Muntinlupa Business High School Debit and Credit Guide

Republic of the Philippines
Department of Education
National Capital Region
SCHOOLS DIVISION OF MUNTINLUPA CITY
MUNTINLUPA BUSINESS HIGH SCHOOL
Espeleta St., Buli, Muntinlupa City
SPTVE
BUSINESS MATH 9
QUARTER 1 WEEK 7
DEBIT AND CREDIT
ANTONIO L. BANDILLA JR.

MARY ANN JOHNLYN T. DALIMOT
Writers
LEONAIDA L. GUTIERREZ
Validator
DR. VALENTINA A. BALLESTEROS
Quality Assurance Team Chair
Address: Espeleta St., Buli, Muntinlupa City
Telephone Number: 8-850-9479 / 8-772-2949
Email Address: mbhsmun@gmail.com
At the end of the module, the students should be able to:

1. Discuss the rules of debit and credit
2. Classify elements/accounts assigned to debit and credit
3. Perform debit and credit in a transaction
a. Apply concepts and rules in a service concerned business
Directions: Read and understand the items being described below. Choose the
letter of the correct answer and write it in your quiz notebook.
1. The graphical representation to show the two-fold effect of the transaction
A. Journal C. T-Account
B. Financial Statement D. Balance Sheet
2. It is the normal balance of asset, expense and drawing
A. Debit C. Both a and b
B. Credit D. none of the above
3. This is the part of the accounting system used to classify and summarize the
increases, decreases, and balances of each asset, liability, stockholders’
equity item, dividend, revenue, and expense
A. Balance C. T-Account
B. Account Normal Balance D. Credit
4. It is the normal balance of liability, revenue and capital
A. Debit C. both a and b
B. Credit D. none of the above
5. Paid the monthly telephone bill
A. Debit Cash, Credit A. Locsin, Capital
B. Debit Telephone Expense, Credit Cash
C. Debit A. Locsin, Capital, Credit Cash
D. None of the above
6. Collected cash from haircut service

A. Debit Cash, Credit Service Revenue
B. Debit Cash, Credit Accounts Payable
C. Debit Cash, Credit Land
7. Purchased additional office supplies for cash
A. Increase in assets = increase in proprietorship
B. Increase in one form of asset = decrease in another form of asset
C. Decrease in asset = decrease in liability
8. Withdrew cash from the practice for personal expense
A. Increase in assets = increase in proprietorship
B. Increase in assets = increase in liabilities
C. Decrease in assets = decrease in proprietorship
9. Bought tools on credit to J. De Belen
A. Increase in assets = increase in liabilities
B. Increase in liabilities = increase in assets
C. Decrease in assets = decrease in proprietorship
10. A simple form of account is called_______________.
A. T-account C. Credit
B. Debit D. account
11. ___________ is to enter the amount on the left side of a T-account.
A. T-account C. To Credit
B. To Debit D. account
12. ___________ is to enter the amount on the right side of a T-account.
A. T-account C. To Credit
B. To Debit D. account
13. The left side of the T-account
B. Debit D. account
14.The right side of the T-account
B. Debit D. account
15.An accounting device use to summarize the increases and decreases in the
asset, liability and proprietorship of the business.
A. Account C. Debit
B. T-account D. Credit

Directions: Match Column A with Column B. Write it in your quiz notebook.
_____ 1. These are the debts or obligations of the

business
_____ 2. Business obligation that matures beyond 1 year
_____ 3. It is an obligation supported with a promissory
note
_____ 4. Short term debt which has been incurred
but not yet paid
_____ 5. Key term to easily recognize liability account
_____ 6. Owner’s equity or investment to the business
_____ 7. The result when total revenue exceeds
total expense
_____ 8. Cost occurred from company’s
operating activities
_____ 9. Electricity, water, internet and waste disposal
are examples of what expense
_____ 10. It is the income generated from
sold goods and rendered services
Debit and Credit

Most businesses these days use the double-entry method for their
accounting. Under this system, your entire business is organized into individual
accounts.
Debits and credits are terms used by bookkeepers and accountants when
recording transactions in the accounting records. The amount in every transaction
must be entered in one account as a debit (left side of the account) and in another

account as a credit (right side of the account). This double-entry system provides
accuracy in the accounting records and financial statements.
T-Account is the device representing as account in the skeleton form of the
capital T is entitled the “T” Account. It is used to indicate addition or subtraction by
position. T-account shows the two-fold effects of the transaction.
ACCOUNT
Debit Credit
Rules of Debit and Credit

Debit to: Credit to:
1. Increase assets 1. Decrease in assets
2. Decrease liabilities 2. Increase in liabilities
3. Decrease in capital due to: 3. Increase In capital due to:
a. Withdrawal of assets by the a. Investment by the owner
owner b. Decrease in expenses and loses
b. Increase in expenses and loses c. Increase in income
c. Decrease in income
DOUBLE-ENTRY BOOKKEEPING
SYSTEM DEBIT CREDIT
Transaction has two-fold effect

DEBIT AND CREDIT APPLIED IN SERVICE CONCERNED BUSINESS TRANSACTIONS

Example Transactions:
Note: Always remember in answering a transaction you are the business.
1. AB & JAM Couture purchased store supplies in cash to National bookstore
DEBIT Store Supplies CREDIT Cash
Explanation:
▪ The business received store supplies (increase in asset) so the result is
Debit.
▪ On the other hand, the business used cash (decreased in asset) so the
balance of cash will result to Credit.
2. AB & JAM Couture planned to add tailoring equipment to the shop. The
business bought equipment from VCM Trading, on credit.
DEBIT Tailoring CREDIT Accounts Payable
Equipment
Explanation:
▪ The business received equipment thru debt. Tailoring Equipment
(increased in asset) = Debit; (increased in liability) = Credit.
▪ Remember, when on credit/ on account is used in a transaction, it
means the transaction involved debt/obligation (liability) to pay in the
future. On account/ On credit: Accounts Payable, Notes Payable
(supported with promissory note)
3. AB & JAM Couture paid water and electric bill due for the month of June.
Water and Electric
DEBIT Bills or Utilities CREDIT Cash
Expense
Explanation:
▪ The business consumed water and electricity throughout the month
and paid on its due date.
▪ There in an increase of expense which is subject for payment so water
and electric bills will result to Debit; in exchange is the payment for the
consumption that makes cash(decrease in asset)Credit.
4. AB & JAM Couture received cash payment from Ms. Layaban for the
designed and finished wedding dress.

DEBIT Cash CREDIT Service Revenue

Explanation:
▪ The business received cash from the customer in exchange of the
tailoring service. Therefore, cash payment comes in (increase in asset)
the result is Debit.
▪ After the render of a particular service, the payment falls as income so
there is an increase of revenue which makes service revenue Credit.
5. Due to the increase of clients for weddings and debuts, M. Dalimot, owner of
AB & Jam Couture invested cash for the purchase of tailoring equipment on
August.
DEBIT Cash CREDIT M. Dalimot, Capital
Explanation:
▪ The owner of the business invested cash for the business, therefore,
the business has increased its asset that makes cash Debit.
▪ When there is an increase of investment, there’s an increase of capital
which makes M. Dalimot, Capital, Credit.
▪ Note: Instead of writing capital alone, include the complete name of the
owner or as shown above and capital, which is rightfully owned by the
owner.
Additional Transaction:
6. M. Dalimot withdrew cash and used it for personal use.
DEBIT M. Dalimot, CREDIT Cash
Drawing
Explanation:
▪ The owner of the business withdrew cash to the business, so the
business decreased its asset that makes cash Credit.
▪ When there is a withdrawal, there’s a decrease in capital which makes
M. Dalimot, Drawing, Debit.
▪ Note: Instead of writing capital after the name of the owner, use
drawing to denote withdrawal.
ACTIVITY 1:

A. Directions: Write whether the given accounts are debit or credit. Use the
(increase/decrease) effects in the first column in answering.
Effect Account Debit/Credit

1 Increase Rent Expense
2 Decrease Tools
3 Increase Accounts Payable
4 Decrease Mortgage Payable
5 Increase A. Curtis, Capital
6 Increase Withdrawal
7 Increase Sales
8 Increase Utilities Expense
9 Increase Interest Revenue
10 Increase Accrued Interest
11 Decrease Cash in Bank
12 Increase Interest Receivable
13 Decrease Taxes Payable
14 Increase Furniture
15 Increase Service Income
B. Directions: State the effects of the following transactions on the assets,
liabilities, and capital by placing a plus ( +) sign and a minus ( -) sign on the space
provided for.
Transactions Asset Liabilities Capital

1 Invested cash and
equipment.
2 Collected cash form a
customer.
3 Purchased additional
equipment on credit.
4 Paid the assistant’s salary.
5 Bought supplies in cash.
6 Paid the telephone bill.
7 Paid the account due in

number 3.
8 Purchased automobile for

business.
9 Received payment car

repair service.
10 Withdrew cash from the

business form personal use.
Directions: Express what you have learned in this lesson by completing the
sentences below.
1. In your own words, what is the essence of studying the rules of debit and
credit to a business?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

o Debits and credits are terms used by bookkeepers and accountants when
recording transactions in the accounting records. It is important to
understand the rules and analysis of debit and credit.
Directions: Read and understand the items being described below. Choose the
letter of the correct answer and write it in your quiz notebook.
1. R. Gutierrez invested cash in a real estate agency
A. Debit Land, Credit Cash
B. Debit Cash, Credit R. Gutierrez, Capital
C. Debit Land, Credit Accounts Payable
2. Paid the monthly rent of the office
A. Debit Cash, Credit R. Gutierrez, Capital
B. Debit Rent Expense, Credit Cash
C. Debit R. Gutierrez, Drawing, Credit Cash
3. Paid for business automobile
A. Debit Cash, Credit Accounts Payable
B. Debit Transportation Expense, Credit Cash
C. Debit Automobile, Credit Cash
4. Purchased office equipment for cash
A. Debit Office Equipment, Credit Cash
B. Debit Office Equipment, Credit Accounts Payable
C. Debit Office Equipment, Credit R. Gutierrez, Capital
5. Purchased office supplies on credit, and office equipment from A. Rama
General Merchandise
A. Debit Office Supplies and Office Equipment, Credit Cash
B. Debit Office Supplies and Office Equipment, Credit Accounts Payable
C. Debit Office Supplies and Office Equipment, Credit R. Gutierrez,
Capital
6. Sold Office Equipment to S. Lahbati and collected cash

A. Debit Office Equipment, Credit Cash
B. Debit Office Equipment, Credit Accounts Payable
C. Debit Cash, Credit Office Equipment
7. Paid the account due to A. Rama
A. Debit Cash, Credit Accounts Payable
B. Debit Accounts Payable, Credit Cash
C. Debit Office Equipment, Credit Cash
8. Received cash from car repair service
A. Debit Cash, Credit Service Revenue
B. Debit Cash, Credit R. Gutierrez, Capital
C. Debit Service Revenue, Credit Cash
9. Paid the secretary’s salary for the first half of the month
B. Debit Salary Expense, Credit Cash
C. Debit Salary Expense, Credit Accounts Payable
10.Withdrew from the agency for personal use
B. Debit R. Gutierrez, Drawing, Credit Cash
C. Debit R. Gutierrez, Drawing, Credit R. Gutierrez, Capital
References
1. Financial Accounting Volume One, pp. 120-121
2. https://www.investopedia.com/terms/r/revenue.asp
3. https://www.investopedia.com/terms/e/expense.asp
4. https://smallbusiness.chron.com/determine-net-income-net-loss-after-adjusting-entries-25076.html
Answer Key


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Republic of the Philippines

ANTONIO L. BANDILLA JR.

At the end of the module, the students should be able to:

MUNTINLUPA BUSINESS HIGH SCHOOL

MUNTINLUPA BUSINESS HIGH SCHOOL

Directions: Match Column A with Column B. Write it in your quiz notebook.

_____ 1. These are the debts or obligations of the

Debit and Credit

MUNTINLUPA BUSINESS HIGH SCHOOL

Rules of Debit and Credit

MUNTINLUPA BUSINESS HIGH SCHOOL

DEBIT AND CREDIT APPLIED IN SERVICE CONCERNED BUSINESS TRANSACTIONS

MUNTINLUPA BUSINESS HIGH SCHOOL

DEBIT Cash CREDIT Service Revenue

MUNTINLUPA BUSINESS HIGH SCHOOL

Effect Account Debit/Credit

Transactions Asset Liabilities Capital

4 Paid the assistant’s salary.

5 Bought supplies in cash.

6 Paid the telephone bill.

7 Paid the account due in

8 Purchased automobile for

9 Received payment car

10 Withdrew cash from the

MUNTINLUPA BUSINESS HIGH SCHOOL

6. Sold Office Equipment to S. Lahbati and collected cash

MUNTINLUPA BUSINESS HIGH SCHOOL

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