PROPHET’S PEN ACADEMY, INC.

MODULE 5

GRADE 12
 FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 1

Name: _____________________________ Date:____________

PRE-TEST

Directions:

• Connect to a real-life situation.

1. Give ten examples of business transactions
2. Prove that for every transaction the accounting equation should always balance.

ASSETS = LIABILITIES+EQUITY
Using the Accounting Equation

Assets = Liabilities + Equity

Assets = Liabilities + Equity

Cash Accounts Equipment Accounts Unearned Revenue Expenses
Receivable Land and Payable Revenue
Building
Inventories Intangible
Assets

1. Initial Investment. Manang Rosie has been well known for her delicious variety of
barbecues. As such, she decided to open up a barbecue store in her neighborhood. The
store would be sole proprietorship business. In order to do so, she invested P25,000 as
initial capital.
Assets = Liabilities + Equity
Cash Owner’s Capital

(1) +P25,000 (1)+P25,000

2. Purchase equipment. To actually create her famous barbecue, she would need the
proper equipment to cook it. Thus, she went to the local hardware store and bought
the necessary equipment such as grills and utensils for P20,000.

Assets = Liabilities + Equity

Cash Equipment Owner’s Capital

(1) +P25,000 (1)+P25,000

(2)-P20,000 (2) +20,000
P5,000
P20,000 P25,000

P25,000 P25,000

3. Purchase inventories through credit. Manang Rosie’s barbecue require only the
freshest meat which can be bought from Ate Shayne’s store in the market. Since
they cost P10,000, Manang Rosie does not have enough money to purchase this.
Despite that Manang Rosie is already a trusted suki if this store. As such, Ate
Shayne decided to give the meat to Manang Rosie on the condition that she will
have to pay her in 30 days.
Assets = Liabilities + Equity
Cash Equipment Inventories Accounts Payable Owner’s Capital

P25,000 P20,000 (1)+P10,000 (3)+P10,000 (1)+P25,000

P5,000 P20,000 P10,000 P10,000 P25,000

P35,000 P35,000
 4. Payment of expenses. To actually set up business, one of her friends told her
that she has to obtain business and other permits from the local government.
As such, she paid P1,000 to obtain such permits.
Assets = Liabilities + Equity
Cash Equipment Inventories Accounts Payable Owner’s Capital Expenses

P25,000 P20,000 (1)+P10,000 (3)+P10,000 (1)+P25,000

(4)-P1,000 (4)-P1,000

P4,000 P20,000 P10,000 P10,000 P25,000 -P1,000

P34,000 P34,000

5. Sale of barbeques. With everything in place, Manang Rosie can now sell her
famous barbecues. During the first day of her new business venture, she was
able to sell 1000 barbecues with a selling price of P20,000. Half of which was
paid cash. The other half was to be paid in 5 days.
Assets = Liabilities + Equity
Cash Accounts Equipment Inventories Accounts Owner’s Revenues Expenses
Receivable Payable Capital
P25,000 P20,000 P10,000 P10,000 -P1,000
P25,000
-P1,000

(5)+P10,000 (5)+P10,000 (5)+P20,000

P14,000 P10,000 P20,000 P10,000 P10,000 P25,000 P20,000 -P1,000

P54,000 P54,000

Correspondingly, the 1000 barbecues account for half of the total supply of
barbecues of Manang Rosie.

Assets = Liabilities + Equity

Cash Accounts Equipment Inventories Accounts Owner’s Revenues Expenses
Receivable Payable Capital
P14,000 P10,000 P20,000 P10,000 P10,000 -P1,000
P25,000
(5)-P5,000 P20,000 -P5,000

P4,000 P10,000 P20,000 P5,000 P10,000 P25,000 P20,000 -P6,000

P49,000 P49,000
 Summary of Transactions
Assets = Liabilities + Equity
Cash Accounts Equipment Inventories Accounts Owner’s Revenues Expenses
Receivable Payable Capital
(1) +P25,000 +P25,000

(2) -P20,000 +P20,000

(3) +P10,000 +P10,000

(4) -P1,000 -P1,000

(5) +P10,000 +P10,000 +P20,000

-P5,000 -P5,000

P14,000 P10,000 P20,000 P5,000 P10,000 P25,000 P20,000 -P6,000

P49,000 P49,000

Evaluation (Post Test)

Directions: Put your answer in a 1 whole sheet yellow paper.

Jerome Garcia started a new business and completed these transactions during August:

Aug. 1 Garcia invested PHP48,000 cash in the business.

1 Rented office space and paid PHP800 cash for the August rent.
3 Purchased exploration equipment for PHP22,000 by paying PHP12,000 cash and
agreeing to pay the balance in 3 months.
5 Purchased office supplies by paying PHP1,500 cash.
6 Completed exploration work and immediately collected PHP420 cash for the work.
8 Purchased PHP1,350 of office equipment on credit.
15 Completed exploration work on credit in the amount of PHP8,000.
18 Purchased PHP700 of office supplies on credit.
20 Paid cash for the office equipment purchased on August 8.
24 Billed a client PHP2,400 for work completed; the balance is due in 30 days.
28 Received PHP5,000 cash for the work completed on August 15.
30 Paid the assistant’s salary of PHP1,100 cash for this month. 30 Paid PHP340 cash
for this month’s utility bill.
30 Garcia withdrew PHP1,050 cash from the business for personal use.

Required
1. Arrange the following asset, liability, and equity titles in a table: Cash; Accounts
Receivable; Office Supplies; Office Equipment; Exploration Equipment; Accounts
Payable; Jerome Garcia, Capital; Jerome Garcia, Withdrawals; Revenues; and
Expenses.
2. Use additions and subtractions to show the effects of each transaction on the accounts
in the accounting equation. Show new balances after each transaction.