ACC 104: Fundamentals of Accounting

and Financial Statement Analysis

Student Activity Sheet #5

Navarrete, Kendrick C'zar M.

Name: ____________________________________________________ Class #:_____________
Section: ____________
SJC-1BSBA-MM-A Schedule: ____________________________ Date: _______________
Dec 7,2023

Lesson Title: Steps in the Accounting Cycle of Service Business Materials:

Activity Sheet #5
Lesson Objectives:
At the end of this module, I should be able to: References:
1. Enumerate the 10 steps in the accounting cycle Basic Financial Accounting and
2. Identify the different types of source documents Reporting, WIN Ballada
3. Identify the different types of journals and steps in Financial Accounting and
journalizing transactions Reporting, Zeus Vernon Millan

Productivity Tips:
Before sleeping tonight, review the important concepts and terms that you’ve learned and schedule
doing problem solving activities to help you check if you can apply the accounting procedures and concepts!

A. LESSON PREVIEW/REVIEW
Introduction
Good day our future entrepreneur! Please smile as we start this new session. 
After familiarizing yourself with the different transactions and its effect, it’s time to introduce you to
the accounting cycle. Accounting cycle is the heart of this subject. It involves different procedures and
steps to follow for the achievement of accounting objectives.
Continue to read this module because another exciting lesson awaits you here! Enjoy!

Activity 1: What I Know Chart, Part 1

Do you know anything about the accounting cycle? Try answering the questions below by writing
your ideas under the first column What I Know. It’s okay if you write key words or phrases that you think
related to the questions.
What I Know Questions: What I Learned (Activity 4)
is the series of sequential steps or 1. What is accounting cycle? is the series of sequential steps or
procedures performed to accomplish the procedures performed to accomplish the
accounting process. Clearly, accounting accounting process. Clearly, accounting
cycle is the way to make sure that
cycle is the way to make sure that
accounting process will be accomplished.
accounting process will be accomplished
1. Identification of the 2. Cite at least 2 steps in 3. Journal Entries are
events to be recorded accounting cycle. posted to the ledger

2. Transactions are period. 4. Preparation of Trial

recorded in the journal
Posting Reference – code
assigned for each account titles to
facilitate the transferring or
posting journal entries to ledger
Transactions that are
recorded to insure a proper
accounting
3. What are the different source
documents you encountered?
4. What is journal?
Balance
Amount – debit and credit amount
written the same way as account title
After an accountable event is identified and
analyzed, the second step is to record it in the
journal by means of a journal entry in the
recording process called journalizing.

This document is the property of PHINMA EDUCATION Page | 1

 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #5
B. MAIN LESSON

Activity 2: Content Notes

Did you still remember our Input-Process-Output illustration in SAS#2? If yes, I know you have
established in your mind the importance of a process in this context. For without a process, there will
never be an output. But the question is how are we going to make sure that accounting processes were
accomplished? Now, it’s time for the accounting cycle to take the spotlight!

is the series of sequential steps or procedures performed to accomplish the

accounting process. Clearly, accounting cycle is the way to make sure that
Accounting accounting process will be accomplished. Without accounting cycle, it’s impossible
cycle to accomplish the accounting process that will produce the accounting output.

Steps in the Accounting Cycle

Step Objective Timeline

1. Identification of the
events to be recorded
2. Transactions are
recorded in the journal
3. Journal Entries are
posted to the ledger
4. Preparation of Trial
Balance
5. Preparation of
Worksheet including
adjusting entries
6. Preparation of Financial
Statements
7. Adjusting Journal
Entries are journalized
and posted
8. Closing Journal Entries
are journalized and
posted
9. Preparation of Post-
Closing Trial Balance
10. Reversing Journal
Entries are journalize and
posted
To gather information about transactions or events During the
generally through source documents. accounting
To record economic impact of transactions on the firm period.
in a journal which is a form that facilitates transfer to
the accounts
To transfer the journal to the ledger for classification
To provide a listing to verify the equality of debits and At the end of
credits in the ledger the accounting
To aid in the preparation of financial statements. period
To provide useful information to decision makers
To record the accruals, expiration of deferrals,
estimations and other events from the worksheet.
To close temporary accounts and transfer profit to
owner’s equity
To check the equality of debits and credits after closing
entries.
To simplify the recording of certain regular transactions At the start of
in the next accounting period. the next period

Each step in the accounting cycle will be discussed in detail in the succeeding modules of our
subject. So I suggest you not just to memorize these steps but also strive to learn how to do these.

This document is the property of PHINMA EDUCATION Page | 2

 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #5
Step 1: Identification of the events to be recorded
This step involves identifying a business transaction and analyzing whether or not that
transaction affects the assets, liabilities, equity, income or expenses of the business. A transaction that
has an effect on the accounts is an accountable event, which needs to be recorded in the books of
account.
Transactions are normally identified from source documents. Source documents are the
written evidences containing information about the transactions. Some documents come in various
forms which include, but not limited to, the following:
1. Sales invoices 5. Bank deposit slips
2. Official receipts 6. Bank statements
3. Purchase orders 7. Checks
4. Delivery receipts 8. Statement of accounts

As a business and accounting student, I suggest you to search for the samples of these
documents on the internet to familiarize yourself with these. 

Steps to analyze the transaction:

a. Determine the accounts affected – In which of the 5 accounts (A L Eq I Ex) are affected?
b. Identify the effect on the accounts – What happened (increased or decreased) to the
accounts affected?
c. Apply the rules of debit and credit – What rule of debit and credit will be applied if the
effect in the account is increase? Decreased?
d. Include the particular account titles to be used – What specific account titles should be
used? (Hint: You may refer to chart of accounts)

Analyzing business transactions is critical and important in accounting cycle. It is an important

step to make sure the reliability of information to be processed in accounting.

Step 2: Transactions are recorded in the journal

After an accountable event is identified and analyzed, the second step is to record it in the
journal by means of a journal entry in the recording process called journalizing.

Journal Entry Format

Date Account Titles and Explanations PR Debit Credit

April 1 CASH 101 100,000
CAPITAL 301 100,000
to record the capital invested by the owner

Observe the following parts of journal entry:

1. Date – journal entries are recorded in the journal chronologically (arrange according to date)
2. a. Account titles – under double entry accounting system, each transaction is recorded in the
journal in two parts:
 Debit account title – aligned in the left
 Credit account title – indented to the right (to show credit represents right side)
b. Explanation – short description of the transaction (to record line)

This document is the property of PHINMA EDUCATION Page | 3

 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #5
3. Posting Reference – code assigned for each account titles to facilitate the transferring or
posting journal entries to ledger
4. Amount – debit and credit amount written the same way as account title

Types of Journal Entry

1. Simple journal entry – one which contains a single debit and credit element. Same as the
illustration in the previous page.
2. Compound journal entry – one which contains two or more debits or credits. Observe the
illustration below:

Date Account Titles and Explanations PR Debit Credit

April 2 Equipment 105 100,000
Cash 101 30,000
Accounts Payable 201 70,000
to record the equipment purchased with down
payment of 30% and the balance is payable next month

Let’s try it!

Ms. Kim opened her Salon business on January 1, 2020. The following were the business transactions:

1. January 1 – Ms. Kim invested P100,000 cash to Kim Salon business.

Analyze the transaction: You did it before, so you can do it! 

a. Determine the accounts affected Asset Liab Equity Income Expense
b. Identify the effect on the accounts + +
c. Apply the rules of debit and credit Dr Cr.
d. Include the particular account titles to be used Cash Capital
The asset (cash) of the business will increase since it received cash investment from the owner,
and equity (capital) will increase since it is an investment transaction of the owner. Right? 

After this, you will just use the format of journal entry to record this transaction

Date Account Titles and Explanations PR Debit Credit

2020
January 1 CASH 101 100,000
KIM, CAPITAL 301 100,000
to record the capital invested by the owner

See? With a right analysis, journal entry will not be a problem because once you have
determined the account titles to use; next thing is you will just follow the suggested and
standard format of journal entry.

This document is the property of PHINMA EDUCATION Page | 4

 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #5
Activity 3: Skill-building Activities
Let’s practice! After completing each exercise, you may refer to the Key to Corrections for feedback.
Try to complete each exercise before looking at the feedback.

Exercise 1: Identification
Identify the word or phrase being described in the following statement below:

Journalizing 1. It is the process of recording journal entry in the journal

Simple Journal Entry 2. A type of journal entry with one debit and credit account.
Source document 3. A written document evidencing the transaction occurred.
Journal 4. It is the book of the original entry
Explanation 5. It is the short description for a transaction in a journal entry
Identification of the events to be
recorded 6. This is the first step in the accounting cycle
7. The arrangement used in recording journal entry following one after
Chronological order another in time
Identifying 8. It is the process of recognition of an event as accountable
9. The code assigned for each account titles to facilitate the transferring or
Posting Reference posting journal entries to ledger
Compound Journal entry 10. Journal entry which contains two or more debits or credits.

Exercise 2: Journal Entry

Journalize the following transaction below and use the chart accounts present:

June 1 – Mr. Park invested P80,000 cash in his business named Park Repair Shop
5 - Bought supplies P10,000 on account to Kim Office Supplies Store
7 - Received cash from the customers for the services to be rendered on June 23 and July 23,
P30,000
11 - Paid salaries expense for his two assistants 6,000 each.
17- Paid the account to Kim Office Supplies Store, P8,000
19 – Acquired equipment on credit, 35,000
23 - Performed services for the cash payment received last June 7, P15,000.
25 - Performed repair services on account, P20,000.
27 - Received and paid the bill for utilities, P2,500.
29 - Collected 75% of the receivables from clients on account
30 – Mr. Park withdrew 7,000 for his personal use.
30 – Paid the following expense: Salaries 8,000; Transportation 1,500; Advertising 2,000;
Miscellaneous 5,000

Use the following account titles and account numbers:

101 Cash 300 Park, Capital 504 Advertising Expense
102 Accounts Receivable 301 Park, Withdrawal 505 Miscellaneous Expense
103 Supplies 400 Service Revenue
104 Equipment 501 Salaries Expense
201 Accounts Payable 502 Utilities Expense
202 Unearned Revenue 503 Transportation Expense

This document is the property of PHINMA EDUCATION Page | 5

 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #5
JOURNAL Page: 1
Date Account Title and Explanation PR Debit Credit
June 1 Cash 101 80,000
Park, Capital 301 80,000
record the initial investment of the owner

June 5 Supplies 103 10,000

Account Payable 201 10,000
record the supplies purchased on credit

June 7 Cash 101 30,000

Unearned Revenue 202 30,000
record the cash received for the services to be rendered

June 11 Salaries Expense 501 12,000

Cash 101 12,000
record payable salaries

June 17 Account Payable 201 8,000

Cash 101 8,000
record the payment of account on supplies

June 19 Equipment 104 35,000

Account Payable 201 35,000
record the acquisition of equipment on account

June 23 Unearned Revenue 202 15,000

Service Revenue 400 15,000
record the performance of service already paid

June 25 Account Receivable 102 20,000

Service Revenue 400 20,000
record the service earned but not received

June 27 Utilities Expense 502 2,500

Cash 101 2,500
record the payable utilities

June 29 Cash 101 15,000

Account Receivable 102 15,000
record cash collected of account receivable

June 30 Park, Withdraw 301 7,000

Cash 101 7,000
record the cash withdrawing's of the owner

This document is the property of PHINMA EDUCATION Page | 6

 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #5
JOURNAL Page: 2
June 30 Salaries Expense 501 8,000
Transportation Expense 503 1,500
Advertising Expense 504 2,000
Miscellaneous Expense 505 5,000
Cash 101 16,500
record various expenses

Activity 4: What I Know Chart, part 2

It’s time to answer the questions in the What I Know chart in Activity 1. Log in your answers based on
what you now know in the third column of the chart.

C. LESSON WRAP-UP
Activity 6: Thinking about Learning
Congratulations for finishing this module! Shade the number of the module that you finished
answer the questions below.
You are done with the session! Let's track your progress.
Period 1 Period 2 Period 3

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

1. What could you have done better to improve your learning today?
none
______________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
2. What surprised you about the lesson today?
______________________________________________________________________________
Jornal
__________________________________________________________________________________
__________________________________________________________________________________

3. Some question/s I want to ask my teacher about this module is/are:

None
______________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

KEY TO CORRECTIONS

Answers to Skill-Building Exercises

Exercise 1:
1. Journalizing 7. Chronological order
2. Simple Journal Entry 8. Identifying
3. Source document 9. Posting Reference
4. Journal 10. Compound Journal entry
5. Explanation
6. Identification of the events to be recorded

This document is the property of PHINMA EDUCATION Page | 7

 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #5
Exercise 2:

JOURNAL Page: 1
Date Account Title and Explanation PR Debit Credit
June 1 Cash 101 80,000
Park, Capital 301 80,000
to record the initial investment of the owner

June 5 Supplies 103 10,000

Accounts Payable 201 10,000
to record the supplies purchased on credit

June 7 Cash 101 30,000

Unearned Revenue 202 30,000
to record the cash received for the services to be rendered

June 11 Salaries Expense 501 12,000

Cash 101 12,000
to record the payment of salaries

June 17 Accounts Payable 201 8,000

Cash 101 8,000
to record the payment of accounts for supplies

June 19 Equipment 104 35,000

Accounts Payable 201 35,000
to record the acquisition of equipment on account

June 23 Unearned Revenue 202 15,000

Service Revenue 401 15,000
to record the performance of service already paid

June 25 Accounts Receivable 102 20,000

Service Revenue 401 20,000
to record the service earned but not received

June 27 Utilities Expense 502 2,500

Cash 101 2,500
to record the payment of utilities

June 29 Cash 101 15,000

Accounts Receivable 102 15,000
to record the cash collection of accounts receivable

June 30 Park, withdrawal 302 7,000

Cash 101 7,000
to record the cash drawings of the owner

This document is the property of PHINMA EDUCATION Page | 8

 ACC 104: Fundamentals of Accounting
and Financial Statement Analysis
Student Activity Sheet #5
Page: 2
JOURNAL
June 30 Salaries Expense 501 8,000
Transportation Expense 503 1,500
Advertising Expense 504 2,000
Miscellaneous Expense 505 5,000
Cash 101 16,500
to record various expenses

This document is the property of PHINMA EDUCATION Page | 9