Accounting for Non-ABM

Learning Objectives
In this learning session, the participants should
be able to:
1. Identify the different types of business
documents

2. Analyze and record common business

transactions using the rules of debit and credit

3. Solve simple problems and exercises in the

analyses of business transactions

DEPARTMENT OF EDUCATION
 Activity

IDENTIFICATION:
1. Identify different transactions happening in a
business within your community.

2. Enumerate the different business documents

that you encounter in your day to day activities.

DEPARTMENT OF EDUCATION
 Analysis

How did you find the activity?

How many business transactions and business
documents have you identified?

What enabled you to accomplish the task?

What are the common business transactions and
business documents did all the group have identified?

What business transactions and business documents

have you not identified?
What hindered you from accomplishing the task
What were your “AHA” moments?

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1
WEEK 7-10

ACCOUNTING CYCLE Series of sequential steps or procedures performed

to accomplish the accounting process

Identification
of events to
be recorded

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Identification of Events to be Recorded

Only the business transactions and events affecting

the business should be recorded in the books.

That is, if it affects the composition of either assets,

liabilities, equity, revenue or expenses and there is a
monetary amount that can be assigned to the event.

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Identification of Events to be Recorded

1. CDL Consulting Services bought a printer for the
office for P 4,500
2. CDL Consulting Services hired two employees which
will be paid P 10,000 monthly.

3. CDL Consulting Services paid rent for its office space,

P 12,000.

4. CDL Consulting Services signed a subscription

contract for an Internet plan at P 999 per month which
will be due at the end of each month

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Source Documents These are original written evidences

containing information about the
nature and the amounts of the
transactions.

• Sales invoices
• Official Receipts
• Statement of Accounts
• Delivery Receipts
• Validated deposit/withdrawal slip
• Bank Statement

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Double-entry The dual effects of a business transaction

Bookkeeping is recorded.
A debit side entry must have a
corresponding credit side entry.

Simple entry Compound entry

-only two accounts are -more than one debit entries or more
affected than one credit entries
- One debit = one credit - One debit= more than one credit
entries and vice-versa

Example: entry to record Example: entry to record the initial

the initial investment of investment of owner in which both
owner in the form cash cash and equipment were invested by
owner
DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

1. Identify the transaction from source documents.

2. Identify if the transaction is SA, UA, EA or EC.
3. Indicate the accounts –either assets, liabilities, equity,
income or expenses-affected by the transaction.
4. Ascertain whether each account is increased or decreased
by the transaction.
5. Using the rules of debit and credit, determine whether to
debit or credit the account to record its increase or
decrease.

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

1. T.Maranan invested P / /
300,000 to start an auto
repair business + +
Dr Cr

Cash T.
Maranan,
Capital
Journal Entry:
Cash P 300,000
T. Maranan, Capital P 300,000
Initial investment of owner

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

2. T.Maranan invested one / /

set of computer amounting P
30,000 and office table and + +
chair worth P 9,000. Dr Cr
Office
Equipment; T.
Office Maranan,
Furniture & Capital
Fixtures
Journal Entry:
Office Equipment P 30,000
Office Furniture & Fixtures 9,000
T. Maranan, Capital P 39,000
Additional investment of owner
DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

3. The business purchased /

various tools for cash, P
150,000. +,-
Dr , Cr

Tools,
Cash
Journal Entry:
Tools P 150,000
Cash P 150,000
various tools for cash

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

4. The business borrowed / /

money from CoopBank, P
200,000. + +
Dr Cr

Cash Loan
Payable

Journal Entry:
Cash P 200,000
Loan Payable P 200,000
Proceeds from bank loan

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

5. Received cash for repair / /

service rendered, P 15,000
+ +
Dr Cr

Cash Repair
Income

Journal Entry:
Cash P 15,000
Repair Income P 15,000
Repair services-cash basis

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

6. Billed the following for / /

repair service rendered:
Ms. Nancy, P 3,000; Mr. + +
Benjo, P 25,000; Ms. Anne, P Dr Cr
3,500.
Accounts Repair
Receivable Income

Journal Entry:
Accounts Receivable P 31,500
Repair Income P 31,500
Repair services-on credit

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

7. Received a promissory note / /

from Mr. Benjie for repair
service rendered, P 17,500 + +
Dr Cr

Notes Repair
Receivable Income

Journal Entry:
Notes Receivable P 17,500
Repair Income P 17,500
Repair services-on credit

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

8. Bought office supplies for / /

cash, P 800
- -
Cr Dr

Cash Office
Supplies
Expense
Journal Entry:
Office Supplies Expense P 800
Cash P 800
purchase of office supplies-cash

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

9. Paid rent P 30,000 for /

three months
+,-
Dr, Cr

Prepaid
Rent, Cash

Journal Entry:
Prepaid Rent P 30,000
Cash P 30,000
Rental payment for three months
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

10. Paid the salaries of the / /

employees, P 15,000
- -
Cr Dr

Cash Salaries
Expense

Journal Entry:
Salaries Expense P 15,000
Cash P 15,000
Payment of salaries

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Analysis of business transactions

Transactions Assets = Liabilities + OE

11. The owner withdraw cash / /

for his personal use, P
10,000 - -
Cr Dr

Cash T.
Maranan
Drawing
Journal Entry:
T. Maranan, Drawing P 10,000
Cash P 10,000
cash withdrawal by owner

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Transferring the amounts from the general journal to

appropriate accounts in the ledger.
Grouping of accounts;
Ledger
Used to classify and summarize transactions and to
prepare data for basic financial statements
General Ledger
Cash
General Journal

Cash xx
Loan Payable xx
Loan
Payable
 Accounting Cycle of a Service Business Part 1

Post the transactions of the previous example (1-11) to their appropriate ledger.

GENERAL LEDGER

DEPARTMENT OF EDUCATION
Accounting Cycle of a Service Business Part 1

DEPARTMENT OF EDUCATION
Accounting Cycle of a Service Business Part 1

GENERAL LEDGER

DEPARTMENT OF EDUCATION
Accounting Cycle of a Service Business Part 1

GENERAL LEDGER

DEPARTMENT OF EDUCATION
Accounting Cycle of a Service Business Part 1

GENERAL LEDGER

DEPARTMENT OF EDUCATION
Accounting Cycle of a Service Business Part 1

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

a list of all accounts with their respective debit or credit

TRIAL balances.
BALANCE
It is prepared to verify the equality of debits and credits in
the ledger at end of each accounting period or at any time
the postings are updated.

Kinds of Trial Balance:

1. Preliminary Trial Balance (the trial balance before
adjustments)
– Trial balance of balances
– Trial balance of totals
2. Adjusted Trial Balance (the trial balance after adjustments)
3. Post-closing Trial Balance (the trial balance after the closing
entries)

DEPARTMENT OF EDUCATION
 Accounting Cycle of a Service Business Part 1

Using the previous example, fill up the missing amounts of the Trial Balance
based on the balances from the general ledger

DEPARTMENT OF EDUCATION
Accounting Cycle of a Service Business Part 1

SOLUTION:

DEPARTMENT OF EDUCATION
Accounting Cycle of a Service Business Part 1

DEPARTMENT OF EDUCATION
 Chart of Accounts
100 - Assets 200 - Liabilities
101 – Cash 201 – Accounts Payable
102 – Accounts Receivable 202 – Notes Payable
103 – Notes Receivable 203 – Loans Payable
104 – Tools 204 – Mortgage Payable
105 – Furniture & Fixtures
106 – Office Equipment
107 – Repair Equipment
 Chart of Accounts
300 – Owner’s Equity 500 – Expenses
301 – Nelson Santos, Capital 501 – Office Supplies Expense
302 – Nelson Santos, Drawing 502 – Rent Expense
503 – Salaries Expense
400 – Revenue 504 – Insurance Expense
401 – Repair Income 505 – Advertising Expense
402 – Rental Income 506 – Light & Water Expense
507 – Miscellaneous Expense
Seatwork
Transactions Debit Credit
1. N. Santos invested P200,000
to start an auto repair business

2. N. Santos invested his tools

costing P14,000 in the business

3. Bought a computer from

Burroughs Company for cash,
P20,000

4. Bought tables and chairs from

Nicfur on credit, P12,000

5. Issued a promissory note for

repair equipment bought,
P45,000
Seatwork
Transactions Debit Credit
6. Borrowed money from the
bank, P35,000

7. Received cash for repair

service rendered, P40,000

8. Billed Mr. Cruz, a customer for

repair service rendered, P3,600

9. Received a promissory note,

P4,000 for repair service
rendered
10. Bought office supplies for
cash, P800
Seatwork
Transactions Debit Credit
11. Paid rent for the office space,
P3,000

12. Paid the salaries of the

employees, P12,000

13. A portion of the office space

is sub-leased to a tenant and
received P500 for rental

14. The owner withdrew cash,

P5,000 for his personal use

15. Paid Nicfur partially, P6,000

(transaction #4)
Seatwork
Transactions Debit Credit
16. Paid the promissory note
(transaction #5)

17. Paid the loan in full

(transaction #6)

18. Collected partially the

account of Mr. Cruz, P2,000

19. Collected the promissory

note (transaction #9)

20. Mortgaged the repair

equipment as collateral for a
loan, P10,000
 Seatwork
Transactions Debit Credit
21. Issued a promissory note for
P6,000 to Nicfur to settle the
account in full
22. Received a promissory note
from Mr. Cruz in full payment of his
account
23. Paid the following expenses
Advertising – P1,400
Insurance – P2,100

24. Bought tables, P8,000 and paid

P2,000 down

25. Billed customer for repair

service rendered, P3,000 and
collected 50%
Thank you!