1. Source of Assets (SA).

An asset account increases and a corresponding claims

(liabilities or owner's equity) account increases. Examples: (1) Purchase of supplies
on account; (2) Sold goods on cash on delivery basis. A OE
2 Exchange of Assets (EA). One asset account increases and another asset account
decreases. Example: Acquired equipment for cash.
3. Use of Assets (UA). An asset accout decreases and a corresponding claims
(liabilities or equity) account decreases. Example: (1) Settled accounts payable; (2)
Paid salaries of employees. A
4. Exchange of Claims (EC). One claims (liabilities or owner's equity) account increases
and another claims (liabilities or owner's equity) account decreases. Example:
Received utilities bill but did not pay.

Every accountable event has a dual but self-balancing effect on the accounting equation.
Recognizing these events will not in any manner affect the equality of the basic
accounting model. The four types of transactions above may be further expanded into
nine types of effects as follows:
Increase in Assets = Increase in Liabilities (SA)
2. Increase in Assets = Increase in Owner's Equity (SA)
3.
3. Increase in one Asset = Decrease in another Asset (EA)
4. Decrease in Assets Decrease in Liabilities (UA)
5.
5. Decrease in Assets = Decrease in Owner's Equity (UA)
6. Increase in Liabilities = Decrease in Owners Equity (EC)
7. Increase in Owner's Equity = Decrease in Liabilities (EC)

8. Increase in one Liability Decrease in another Liability (EC)

9 Increase in one Owner's Equity Decrease in another Owner's Equity (EC)

TYPICAL ACCOUNT TITLES USED

STATEMENT OF FINANCIAL POSITION

Assets
Assets are should be classified only into two: current assets and non-current assets. Per
revised Philippine Accounting Standards (PAS) No. 1, an entity shall classify assets as
Current when:
a. it expects to realize the asset, or intends to sell or consume it, in its normal
operating cycle;
b, it holds the asset primarily for the purpose of trading;
C. it expects to realize the asset within twelve months after the reporting period; or
d. the asset is cash or à cash equivalent (as defined in PAS No. 7) unless the asset is
restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.

All other assets should be classified as non-current assets. Operating cycle is the time
between the acquisition of assets for processing and their realization in cash or cash
equivalents. When the entity's normal operating cycle is not clearly identifiable, it is
assumed to be twelve months.