Module 10: Business Transactions and Their

Analysis Applied to the Accounting Cycle of a

Service Business- Part 1
Objectives:
a. Describe the nature and give examples of
business transactions
b. Identify the different types of business
documents
c. Analyze common business transactions
using the rules debit and credit
d. Solve simple problems and exercises in
the analyses of business transactions
Module 10: Business Transactions and Their
Analysis Applied to the Accounting Cycle of a
Service Business- Part 1
Types of business according to the activities

Car mechanic/repair

Car parts store

Car making
Module 10: Business Transactions and Their
Analysis Applied to the Accounting Cycle of a
Service Business- Part 1
Types of business according to the activities

Car mechanic/repair Service

Car parts store

Car making
Module 10: Business Transactions and Their
Analysis Applied to the Accounting Cycle of a
Service Business- Part 1
Types of business according to the activities

Car mechanic/repair Service

Car parts store Merchandising

Car making
Module 10: Business Transactions and Their
Analysis Applied to the Accounting Cycle of a
Service Business- Part 1
Types of business according to the activities

Car mechanic/repair Service

Car parts store Merchandising

Car making Manufacturing

 Module 10: Business Transactions and Their
Analysis Applied to the Accounting Cycle of a
Service Business- Part 1

Five Major Accounts

Assets Are resources owned by the business

Liabilities Are claims against the asset of the business

Owners Equity Is the claim of the owner or owners

Income Increases the equity or the capital resulting from

business activities
Expenses Decreases the equity or the capital resulting from the
business
Nature of a Service Business

A service business provides a needed

service for a fee
In general service business, have no
actually physical product to sold to clients
Service business includes salons,
barbershop, laundry service, car repairs,
medical centers, and services of
professionals
Nature of a Service Business

In relatively small service businesses , all

transactions are on cash payments. This
means sales are collected immediately
while most expenses are paid outright in
the form of cash or checks
The typical financial transactions recorded
for a service company include collecting a
deposit from the customer, providing the
service and receiving payment
Accounting Cycle of a Service Business

1. 2. Journal
3. Posting
Transactions Entries

8. Closing 4. Trial
Books Balance

7. Financial
5. Worksheet
Statement

6. Adjusting
Journal Entries
Typical Type of Business Documents

1. Official Receipt or Cash Receipt

It is used when a business receives money or
check
A document that acknowledgement that
money or check have been received

2. Charge Invoice or Sales Invoice

It is a document used when service has been
rendered, but the client will be billed only
after a certain number of days
from the date of service
Typical Type of Business Documents

3. Check or Cash Voucher

It is a document used when a check is issued
to pay a certain supplier or vendor
The accounting cycle is continuous process of
accumulating, summarizing and reporting
financial information. The step includes

The accounting cycle is continuous process of

accumulating, summarizing and reporting
financial information. The step includes