Activities/Assessments:

Self-Assessment

I. Discuss the normal side of Elements of Financial Statements (Assets, Drawing,

Expenses, Liabilities, Income/Revenue, and Capital) by illustrating a T-account and
indicating 5 examples per element. (Ex. – Asset – Cash, Accounts Receivable)

Debit Credit
Asset Liabilities
1. Cash 1. Accounts payable
2. Accounts Receivable 2. Mortgages payable
3. Prepaid Rent 3. Payroll taxes
4. Office Equipment 4. Income taxes payable
5. Investments` 5. Notes payable 

Drawing Income/ Revenue

1. Darren Ace, Drawing 1.Sales
2.Rene Jay, Drawing 2. Rent Revenue
3. Raul Valde, Drawing 3. Dividend Revenue
4. Ian Miro, Drawing 4. Interest Revenue
5. Jhun Dalton, Drawing 5. Contra Revenue

Expense Capital/ Equity

1. Wages Expense 1. Darren Ace, Capital
2. Rent Expense 2. Rene Jay, Capital
3. Utilities Expense 3. Raul Valde, Capital
4. Supplies Expense 4. Ian Miro, Capital
5. Miscellaneous Expense 5. Jhun Dalton, Capital

II. What is a correcting entry? What is the importance of using correcting entry when
error occurs?
A correcting entry is a journal entry that is made in order to fix an erroneous transaction that had previously been recorded in
the general ledger. It is importance of using correcting entry because there must make correcting journal entries as soon
as you find an error

Practical
III. Encircle the letter of your answer.

1. Each of the following statement about an account is true except

a. There are separate accounts for specific assets and liabilities but only one account for
owner's equity items
b. The left side of account is the credit or decrease side.
c. An account is an individual accounting record of increases and decreases in specific
asset, liability, and owner's equity items.
d. In the simplest form, an account consists of two part
2. Debits and credits:
a. Increase assets and decrease liabilities
b. Decrease both assets and liabilities
c. Decrease assets and increase liabilities
d. Increase both assets and liabilities

3. A revenue account:
a. Is decreased by credits
b. Is increased by credits
c. Has a normal balance of debit
d. Is increased by debits

4. Which of the following accounts have normal debit balances?

a. Assets, expenses, and revenues
b. Assets, owner's drawings, and expenses
c. Assets, expenses, and owner's capital
d. Assets, liabilities and owner's drawings

5. Each of the following statements is true about a journal except:

a. It provides a chronological record of transactions.
b. It helps to locate errors because the debit and credit amounts for each entry can be
readily compared.
c. It discloses in one place the complete effect of a translation.
d. It is not a book of original entry.

6. Which of the following pertains to a ledger?

a. Contains only asset and liability accounts
b. Is a book of original entry
c. Should show accounts in alphabetical order
d. Is a collection of the entire group of accounts maintained by a company
7. Which of the following pertains to a trial balance?
a. Proves that all transactions have been recorded
b. Will not balance if a correct journal entry is posted twice
c. Proves the mathematical accuracy of journalized transactions
d. Is a list of accounts with their balances at a given time

8. The Trial Balance will be out of balance if:

a. P 1,000 cash drawing by the owner is debited to Owner's Drawing for P 10,000 and
credited to Cash for P 1,000.
b. The purchase of supplies on account is debited to Supplies and credited to Cash
c. A P 4,500 payment on account is debited to Accounts Payable for P 450 and credited
to Cash for P 450.
d. A correct journal entry is posted twice.

9. Posting is the process of

a. Transferring entries from the ledger to the journal
b. Transferring entries from the journal to the ledger
c. Reconciling entries from the journal to the ledger
d. Reconciling entries from the ledger to the journal

10. The erroneous rearrangement of digits like writing P 875 as P 785 is a:

a. posting error
b. footing error
c. transposition
d. slide
IV. For each of the following accounts, state in column A the classification of the account
(Whether the account is an asset, liability, capital, revenue, or expense), in Column B if
debit or credit for increase in the account and in column C if debit or credit for decrease,
and in column D, the normal balance of the account.

Column A Column B Column C Column D

Classification Increase Decrease Normal Balance
Ex. Utilities Expense Expenses Debit Credit Debit
1. Accounts Payable Liabilities Credit Debit Credit
2. Accounts Receivable Assets Debit Credit Debit
3. Cash Assets Debit Credit Debit
4. Carl Calma, Capital Owner’s Capital Credit Debit Credit
5. Carl Calma, Drawing Owner’s Drawing Debit Credit Debit
6. Commission Income Revenue Credit Debit Credit

7. Equipment Assets Debit Credit Debit

8. Interest Receivable Assets Debit Credit Debit
9. Insurance Expense Expenses Debit Credit Debit
10. Notes Payable Liabilities Credit Debit Credit
11. Notes Receivable Asset Debit Credit Debit

12. Prepaid Rent Asset Debit Credit Debit

13. Prepaid Insurance Asset Debit Credit Debit
14. Rent Expense Expenses Debit Credit Debit
15. Rent Revenue Expenses Debit Credit Debit
16. Salaries Expense Expenses Debit Credit Debit
17. Salaries Payable Liabilities Credit Debit Credit
18. Service Revenue Revenue Credit Debit Credit
19. Supplies Asset Debit Credit Debit
20. Supplies Expense Expenses Debit Credit Debit
V. For each of the following transactions, state the account/s to be debited and the
account/s to be credited.

Business Transactions Debit Credit

a. Received cash for services rendered
b. Received cash investment from Leah
Reyes, the owner of the firm.
c. Paid cash for advertising start of the
business.
d. Bought office supplies for cash.
e. Billed clients for services rendered on
account.
f. Purchased equipment on account.
g. Paid the assistant's salary.
h. Received a check from a customer
on account.
i. Paid creditors on account.
j. The owner withdrew cash for personal
use.
k. Paid office rent for the month.
l. Purchased additional office supplies
on account.
m. Returned portion of office
supplies purchased (l.)
n. Borrowed money from a finance
company issuing a promissory note.
o. The owner transferred her personal
computer (equipment) for office use.
p. Issued check in payment for the
promissory note issued.
 Debit Credit
A. Asset(Cash) Revenue

B. Asset(Cash) Leah Reyes, Capital

C. Accounts Payable Cash

D. Supplies Expense Cash

E. Accounts Receivable Service Revenue

F. Accounts Payable Cash

G. Salary Payable Cash

H. Cash Accounts Receivable

I. Accounts Receivable Cash

J. Drawing Account Cash

K. Prepaid Rent Cash

L. Supplies Expense Accounts Payable

M Cash Accounts Receivable

.
N. Note Payable Cash

O. Equipment Accounts Payable

P. Cash Note Payable