.

Difference between Accounting and bookkeeping

Bookkeeping is the recording of financial transactions and events, either manually or electronically.

Accounting includes identifying, measuring, recording and reporting and analyzing economic events and
transactions. It involves interpreting information, and designing information systems to provide useful
reports that monitor and control an organization's activities.

Bookkeeping is procedural and is largely concerned with development and maintenance of accounting
records. It is the "how" of accounting.

Accounting is conceptual. It is concerned with the "why", reason or justification for any action adopted.

Bookkeeping is the tedious part of the financial affairs of a business. It involves the systematic recording
of the amounts, dates and sources of each revenue and expense transaction. Bookkeeping is concerned
3|Page
PROF. ANNA MITOS J. DIZON,MM
with the systems that enable the financial information to be extracted in the transactions that generate
revenue and incur expense in the business.

Accounting is the bigger picture. It is the system that keeps track of the data, including people, and
records the transaction’s history, as well as taking the information that is obtained through the
bookkeeping process and using that information to analyze the results of the business. Accounting is the
system that provides the reports and information needed for management to make decisions as to the
direction of the business, as well as issues such as taxation, Sales Tax etc.

Types of business organizations

1.) Sole proprietorship
This is the simplest form of business of business organization where capital is owned and
provided by one person called “proprietor”

2.) Partnership
The capital of the business is owned and provided by two or more persons called “partners”,
who agree among themselves to contribute money, property or industry with the intention of
dividing the profits thereof.

3.) Corporation
The biggest and the most complicated form of business organization. This is organized by at
least five but not more than fifteen persons called “ incorporators”.

Types of business activities:

1. Service concern
This is a business that derives its income from services rendered to customers. For
professional services, examples are services of Accountants, Doctors, lawyers, etc. For non-
professional services, examples are that of a laundry shop, repair shop, Janitorial servicing,
and the like

2.) Merchandising
This is a business that is engaged in buying goods or merchandise or any form of finished
products and sells them at a profit. It may be a retail of wholesale business. Examples are
grocery stores.

3.) Manufacturing
This business is engaged in buying raw materials and supplies to be processed or
manufactured, converting them into finished products for sale at a profit like that of a furniture
shop, and manufacturers of cement and appliances.

4.) Agriculture
The business is engaged in planting of crops and sells its products either in raw or
finished form at a profit.
5.) Hybrid
These business organization is involve in more than one type of activity which are
manufacturing, merchandising and service.

4|Page
PROF. ANNA MITOS J. DIZON,MM
MULTIPLE CHOICE

Choose the correct answer. Write the correct answer on the blank.
1._____________ includes identifying, measuring, recording and reporting and analyzing economic events and
transactions. It involves interpreting information, and designing information systems to provide useful reports that
monitor and control an organization's activities.
A. Accounting
B. Bookkeeping
C. Analyzing
2._____________ is procedural and is largely concerned with development and maintenance of accounting
records. It is the "how" of accounting.
A. Analyzing
B. Accounting
C. Bookkeeping
3. ____________ The biggest and the most complicated form of business organization. This is organized by at least
five but not more than fifteen persons called “ incorporators”.
A. Single Proprietorship
B. Partnership
C. Corporation
4._____________ This is the simplest form of business of business organization where capital is owned and
provided by one person called “proprietor”
A. Corporation
B. Partnership
C. Single Proprietorship
5._____________ The capital of the business is owned and provided by two or more persons called “partners”,
who agree among themselves to contribute money, property or industry with the intention of dividing the profits
thereof. A. Single Proprietorship
B. Partnership
C. Corporation
6. ____________ are enterprises that are established and maintained for the purpose of providing services (rather
than or in addition to products) to private and/or commercial customers.
A. Service Concern
B. Merchandising
C. Manufacturing
D. Agriculture
E. hybrid
7.___________ a business is engaged in buying of raw materials and supplies to be processed or manufactured,
converting them into finished products for sale at a profit, like that of a furniture shop, a manufacturer of cars, and
a home appliances and the like.
A. Service Concern
B. Merchandising
C. Manufacturing
D. Agriculture
E. Hybrid

II. ACCOUNTING CONCEPTS AND PRINCIPLES

The preparation of financial statements is governed and guided by a uniform set of accounting
rules, procedures, practices and standards termed as Generally Accepted Accounting principles (GAAP).

5|Page
PROF. ANNA MITOS J. DIZON,MM
GAAP served as “ground rules” that guide accounting practioners in recording and reporting financial
information of a business entity.

Generally Accepted Accounting Principles (GAAP)

Generally Accepted Accounting Principles (GAAP) are uniform set of accounting rules, procedures,
practices and standards that are followed in preparing the financial statements.

Some GAAP that are followed follows:

1. Cost principle - This accounting principle requires that assets should be recorded at original
acquisition cost.

2. Objectivity principle- Every accounting transaction should always be supported by verifiable data
as evidence of transactions

3. Adequate disclosure- Financial statements should be free from material misstatements

4. Materiality principle- Dictates practicality to rule over theory in determining the valuation of an
item. It depends upon the professional judgment of the accountant

5. Consistency principle- Requires that accounting methods and procedures should be applied on a
uniform basis from period to period to achieve comparability in the financial statements

6. Matching principle- Revenue should be recognized when earned and expenses when incurred.

Basic Accounting Assumptions

Basic accounting concepts or assumptions are the very foundations of Generally Accepted Accounting
Principles (GAAP). Without these accounting assumptions, there could be no uniformity in the practice of
accounting which can only result to meaningless financial statements.

The five (5) Basic Accounting Assumptions are as follows:

1. Accounting entity or separate entity or business entity assumption- An entity is separate and
distinct from its owner. For example if Mr Cruz owns a transportation business named “Cruz
Transpo” , if he puts cash and properties into his business, the owner of these properties and
cash will not anymore be Mr. Cruz but “Cruz Transpo”

2. Going-concern assumption. The business is presumed to operate indefinitely except if its already
clear that the business is already bankrupt.

3. Time-period assumption. The life of the business is divided into equal periods. Example , reports
may be prepared on a monthly, quarterly, semi-annual or in a yearly period. Types of annual
periods are Calendar period and the Fiscal period. Calendar period starts January 1 and ends
December 31 of the same year. Fiscal period starts on the 1 st day of any month and ends on the
last day of the 12th month thereafter.

4. Unit of measure assumption or monetary unit assumption. It is assumed that business

transactions can be objectively measured or quantified in terms of peso. And it is presumed that
Philippines is using the Peso unit of measure and United States is using Dollar.

6|Page
PROF. ANNA MITOS J. DIZON,MM
 5. Accrual basis assumption. It is presumed that Income or Revenue is recorded when earned even
if not yet collected and expenses are recorded when incurred even if not yet pad. And further,
sales and expenses must be recorded on the period that it is earned and incurred respectively.
Example, Sales in the year 2014 must be recorded in 2014 and not in any other year.

Self-check Question

Choose the letter that corresponds to the correct answer.

1. A body of rules, policies, principles, and standards which has been developed and is accepted by
the members of accounting profession is called
a. Basic accounting assumptions
b. Quantitative characteristics
c. Qualitative objectives
d. Generally accepted accounting principles

2. Going concern assumption means that:

a. The business is registered with a government agency
b. The business is making satisfactory amount of profit
c. The business has no known intent of curtailing normal operations
d. The business is allowed to open a branch anywhere

3. Which concept or principle is consistent with the accrual basis of accounting?

a. Monetary concept
b. Periodicity concept
c. Matching concept
d. Concept of equality of value received and value parted with
e.
4. Which of the following is not a characteristic of accrual basis of accounting?
a. Income is recognized when service is rendered on account
b. Income is recognized only upon collection from the customer
c. Expenses are taken up when incurred although not yet paid
d. Expenses that are indirectly related to operations are also deducted from the gross
income to arrive at the amount of net income

5. Which of the following concept assumes that the purchasing power of peso is constant?
a. Monetary concept
b. Periodicity concept
c. Matching concept
d. Concept of equality of value received and value parted with

6. The assumption that the operating life of the business may be divided into equal reporting periods
is known as
a. Matching concept
b. Periodicity concept
c. Cash basis accounting
d. Earning process

7. The accounting method and procedures should be applied on a uniform basis from period to
period to achieve comparability in the financial statements

7|Page
PROF. ANNA MITOS J. DIZON,MM
 a. Consistency principle c. materiality principle
b. Objectivity principle d. matching principle

8. A principle that calls for a proper matching of revenue and expenses for fair reporting of financial
statements
a. Consistency principle c. materiality principle
b. Objectivity principle d. matching principle

9. What principle in accounting requires that financial statements should be free from material
misstatements?
a. adequate disclosure c. neutrality
b. Consistency d. objectivity

10. The principle that draws controversy, but are used by accountants because of its reliability
a. Cost principle c. materiality principle
b. Objectivity principle d. matching principle

III. FINANCIAL STATEMENTS & CHART OF ACCOUNTS

Basic Financial Statements

1. Balance sheet or Statement of Comprehensive Income
2. Income Statement
3. Statement of Changes in Owner’s Equity
4. Cash Flow Statement

1. Balance Sheet - The financial statement which shows the amount and nature of business assets,
liabilities, and owner's equity (capital) as of a given date. It is also known as a Statement of
Financial Position or a Statement of Financial Condition.
Sample Balance Sheet:

LLANES LAUNDRY SERVICES

Balance Sheet
As of March 31, 2015

ASSETS
Current Assets:
Cash in Bank P 743,000
Accounts Receivable P 35,000
Less: Estimated Uncollectible accounts 350 34,650
Laundry Supplies 70,000
Total current assets P 847,650

Non-current assets:
Property and Equipment
Laundry Equipment P 150,000
Less: Accumulated Depreciation 2,500
Total current assets P 147,500
TOTAL ASSETS P995,150
========

8|Page
PROF. ANNA MITOS J. DIZON,MM
 LIABILITIES ANS OWNER’S EQUITY
LIABILITIES
Current Assets:
Notes payable P 100,000
Accounts Payable 30,000
Accrued Advertising 3,000
Total current liabilities P 133,000

OWNER’S EQUITY
G. Llanes, Capital 862,150
TOTAL LIABILITIES AND OWNER’S EQUITY P 995,150
========

Basic Accounting Equation

Total assets must be always equal to Liabilities plus owner’s equity. Assets are found on the left
side of the equation which we termed “Debit” and Liabilities and owner’s equity at the right side of the
equation which we termed as “Credit”

The basic accounting equation is based on the Balance Sheet format expressed as follows:

ASSETS = LIABILITIES + OWNER’S EQUITY

Thus, substituting our equation with the balance sheet data:

ASSETS = LIABILITIES + OWNER’S EQUITY

P995,150 = P 133,000 + P862,150

SELF CHECK

What are the basic financial statements

1. __________________________________
2. __________________________________
3. __________________________________
4. __________________________________

A. What are the three components of a Balance Sheet

1. _________________________________________
2. _________________________________________
3. _________________________________________

B. What are the three accounting values?

1. _____________________________________
2. _____________________________________
3. _____________________________________

9|Page
PROF. ANNA MITOS J. DIZON,MM
Self-Check Questions

I. Determine the unknown accounting elements that relates to Balance Sheet

CASE 1C CASE 2 CASE 3C CASE 4 CASE 5
ASSETS 175,000 450,000 ? 380,000 520,000
LIABILITIES ? 100,000 120,000 ? 260,000
OWNER’S 75,000 ? 180,000 -0- ?
EQUITY

2. Income Statement – is a financial statement which shows the performance of the enterprise for a
given period of time.

Sample of an Income statement follows:

LLANES LAUNDRY SHOP

Income Statement
For the month ended March 31, 2018

Revenue:
Laundry Income P 80,000

Operating Expenses:
Uncollectible Accounts P 350
Depreciation expense 2,500
Salaries expense 10,000
Rent expense 5,000
Utilities expense 12,000
Laundry supplies expense 20,000
Taxes & licenses 4,000
Advertising expense 3,000 56,850
Operating Income P 23,150
Less: Financial Charges
Interest expense 1,000
Profit for the month P 22,150
=======

EXPANDED ACCOUNTING EQUATION

In Expanded Accounting Equation, we combine the components of Balance Sheet and the
Income Statement as follows:

Assets = Liabilities + Owner’s Equity (+Revenue – Expenses)

10 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Substituting this equation with Balance sheet and Income statement data:

Assets = Liabilities + Owner’s Equity (+Revenue – Expenses)

P 995,150 = P133,000 + P840,000 (+P80,000-P57850)

SELF CHECK

Determination of profit & Loss

The following relates to the operating results (performance) of the business. Fill in the blanks with the
missing figures.

CASE 1 CASE 2 CASE 3C CASE 4 CASE 5

Total Income 85,0 90,000 ? 60,000 75,000
00

Total Expenses 60,000 ? 40,000 ? ?

Profit(Loss) ? 60,000 (10,000) 10,000 -0-

3. Statement of Changes in Owner’s Equity is a financial statement that summarizes the changes
in equity for a given period of time. The beginning equity of the owner is increased by the
additional investment and net income. Correspondingly, it is decreased by withdrawal and net
loss.
Sample Statement of Changes in Owner’s Equity:

LLANES Bookkeeping Services

Statement of Changes in Owner’s Equity
For the Month Ended January 31,2018

Llanes, Owner’s Equity, March 1, 2015 P850,000

Add: Additional Investment P -0-
Net Income 22,150 22,150
Total P872,150

Less: Withdrawal 10,000

Owner’s Equity,End P862,150

SELF CHECK

Profit 100,000
Withdrawal during the period 50,000
Additional Investment 30,000

11 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 Question:
If the owner’s equity, beginning was P80,000, how much would be the Owner’s equity end?

4. Statement of Cash Flows – is a financial statement that provides information about cash inflows
(receipts) and cash outflows (payments) of an entity for a given period of time which is being
classified into the following activities:

 Operating activities – the inflows and outflows of cash from the normal operating activities of
the business

 Investing activities – the inflows and outflows of cash from the sale or purchase of assets other
than Inventory

 Financing activities – the inflows and outflows of cash from the owner’s and creditors of the
enterprise

ILLUSTRATION
(How to prepare Statement of Cash Flows)
Step 1 – From the ledger account of Cash in Bank, identify the following:

a. Cash flows from operating activities

b. Cash flows from investing activities
c. Cash flows from financing activities

Step 2- Prepare the Statement of cash flows using the identified cash flows above and using the
standard format.

Step 3- Be sure that the Cash Balance per ledger is equal to the Cash balance at the end of the
period in the Cash Flow Statement.

Sample follows:

12 | P a g e
PROF. ANNA MITOS J. DIZON,MM
13 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 PERFORMANCE TASK

BALANCE SHEET ACCOUNTS

(Permanent accounts)

ASSETS (current and non- current)

Current assets - refer to all assets that are expected to be realized, sold or consumed within the
enterprises’ normal operating cycle.

Cash – the account used to describe money, either in paper or in coins. (checks, postal money orders,
bank drafts and treasury warrants).

Petty Cash Fund – the account title used for the money placed and set aside for petty or small expenses.

Notes Receivable –promissory note that is received by the business from the customer arising from
rendering of services, sale of merchandise, etc.

14 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Accounts Receivable – the account title used for amounts collectible from customers arising from the
services rendered, sale of goods on credit/account. This constitutes an oral or verbal promise to pay by a
customer or client.

Allowance for bad debts – this is an “asset” or a “contra asset” account. It provides for possible losses
from uncollected accounts. This is not an asset but is classified as such because it is shown as a
deduction from the Accounts Receivable which is a Current Asset account.

Accrued Interest income – the account title used for interest earned on a Notes Receivable which is not
yet collected.

Advances to Employees – the account title used for amounts collectible from employees for allowing
them to make cash advances which are deductible against their salaries and wages.

Inventories – these are assets which are (1) held for sale in the ordinary course of business; (2) in the
process of production for such sale; or (3) in the form of materials or supplies to be consumed in the
production process or in the rendering of services.

Prepaid Expenses – account title used for expenses already paid but is not yet incurred. (Prepaid rental,
prepaid advertising, and prepaid advertising).

Unused Supplies – account title used for cost of stationery and other supplies purchased for use but are
left on hand and still unused.

Non- Current Assets

Land – account title used for the site where the building used as office or store is constructed.

Building – account title used for a finished construction owned by the business where operations and
transactions took place.

Equipment – includes calculators, typewriters, adding machines, computers, steel filing cabinets and the
like. If these are used in the office, the account title to be used is “office equipment’. Trucks, jeeps, vans,
automobiles and other kinds of motor vehicles are used exclusively for delivering goods; the account title
is “Delivery Equipment”.

Furniture and Fixtures – includes chairs, tables, counters, display cases and the like. If these are used
in the office, the account title is “office furniture & Fixtures” and if these are used in store, the account title
is “store furniture & fixtures”

Accumulated Depreciation – a “contra-asset” account. Shown as a deduction from the property and
equipment.

LIABILITIES (current and non- current)

Current liabilities

- are what a company currently owes to its suppliers and creditors. These are short-term debts, all due in
less than a year.

15 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Accounts payable - This is the money the company currently owes to its suppliers,

Accrued expenses –expenses already incurred but not yet paid.

Notes Payable – the same as accounts payable but only the obligation is evidenced by a promissory
note. The enterprise is the one who issued the note.

SSS Premium Payable – refers to the amount due and payable by the enterprise to the Social Security
System. This is composed of both employer and employees’ share of SSS contributions.

Phil health Premium Payable – refers to the amount due and payable by the enterprise to the Phil
health Insurance Corporation. This is composed of both employer and employees’ share of Phil health
contributions.

Pag- Ibig Premium Payable – refers to the amount due and payable by the enterprise to the Home
Development Mutual Fund. This is composed of both employer and employees’ share of Pag - Ibig
contributions.

Withholding Tax Payable – account title used referring to the amount due and payable by the enterprise
to the Bureau of Internal Revenue for the tax withheld from employees

Pre – collected or Unearned Income – account title used for an income collected or received in advance
and is not yet earned.

Non- current liabilities –

opposite of current liabilities. Obligation that is not required to be satisfied within 12 months of the
balance sheet date. Also called long-term liability.

Notes Payable(long term) – same with that of Notes Payable (short term) but only, this requires
payment for more than a year.

Mortgage Payable – a financial obligation of the enterprise which requires a fixed or tangible property to
be pledged as collateral to ensure payment.

OWNER’S EQUITY

Llanes, Capital

Capital – is the amount of the business assets owned by the business owners. The calculation for
owner’s equity is assets minus liabilities. In a simplified example, if the value of the business assets is P3,
500,000 and the total business liabilities are

P2, 500,000, the owner’s equity is P1, 000,000. These values are expressed on the business balance
sheet, which shows assets on the left and liabilities and owners equity on the right.

LLANES, Withdrawal

Withdrawal – the owner’s withdrawal is likewise indicated by the use of the owner’s name with the word
“drawing” or “personal” written after the name which is separated by s “comma”.

16 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Income & Expense Summary – a temporary account created at the end of the accounting period where
Income and expenses are temporarily closed to this account.

INCOME STATEMENT ACCOUNTS

Sales – in general, this represents revenue derived from the sale of merchandise.

Service Income – in general, this is the account title used for all types of income derived from rendering
services. Sometimes the account title used is “service revenue”. Other specific income account titles used
are:

Professional Income – the account title generally used by professionals for income earned from
the practice of their profession or maybe specified as “accounting or auditing fees income” for
accountants, “legal fees income” for lawyers, “dental fees income” for dentists, “medical fees income” for
doctors, etc.

Rental Income – for income earned on buildings, space or other properties owned and rented out by the
business as the main line of its activity.

Interest Income – for income received by the business arising from an amount of money borrowed by a
customer and is usually covered by a promissory note.

Miscellaneous Income – for income earned by the business which is not the main line of its activity and
could not be clearly classified.

EXPENSES

Cost of Sales or Cost of Goods Sold – cost to produce and sell the goods.

Interest Expense – an expense incurred from borrowed money.

Salaries Expense - account title used for compensation given to employees.

Rent Expense – account title used for the amount paid or incurred for use of property, usually premises.

Repairs and Maintenance – account title used for expenses incurred in repairing or servicing the
buildings, machineries, vehicles, equipment, etc., which are owed by the business.

Office Supplies – the stationery, envelopes, clips, fasteners, etc., used in the office will bear the account
title as “office supplies”, if use in the store “store supplies” or another title may be used to describe the
kind of supplies used.

Bad Debts – account title used for the anticipated loss that the business may incur arising from
uncollectible accounts.

Depreciation Expense – account title used for the allocated portion of the cost of property and
equipment or fixed assets.

Taxes and Licenses – account title used for the amount paid for business permits, licenses and other
government dues except the Income Tax which is not allowable by law as a deduction.
17 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Insurance Expense – account title used for the expired portion of the insurance premium paid.

Utilities Expense – account title used for telephone, light and water bills. Also included is gasoline,
lubricants and oil.

SSS Contribution – account title used for the employer’s share on SSS Contribution.

Phil Health Contribution – account title used for the employer’s share on Phil Health Contribution.

Pag – Ibig Contribution – account title used for the employer’s share on Pag – Ibig contribution.

Miscellaneous Expense – account title used for the amount paid as expense which is not significant
enough to warrant a particular classification.

SELF CHECK

Fill-in the blanks with the correct answer.

1. _________________ refer to all assets that are expected to be realized, sold or consumed within
the enterprises’ normal operating cycle
2. _________________ the account used to describe money, either in paper or in coins. (checks,
postal money orders, bank drafts and treasury warrants). Cash in hand/Cash.

3. _________________ the account title used for the money placed and set aside for petty or small
expenses. This exists when the business used the imprest system of keeping cash.

4. __________________promissory note that is received by the business from the customer arising
from rendering of services, sale of merchandise, etc.

5. __________________the account title used for amounts collectible from customers arising from
the services rendered, sale of goods on credit/account. This constitutes an oral or verbal promise
to pay by a customer or client.
6. __________________this is an “asset” or a “contra asset” account. It provides for possible losses
from uncollected accounts. This is not an asset but is classified as such because it is shown as a
deduction from the Accounts Receivable which is a Current Asset account.
7. __________________ the account title used for interest earned on a Notes Receivable which is
not yet collected.
8. __________________the account title used for amounts collectible from employees for allowing
them to make cash advances which are deductible against their salaries and wages.
9. __________________these are assets which are (1) held for sale in the ordinary course of
business; (2) in the process of production for such sale; or (3) in the form of materials or supplies
to be consumed in the production process or in the rendering of services.
10. ______________ account title used for expenses already paid but is not yet incurred. (Prepaid
rental, prepaid advertising, and prepaid advertising).
11. ______________ account title used for cost of stationery and other supplies purchased for use
but are left on hand and still unused.
12. _______________ account title used for the site where the building used as office or store is
constructed.
13. _________________account title used for a finished construction owned by the business where
operations and transactions took place.
14. _________________includes calculators, typewriters, adding machines, computers, steel filing
cabinets and the like. If these are used in the office, the account title to be used is “office

18 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 equipment’. Trucks, jeeps, vans, automobiles and other kinds of motor vehicles are used
exclusively for delivering goods; the account title is “Delivery Equipment”.
15. _________________includes chairs, tables, counters, display cases and the like. If these are
used in the office, the account title is “office furniture & Fixtures” and if these are used in store,
the account title is “store furniture & fixtures”
16. _________________a “contra-asset” account. Shown as a deduction from the property and
equipment.
17. __________________ are what a company currently owes to its suppliers and creditors. These
are short-term debts, all due in less than a year. Paying them off normally requires the company
to convert some of its current assets into cash.
18. __________________ This is the money the company currently owes to its suppliers
19. __________________ Expenses already incurred but not yet paid them.
20. __________________the same as accounts payable but only the obligation is evidenced by a
promissory note. The enterprise is the one who issued the note.
21. ___________________ account title used referring to the amount due and payable by the
enterprise to the Social Security System. This is composed of both employer and employees’
share of SSS contributions.
22. ____________________account title used referring to the amount due and payable by the
enterprise to the Phil health Insurance Corporation. This is composed of both employer and
employees’ share of Phil health contributions.
23. ____________________account title used referring to the amount due and payable by the
enterprise to the Home Development Mutual Fund. This is composed of both employer and
employees’ share of Pag - Ibig contributions.
24. ______________________account title used referring to the amount due and payable by the
enterprise to the Bureau of Internal Revenue for the tax withheld from employees
25. _____________________account title used for an income collected or received in advance and
is not yet considered as “earned”.
26. ____________________ opposite of current liabilities. Obligation that is not required to be
satisfied within 12 months of the balance sheet date. Also called long-term liability.
27. ____________________same with that of Notes Payable (short term) but only, this requires
payment for more than a year.
28. ____________________a financial obligation of the enterprise which requires a fixed or tangible
property to be pledged as collateral to ensure payment.
29. ____________________the amount of the business assets owned by the business owners..
30. ____________________the owner’s withdrawal from the business whtehr in cash or in property.
31. _____________________a temporary account created at the end of the accounting period where
Income and expenses are temporarily closed to this account.
32. _____________________in general, this represents revenue derived from the sale of
merchandise.
33. _____________________in general, this is the account title used for all types of income derived
from rendering services. Sometimes the account title used is “service revenue”. Other specific
income account titles used are:
34. _____________________the account title generally used by professionals for income earned
from the practice of their profession or maybe specified as “accounting or auditing fees income”
for accountants, “legal fees income” for lawyers, “dental fees income” for dentists, “medical fees
income” for doctors, etc.
35. ______________________for income earned on buildings, space or other properties owned and
rented out by the business as the main line of its activity.
36. _____________________for income received by the business arising from an amount of money
borrowed by a customer and is usually covered by a promissory note.
37. _____________________for income earned by the business which is not the main line of its
activity and could not be clearly classified.
38. _____________________cost to produce and sell the goods.
39. _____________________ an expense incurred from borrowed money.

19 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 40. _____________________account title used for compensation given to employees.
41. ____________________account title used for the amount paid or incurred for use of property,
usually premises.
42. ________________________ account title used for expenses incurred in repairing or servicing
the buildings, machineries, vehicles, equipment, etc., which are owed by the business.
43. ________________________the stationery, envelopes, clips, fasteners, etc., used in the office
will bear the account title as “office supplies”, if use in the store “store supplies” or another title
may be used to describe the kind of supplies used.
44. ________________________account title used for the anticipated loss that the business may
incur arising from uncollectible accounts.
45. ________________________account title used for the allocated portion of the cost of property
and equipment or fixed assets.
46. ________________________account title used for the amount paid for business permits,
licenses and other government dues except the Income Tax which is not allowable by law as a
deduction.
47. ________________________account title used for the expired portion of the insurance premium
paid.
48. ________________________account title used for telephone, light and water bills. Also included
is gasoline, lubricants and oil.
49. ________________________account title used for the employer’s share on SSS Contribution.
50. ________________________Phil Health Contribution – account title used for the employer’s
share on Phil Health Contribution.
51. ________________________account title used for the employer’s share on Pag – Ibig
contribution.

52. ________________________account title used for the amount paid as expense which is not
significant enough to warrant a particular classification.

CHART OF ACCOUNTS

What is Chart of Accounts?

A Chart of Accounts is a list of numbered account TITLES that are prepared beforehand to guide
bookkeeper and accountant of what specific account titles will be used in describing the exchanges of
values in a transaction. A bookkeeper may create an account title in cases where a transactions involves
an account title which is not found in the Chart of Accounts.

The Chart of Accounts shows account titles which are arranged in this order:

ASSETS, LIABILITIES, OWNER' EQUITY, INCOME & EXPENSE

20 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Sample Chart of Accounts:

ASSETS OWNER’S EQUITY

Acct # Account Name Acct # Account Name

110 Cash in Bank 310 Llanes, Capital

120 Accounts Receivable 320 Llanes, Withdrawal
130 Notes Receivable 330 Income & Expense Summary
140 Office Supplies
150 Prepaid Advertising INCOME
160 Furniture and Fixtures
170 Office Equipment 410 Bookkeeping Services Income
180 Delivery Equipment 420 Other Income

LIABILITIES EXPENSES
210 Accounts Payable 510 Rent Expense
220 Notes Payable 520 Salaries Expense
230 Accrued Expenses 530 taxes and Licenses
240 SSS Premium Payable 540 SSS Contribution
250 Phil health Premium Payable 550 Phil health Contribution
260 SSS Premium Payable 560 SSS Contribution
270 Withholding Tax Payable 570 Utilities Expense

PERFORMANCE TASK

From the account titles below, prepare the Chart of Accounts in the following order with the
corresponding account codes:
Assets (100-199)
Liabilities (200-299)
Owner’s Equity (300-399)
Revenues (400-499)
Expenses (500-599)

Cash Notes payable Other income Prepaid insurance

Service Income Rent expense Salaries expense Utilities expense
Accrued interest Juan Go, Capital Juan Go, Drawing
expense
Accounts payable Office supplies Advertising expense Taxes payable
Depreciation expense Delivery equipment Notes receivable Bad debts
Accounts receivable Office Equipment Interest expense
Supplies expense Phil health Premium Furniture and fixtures Taxes and licenses
payable
SSS Premium Income and expense Accounts payable Insurance expense
payable summary
21 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 IV. ACCOUNTING CYCLE NO. 1- IDENTIFYING

BUSINESS TRANSACTIONS AND EVENTS

Not all business activities are “accountable”. For example, the hiring of employees, death of
company president and the entering into contracts are all business activities that cannot be quantified or
expressed in terms of money, thus they cannot be recorded in in the books of the enterprise.

Business activities are called business transactions and events if they affect the assets, liabilities
and owner’s equity of the business

Business events are the occasional occurrence in the life of the business like inventory loss due
to typhoons, theft or robbery.

Business transactions on the other hand, are exchanges of equal monetary values.

SELF CHECK
Fill in the blanks with the letter A if the business activities below are accountable which must be recorded
in the books of the business and NA if non-accountable or which are not recorded in the books of the
business.

1. ______ the president of the company died of lung cancer

2. ______ the owner renovate his residential house

3. ______ the owner renovate the warehouse of the business

22 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 4. ______ The owner withdraw cash from the business for personal use
5. ______ the owner paid the light and water of his vacation house.
6. ______ the cashier of the store deposited money to the bank
7. ______ the owner purchased for the life insurance of his family

8. ______ Paid the salaries of the house helpers

9. ______ Paid the salaries of the employee

10. _____ paid the insurance of the properties of the business

ANALYSIS OF BUSINESS TRANSACTIONS

Again, in business, we record only transactions that affect the assets, liabilities and owner’s
equity of the owner and these transactions must be supported by business documents or source
documents as evidence that a transaction really occurs. Common business documents are:
(Note: it is assumed that we are the bookkeeper of ADS Repair Shop)
A. Business documents involved in buying activities:

1. Purchase order- the first document that ADS Repair Shop should fill-up in placing orders.
Purchase Orders are not recorded in the books because there is no business
transaction yet.(Remember, business transactions occurred only when there is exchanges
of equal monetary values, which means you have already received the items purchased and
you have already paid in cash or has given your promise to pay)

ADS LAUNDRY SHOP

Quezon Avenue, Iligan City
PURCHASE ORDER
NO. 001
March 1, 2018
To : Gaisano Mall-Iligan
Address: Poblacion, Iligan City

Please deliver the following goods as ordered:

Qty. Unit Description Unit price Amount
100 Ctns. Pride powder detergent
20 Bags Del fabric conditioner

TOTAL
Approved by: Allen Delos Santos

23 | P a g e
PROF. ANNA MITOS J. DIZON,MM
2. CASH INVOICE – is a document issued by a supplier to its customer whenever the customer
purchases items in cash. In the sample charge invoice below, Gaisano mallis the supplier and ADS
Laundry Shop is the customer.

GAISANO MALL-ILIGAN
Quezon Avenue, Iligan City
CASH INVOICE
NO. 504562
March 2, 2018
To : ADS Laundry Shop
Address: Poblacion, Iligan City Terms: 30 days
Qty. Unit Description Unit price Amount
100 Ctns. Pride powder detergent 400 40,000
20 Bags Del fabric conditioner 100 2,000

TOTAL 42,000

Prepared by Received goods in good order & condition

J. Madela
GAISANO Mall-Iligan Allen Delos Santos
Customer

This can be interpreted as:

“Purchased laundry supplies for cash”

Note: The one who issued the document is the name stated in the heading of the document. In the
above cash invoice, Gaisano Mall is the one who issued the document.

24 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 3. CHARGE INVOICE

This document is issued by a supplier to its customer whenever the customer purchases items on
account or on credit. In the sample charge invoice below, Gaisano mall is the supplier and ADS
Laundry Shop is the customer.

GAISANO MALL-ILIGAN
Quezon Avenue, Iligan City
CHARGE INVOICE
NO. 504562
March 2, 2018
To : ADS Laundry Shop
Address: Poblacion, Iligan City Terms: 30 days
Qty. Unit Description Unit price Amount
200 Ctns. Pride powder detergent 400 80,000
40 Bags Del fabric conditioner 100 4,000
TOTAL 84,000

Prepared by Received goods in good order & condition

J. Madela
GAISANO Mall-Iligan Allen Delos Santos
Customer

This can be interpreted as:

“Purchased laundry supplies on account or on credit”
Note: The one who issued the document is the name stated in the heading of the document. In the
above charge invoice, Gaisano Mall is the one who issued the document.

25 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 4. CHECK VOUCHER
This is the document issued by the customer to be attached to a check for every payment
made. It bears the check number and the explanation as to what payment the check is
intended for.

ADS LAUNDRY SHOP

Quezon Avenue, Iligan City

CHECK VOUCHER NO. 5

Check no. 84322
March 25, 2018
Payee : Gaisano Mall
Pesos : Fifty thousand Pesos only P50,000
EXPLANATION
In payment of :
Partial payment of account P 50,000

Prepared by Approved by:

J. Madela Allen Delos Santos
Manager

This can be interpreted as:

“Paid Gaisano Mall as partial payment of account”

Note: The one who issued the document is the name stated in the heading of the document. In the
above check voucher, ADS Laundry Shop is the one who issued the document.

VALUE RECEIVED = VALUE PARTED WITH

Business transactions are analyzed from the point of view of the business. If the transaction is
“purchased or “Bought’, it is the business that is buying. If the transaction is “sold”, it is the business that
is selling. In making analysis, always consider yourself as the business.

In analyzing a transaction, determine first the

VALUE RECEIVED or DEBIT

Before the VALUE PARTED WITH or CREDIT.
26 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Example:

Bought a car for cash in the amount of P500,000

The entry would be:

VALUE RECEIVED or DEBIT = CAR P500,000
VALUE PARTED WITH or CREDIT = CASH P500,000

Remember: the debit and credit must have equal monetary values

27 | P a g e
PROF. ANNA MITOS J. DIZON,MM
28 | P a g e
PROF. ANNA MITOS J. DIZON,MM
SELF CHECK
Instruction : the following paired transactions are related t each other. Determine the value received or
“DEBIT” and the value parted with or “ CREDIT”. Use the appropriate account titles.

Value Received or DEBIT Value parted with or CREDIT

A-1 Santos invested cash in
business

A2 Santos invested computer in

business

A-3 Santos invested tables and

chairs in business
A-4 Santos invested a delivery
car in business
B-1 Santos withdrew cash from
business

B-2 Santos withdrew his

computer from business
C-1 Rendered services on
account to Helen Go
C-2 Rendered services in cash

C-3 Rendered services on

account to virgie Tan. Miss
Tan issued a promissory note
in return

29 | P a g e
PROF. ANNA MITOS J. DIZON,MM
D-1 Collected in full the account
of Helen G0

D-2 Collected in full the account

of Virgie Tan

E-1 Sold an old typewriter in cash

E-2 Sold an old typewriter on

account

F-1 Collection of old typewriter

sold on account
G-1 Borrowed money from the
bank and issued a
promissory note.
G-2 Issued a promissory note for
the money from Gabino Ang
H-1 Paid the note issued to the
bank

H-2 Paid the promissory note

issued to Gabino Ang
I-1 Received a note from Alden
Richards for the money he
borrowed
I-2 Received a note from Maine
Mendoza for the services
rendered
J-1 Collected in full the note
issued to Alden Richards
J-2 Collected the note issued to
maine Mendoza
K-1 Purchased a new computer
in cash

K-2 Bought a delivery car on

account

L-1 Paid the delivery car in K-2

M-1 Paid salaries of workers

M-2 Paid light & Power

M-3 Paid rent for the month

M-4 Paid interest of money

borrowed

30 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 BASIC ACCOUNTING EQUATION

EXPANDED ACCOUNTING EQUATION :

ASSETS=LIABILITIES + OWNER’S EQUITY

+ Revenue
-Expenses
-withdrawal

Important:
For easy understanding the RULES OF DEBIT AND CREDIT (which must be memorized by
students) are summarized as follows:

ASSETS
DRAWING
EXPENSES
(ADE)
_____________________________________________________________

Left side Right side

Debit Credit
Value received Value parted with

(Normal Balance)

INCREASE when DEBITED DECREASE when CREDITED

31 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 LIABILITIES
OWNER’S EQUITY
INCOME
(LOI)
_____________________________________________________________

Left side Right side

Debit Credit
Value received Value parted with

(Normal Balance)

DECREASE when DEBITED INREASE when CREDITED

PERFORMANCE TASK# 1

32 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Performance task# 2

Performance task# 3

33 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Performance task# 4

Performance task# 5

34 | P a g e
PROF. ANNA MITOS J. DIZON,MM
PERFORMANCE TASK# 6

35 | P a g e
PROF. ANNA MITOS J. DIZON,MM
PERFORMANCE TASK# 7

PERFORMANCE TASK# 8

36 | P a g e
PROF. ANNA MITOS J. DIZON,MM
PERFORMANCE TASK# 9

The T Account

T Account is a device that will group accounting values with their amounts that belong to one item
only. For the account “cash” for example, all amounts representing increases and decreases in cash
are entered in the “cash account”

Shown below is the formation of a T-Account:

ACCOUNT TITLE

Left side Right Side

Or or

DEBIT CREDIT

Or or

VALUE RECEIVED VALUE PARTED WITH

Shown below is an example of Cash and Accounts Payable and Accounts Receivable account with
their debit and credit entries:
37 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 CASH

____________________________________

Dr. P 25,000 P 10,000

10,000 5,000

____________________________________

Debit total P 35,000 P 15,000 credit total

____________________________________

Debit balance P 20,000

========

ACCOUNTS PAYABLE

_________________________________________________

Dr. P 15,000 P 40,000

20,000 10,000

_____________________________

Debit total P 35,000 P 50,000 credit total

______________________________
P 15,000 credit balance

=======

38 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 ACCOUNTS RECEIVABLE

_________________________________

Dr. P 25,000 v P 25,000

___________________________________

Debit total P 25,000 P 25,000 credit total

______________________________
0 zero balance or in-balance

=======

39 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 V. ACCOUNTING CYCLE NO. 2 –JOURNALIZING

40 | P a g e
PROF. ANNA MITOS J. DIZON,MM
41 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Below is a sample of an actual General Journal

42 | P a g e
PROF. ANNA MITOS J. DIZON,MM
43 | P a g e
PROF. ANNA MITOS J. DIZON,MM
44 | P a g e
PROF. ANNA MITOS J. DIZON,MM
45 | P a g e
PROF. ANNA MITOS J. DIZON,MM
ILLUSTRATIVE PROBLEM: JOURNALIZING
Below are the Chart of Accounts and the transactions for the month of January 2015 for Angel
Health Centre.

Required:
Journal entries for the month of January 2015.

46 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Transactions for the month of January 2015 follow:

47 | P a g e
PROF. ANNA MITOS J. DIZON,MM
48 | P a g e
PROF. ANNA MITOS J. DIZON,MM
49 | P a g e
PROF. ANNA MITOS J. DIZON,MM
50 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Remember the following:

KEY WORD DEBIT/VALUE RECEIVED CREDIT/VALUE PARTED

WITH
Investment Account being invested Capital
Withdrawal Drawing account Cash or property withdrawn
Received/collected Cash Accounts receivable/notes
receivable
Paid Account being paid Cash
(Payable/expenses)
Purchased or bought in asset being purchased Cash
cash
Purchased or bought on Asset being purchased Accounts/notes payable
account
Rendered services in cash Cash Service income/revenue
Rendered services on Accounts receivable/notes Service Income/Revenue
account receivable

Performance Task # 1

51 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Performance Task # 2

Performance Task # 3

52 | P a g e
PROF. ANNA MITOS J. DIZON,MM
53 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 VI. ACCOUNTING CYCLE NO. 3 –POSTING JOURNAL ENTRIES TO LEDGER
POSTING
Posting refers to the process of transferring the same information found in the journal to the
ledger. Posting basically is a sorting process. It groups similar accounts according to its nature and type.
In the process of transferring the information from the journal to the ledger, the following
guidelines must be observed:
 Debit entries in the journal shall be transferred to the debit side of the ledger
 Credit entries in the journal shall be transferred to the credit side of the ledger
LEDGER
The ledger accumulates all data necessary prior to the preparation of the financial statements.
Similar accounts found in the journal are grouped together in the ledger. The number of ledger
accounts to be provided is depends on the number of accounts found in the Chart of Accounts.
The ledgers are arranged in the following order of accounting elements based on the
arrangements in the balance sheet and income statement as follows:
a. Assets
b. Liabilities
c. Capital
d. Income
e. Expense

The ledger basically appears in the form of T-account as follows:

The ledger has the following parts:

 Date reflects the date of the transactions recorded in the journal
 Particulars is for the brief explanation of the transaction
 F or folio or post reference column is used for cross referencing of information. It is
the page number of the journal of the account being posted.
 Debit column reflects the debit amount from the journal of the account being posted
 Credit column reflects the credit amount from the journal of the account being
posted
 Page number indicates the current page used in sorting the accounts

54 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 POSTING PROCEDURE FOR ALL TYPES
OF BUSINESS ORGANIZATIONS

Illustration of the posting procedure follows:

55 | P a g e
PROF. ANNA MITOS J. DIZON,MM
FOOTING OF LEDGER

Footing is the process of adding the debit and credit money columns of the ledger and finding
their balances illustrated as follows:

Remember: I the debit total is higher than the credit total, put the difference on the “Particular” column of
the debit side which means that the Cash on Hand account has a debit balance of P227,175

Remember: I the credit total is higher than the debit total, put the difference on the “Particular” column of
the credit side which means that the Accounts Payable account has a credit balance of 155,000.

Remember: If there is only one entry in any side of account in the ledger, no footing is needed and entry
is left as it is.

56 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Remember: If the debit total is the same as the credit total, the account is said to be in balance or zero.
Below is an actual form of a ledger:

57 | P a g e
PROF. ANNA MITOS J. DIZON,MM
PERFORMANCE TASK # 1

The following are taken from the records of Atty. Delos Reyes for the month of June 2016:

Required:
Foot the debit and credit totals and extract the balances of the ledger with 100% accuracy.
Remember: posting procedures for types of business organizations are basically
the same

58 | P a g e
PROF. ANNA MITOS J. DIZON,MM
PERFORMANCE TASK # 2

The following journal entries are found in the books of Allen Repair Shop during the first
month of operation in June 2016:

Required:
1. Transfer the entries in a two-column journal. Provide explanation
2. Post to the general ledger.

59 | P a g e
PROF. ANNA MITOS J. DIZON,MM
 VII. ACCOUNTING CYCLE NO. 4 –TRIAL BALANCE PREPARATION

TRIAL BALANCE
 The fourth step in accounting cycle is the preparation of Trial balance.
 Trial balance is the listing of all accounts with open balances from the general
ledger (accounts with no balance or zero balance are not included).
 Trial balance accounts are listed according to the account sequence found in the
chart of accounts. (ASSET, LIABILITIES, CAPITAL, INCOME, EXPENSE)

 Parts of a Trial balance are :

1. Heading
a. Name of business
b. Title of the statement (Trial Balance)
c. Period covered
2. Body
a. Account titles
b. Debit balances
c. Credit balances

Illustration of a Trial balance follows:

ADS Laundry Services
Trial Balance
March 31, 2015

Account title F Debit Credit

Cash in Bank 1 P 743,000
Accounts Receivable 2 35,000
Laundry supplies Inventory 3 90,000
Laundry Equipment 4 150,000
Notes Payable 5 P 100,000
Accounts payable 6 30,000
Cruz, Capital 7 850,000
Cruz, Drawing 8 10,000
Laundry Income 9 80,000
Salaries Expense 10 10,000
Rent Expense 11 5,000
Utilities Expense 12 12,000
Taxes and Licenses 13 4,000
Interest Expense 14 1,000 __________
TOTAL P 1,060,000 P 1,060,000

60 | P a g e
PROF. ANNA MITOS J. DIZON,MM
Important reminders:

1. Heading must be written in the center

2. Arrange the accounts according to the arrangement of the CHART OF ACCOUNTS
3. Figures at the bottom must be always equal and double ruled.

PERFORMANCE TASK # 1
Prepare Trial Balance from the following (ledger) T accounts

61 | P a g e
PROF. ANNA MITOS J. DIZON,MM
PERFORMANCE TASK # 2

The following accounts were accounts with open balances taken from the ledger of Hyzel
Industries:

62 | P a g e
PROF. ANNA MITOS J. DIZON,MM
PERFORMANCE TASK # 3
The bookkeeper of Trust Manpower Services recorded the following journal entries;

63 | P a g e
PROF. ANNA MITOS J. DIZON,MM
REQUIRED:

PERFORMANCE TASK # 4
The transaction of Hard Industries for the month of April 2016 follows:

-
End of 1st Module-
“There are no shortcuts to Dreams”

64 | P a g e
PROF. ANNA MITOS J. DIZON,MM