Accountancy, Business, & Management 1

Accountancy, Business, and Management 1

Module 7: Analyze Common Business Transactions Using The
Rules of Debit and Credit
Quarter 1 Week 6
Module 7

Developed by: Jessica C. Caballes, LPT

for personal consumption only

For personal consumption

https://www.gre.ac.uk/articles/ils/analysis https://www.google.com.ph/imgres?imgurl=https%3A%2F%2F3.imimg.com only

WEEKLY HOME LEARNING PLAN

Year Level : 11
Track : ABM
Learning Area : Accountancy, Business, and Management 1
Mode of Delivery : Modular Printed Modality / Digitized
General Instruction : Read and understand the concepts discussed in Module 7. Follow the directions given for each
activity and write your answers on a separate sheet.
Requirement : Non-spring notebook and yellow paper
: 2-column general journal (just make it ready for later activities)
Most Essential Output to be
Day & Time
Learning Learner's Tasks / Responsibility Submitted on
(week2)
Competency Friday
9:30 AM - 10:00 AM analyze common Answer the WHAT I KNOW and PRETEST Output 1: Activity
business Task 1 : (required notebook) 5
transactions using
10:00 AM - 10:30 the rules of debit Task 2 : Answer Activity 1 ( required notebook) Output 2:
and credit SUMMATIVE TEST
10:30 AM - 11:00 PM ABM_FABM11-IIIg-
Task 3 : Answer Activity 2 (required notebook)
j-27 Staple all outputs
together and
11:00AM - 11:30AM Task 4: Answer Activity 3 (required notebook)
solve simple submit them with
11:30 PM- 12:30 PM problems and Task 5 : Answer Activity 4 (required notebook) the thew module.
exercises in the
Task 6 : Answer Activity 5 (2 column worksheet/
analyses of
journal) You may stip off some pages of your For digitized
1:00 PM- 4:00 PM business transaction
general journal and use it as your answer sheet users, answer
ABM_FABM11-IIIg-
instead of a two column worksheet. OUTPUT 1 activities requiring
j-28 journal entries in
Answer the SUMMATIVE TEST (Yellow Paper)
your general
records transactions OUTPUT 2
journal. Take a
of a service business photo and submit
in the general journal
them through our
ABM_FABM11-IVa-d -
30
MOODLE page.
DO NOT FORGET to write your name, subject, and section to every submitted output. Stay
NOTE :
safe everyone.
 Accountancy, Business, & Management 1
2

What I know

Directions: True of False. Write True if the statement if correct and False if the otherwise.
_________________ 1. Transactions are entered in the ledger first and then they are analyzed in terms of their
effect on the accounts
_________________ 2. Business documents can provide evidence that a transaction has occurred.
_________________ 3. Each transaction must be analyzed in terms of its effect on the accounts before it can be
recorded in a journal.
_________________ 4. A new account is opened for each transaction entered into by a business firm.
_________________ 5. Transactions are entered in the ledger accounts and then transferred to journals.
_________________ 6. All business transactions must be entered first in the general ledger.
_________________ 7. A simple journal entry requires only one debit to an account and one credit to an account.
_________________ 8. A compound journal entry requires several debits to one account and several credits to
one account.
_________________ 9. Transactions are recorded in alphabetic order in a journal.
_________________ 10. The account titles used in journalizing transactions need not be identical to the account
titles in the ledger.
Now let us check how much you know about analyzing
business transactions and recording the same using
debit and credit.
 Accountancy, Business, & Management 1 3

MODULE TITLE: Business Transaction and Their Analysis as Applied to the Accounting Cycle of a Service Business- Part I

PERIOD COVER: Week 6, Lesson 7.1 and 7.2 LESSON OUTLINE

OVERVIEW Topics Minutes
The Rules of Debit and Credit 60
Contents: Activity 1 15
Lesson 7.1 The Rules of Debit and Credit Accounts' Normal Balances 60
Lesson 7.2 Accounts' Normal Balances Activity 2 15
Activity 3 10
Content Standards Practice Activity 4 10
The learners demonstrate an understanding of the business transactions and Enrichment Activity 5 40
their analysis, to include definition and nature of business transactions, types Evaluation Summative Test 90
Total Nominal Duration 300
of source or business documents, and the rules of debits and credits
Resources
Performance Standards Cabrera, M.B. (2016), Funadamentals of Accountancy, Business &
Management Vol. 1. Manila: GIC Enterprises & Co., Inc.
The learners are able to identify business and nonbusiness transactions,
CHED. (2016). ABM1 Teaching Guide
enumerate the types of business documents, recite the rules of debit and
Frais, S. A., Pefiangco, E. C. (2016). Fundamentals of Accountancy,
credit, and apply these to simple cases.
Business, and Management: A Textbook in Basic Accounting 1. The
Phoenix Publishing House Inc. Philippines
Learning Competencies:
Horngren, C.T., Harrison Jr., W. T., & Oliver, M (2012). Accounting (9th
Upon Completing the lesson, learner shall be able to
Edition) . Prentice Hall.
• analyze common business transactions using the rules of debit and credit
Millan, Zeus Vernon B. (2016). Financial Accounting, Part 1A
ABM_FABM11-IIIg-j-27 Rabo,J.S., Tugas,F.C., & Salendrez,H.E. (2016). Fundamentals of
• solve simple problems and exercises in the analyses of business Accountancy, Business, and Management 1. Quezon:Vibal Group, Inc.
transaction ABM_FABM11-IIIg-j-28 Valix, Conrado T. et.al. (2015). Financial Accounting, Vol. 1, First part. GIC
Enterprises & Co. Inc.
Specific Learning Objectives https://financialaccountingsolutions.blogspot.com/2019/02/books-of-accounts.html
At the end of this lesson, the learner will be able to https://www.youtube.com/watch?time_continue=61&v=j71Kmxv7smk&feature=emb_logo
• define debits,credits, and normal account balances https://courses.lumenlearning.com/sac-finaccounting/chapter/general-rules-for-debits-and-credits/
• use double-entry accounting and T-acccounts https://www.toppr.com/guides/accountancy/recording-transactions/using-debit-and-credit/
• journalize transactions of a service business https://www.accountingtools.com/articles/what-are-source-documents-in-accounting.html
 Accountancy, Business, & Management 1 4
Lesson 7.1 The Rules of Debit and Credit

We have learned from our previous modules that accounting uses the double-entry system,
which means that each business transaction has dual effects: the receiving (value received-
Debit) and giving (value parted with-Credit) side. Thus, for every transaction there are at
least two accounts getting affected—debit and credit account. Debits and Credits are the
inherent parts of journalizing process. These terms are taken from the Latin past participles of debitum
and creditum and further abbreviated as DR meaning debere and CR credere, respectively.

I- Rules on Debits and Credits – the golden rules of accountancy

• First: Debit what comes in, Credit what goes out.
 The name of the account to be debited is always listed first. The debited account is listed on
the first line with the amount in the left side of the register.
 The credited account is listed on the second line and is usually indented. The credited
amount is recorded on the right side of the register.
•Second: Debit all expense and losses, Credit all income and gains.
•Third: Debit the receiver, Credit the giver.
•Fourth: Check that the total amount of debit should always equal to the total amount of credit.

For example: The business received P100,000 cash as initial investment of the owner.
 Received: Cash P100,000
 Gave or Issued: Capital P100,000 to the owner

ILLUSTRATION
Using general journal
GENERAL JOURNAL
Date PARTICULARS Ref Debit Credit
20X1 DEBIT 500,000.00
CREDIT 500,000.00
EXPLANATION

Using general ledger or the T-Account

 Accountancy, Business, & Management 1 5

Accounts Receivable
DR = Debit CR= Credit

ACTIVITY 1

Think of any service business and create a scenario listing all the
possible transactions that may occur in your chosen business.
Label it with corresponding dates of occurrence.

Lesson 7.2 Accounts’ Normal Balances

 Accountancy, Business, & Management 1 6

Account Classification Normal Balance

Asset Debit
Contra Asset Credit
Liability Credit
Contra Liability Debit
Owner's Equity Credit

ACTIVITY 2

A. For each of the following accounts Indicate B. For each of the following accounts indicate
whether the account is to be debited (DR) or to the effect of a debit or a credit on the account
be credited (CR) and its normal balance. Increase (+), Decrease
DR CR (–), DR or CR for normal balance.
1. Decrease in Accounts Payable DR CR NB
2. Increase in Capital account 1. J, Capital
3. Increase in Notes Payable 2. Common Stock
4. Increase in Land 3. Gain on Sale
5. Decrease in Accounts Receivable 4. Income Tax Payable
6. Increase in Wages Expense 5. Notes Receivable
7. Increase in Copyright
8. Increase in Unearned Revenue
9. Increase in Owner’s drawing
10. Increase in Interest Expense
 Accountancy, Business, & Management 1 7






Official Receipt or Cash Receipt.

Charge Invoice or Sales Invoice. It is

Check or Cash Voucher. It is

 Accountancy, Business, & Management 1 8

Lockbox check images

Packing slip.

Supplier invoice

Time card.

ACTIVITY 3
 Accountancy, Business, & Management 1 9

Title of the account

debited along with
GENERAL JOURNAL
its peso amount.
DATE
20x1 PARTICULARS PR DR CR
04-01 Cash (A+) 300,000
Ramos, Capital (Q+) 300,000
To record initial inv estment.
Indented title of the
Brief Explanation of the account credited along
Date of Transaction Transaction with its peso amount.

These notations would not normally show up in a journal, but it is included here to
reinforce the rules of debit and credit.

Remember! When to Debit when to Credit

Let’s Practice!

ACTIVITY 4
Directions: Journalize the following business transactions in general journal form. You may omit
explanations of the transaction.

1. Jessica Cables invested P100,000 cash to start an appliance repair business on January 1, 20x1.
2. On the same day, she hired an employee to be paid P400 per week, starting tomorrow.
3. On the January 5th , she paid one year's rent in advance P60,000.
4. On January 8th, she paid the worker’s weekly wage and also recorded the revenue of P55,000

DATE
20x1 PARTICULARS PR DR CR
 Accountancy, Business, & Management 1 10

Activity 5
Problem: Digong Batu, a house painter, obtained a business permit and opened a business
called Digong Painting Services. During the month of June 20x1, he completed the following
transactions:
Jun-03 Began his business by contributing equipment v alued at P 24,600 and placing
P 142,000 in a business checking account in the name of the business.
5 Purchased a used truck costing P 38,000. Withdrew and paid P 10,000 in cash
and signed a note for the balance.
7 Purchased supplies on account for P 6,400.
8 Completed a painting job and billed the customer P 9,600.
10 Receiv ed P 3,000 in cash for painting tw o rooms.
11 Hired an assistant to w ork w ith him at P120 per hour.
12 I ssued check for the purchased of supplies for P 3,200.
13 Receiv ed a P 9,600 check from the customer billed on June 8.
14 I ssued a check to insurance agency amounting P 8,000 for an insurance
policy for eighteen months cov erage.
16 Billed a customer P 12,400 for a painting job.
18 I ssued a check to the assistant w orth P 3,000 for tw enty-fiv e hours w ork.
19 Paid P 800 for a tune-up for the truck.
20 Paid for the supplies purchased on June 7.
21 Purchased a new ladder (equipment) for P 1,200 and supplies for P 5,800 on
account,
23 Receiv ed a telephone bill for P 1,200 due next month.
24 Receiv ed P 6, 600 in cash from the customer billed on June 16.
26 Receiv ed P 7,200 in cash for painting a fiv e-room apartment.
28 I ssued P4,000 check for the partial payment of note signed for the truck.
29 Paid the assistant P 3,600 for thirty hours w ork.
30 Withdrew P 6,000 for personal use.

Required:
Record the trasactions in the general journal. Just leave the EXPLANATION and PR blank. Use
the accounts listed below as your reference:

Accounts Payable Painting Fees

Accounts Receiv able Prepaid I nsurance
Cash in Bank Supplies
Cash on Hand Telephone Expense
D, Capital Truck
D, Withdrawal Truck Expense
Equipment Utilities Payable
Notes Payable Wages Expense
 Accountancy, Business, & Management 1 11

PRETEST PRETEST ACTIVITY 2

1. TRUE 11. FALSE A. DR CR B.
1. False DR CR NB
2. True 2. FALSE 12. TRUE 1. 
1. – + CR
3. True 3. FALSE 13. FALSE 3.  3. – + CR
4. False 4. TRUE 14. TRUE 5.  5. + – DR
5. False 5. False 15. False 7. 
6.False 6.False 9. 
7. True 7. FALSE
8. False 8. False
Activity 3
9. False 9. False
10. TRUE YES NO
10. False
a. X
ACTIVITY 4 c. X
GENERAL JOURNAL e. X
g. X
DATE
20x1 PARTICULARS PR DR CR
01-01 Cash 100,000
J.C, Capital 100,000

01-05 Prepaid Rent 60,000

Cash 60,000
06-18 Wages Expense 3,000
01-08 Salaries and Wages 2,800
Cash 52,200
Cash in Bank 3,000
Service Revenue 55,000
06-19
ACTIVITY 5
DATE PARTICULARS PR DR CR
20X1
06-03 Equipment 24,600
06-20 Accounts Payable 6,400
Cash in bank 142,000
D, Capital 166,600 Cash in Bank 6,400

06-05 06-21

06-07 Supplies 6,400

Accounts Payable 6,400
06-23 Telephone Expense 1,200
06-08
Utilities Payable 1,200

06-24
06-10 Cash 3,000
Painting Fees 3,000

06-11 06-26 Cash 7,200

Painting Fees 7,200

06-12 Supplies 3,200 06-28

Cash in Bank 3,200

06-13
06-29 Wages Expense 3,600
Cash 3,600
06-14 Prepaid Insurance 8,000
Cash in Bank 8,000
06-30
06-16