What I Know

Read the following statements below. Write a / if the statement is correct, otherwise write X.
_______ 1. Analyzing is the first step in the accounting cycle
_______ 2. Source documents are written evidences containing information about transactions
that comes in various forms.
_______ 3. Transactions are normally identified from source documents
_______ 4. A transaction that has an effect on the accounts is an “accountable event,” which
needs to be recorded in the books of accounts.
_______ 5. The accounting cycle represents the steps or procedures used to record
transactions and prepare financial statements.

What's More
Activity 1
Identify the following events whether it is recorded as accountable events or not recorded as
non-accountable events. Write AE for accountable events and NAE for non-accountable events.
1. M. Manzano invested P150,000 in an Auto Repair Shop
2. Purchased repair equipment from M. Bay P15,000 on account
3. Purchased repair supplies P10,000 on cash
4. Received cash from client P25,000 for the contract of repairing his car.
5. Completed repair work to Ms. Zen on cash, P15,000
6. Paid one half of the amount owed to M. Bay
7. Received P5,000 from Mr. XYZ as partial payment of the service rendered
8. Paid for the gas and oil place in the service car, P600
9. Ordered additional equipment to M. Bay P30,000. The equipment will be delivered on the
next month.
10. Completed repair work for A. Martinez on credit, P10,800
11. Hired a shop assistant with a salary of P5,000 a month. The assistant will start on the next
month.
12. Paid P5,000 for the shop space
13. Withdrew P12,000 for personal use
14. Collected the account due from A. Martinez
15. Received in full the account due from Mr. XYZ

What I Have Learned

1. What are source documents?

2. How are business transactions identified for recording purposes? Give examples of source
documents.

3. Why are they important in the recording process?

4. Reflect on the most valuable skills you have learned about the lesson: As a student, how
important are those source documents on your daily living?

What I Can Do
1 Increases in cash coming from the owner as his additional investment in the business.
2 Increase in supplies expense for supplies purchased
3 Decrease in cash in bank for issuing these source documents
4 Increase in accounts receivable for service rendered to customer
5 Increase in cash, increase in liabilities for receiving cash in exchange for this source
documents
6 Increase in expense and decrease in cash in bank as shown in the source document is
recorded
7 Increase in cash in bank and decrease in cash on hand, when this source document is
recorded
8 Increase in expenses when this source of document of utility services consumed is recorded
9 Decrease in cash on hand when this source of document indicating payment of an account is
recorded.
10 Decrease in accounts receivable as indicated in this source document issued to customer to
act on the complaint due to unsatisfactorily service rendered by the business.

Assessment
1. Implements the accounting process of identifying, recording, and communicating economic
information.
2. This source document used for sale of service.
3. This source document issued by a buyer to a seller indicating the types, quantities and
agreed prices for products or services that the buyer intends to purchase.
4. This source documents shows the date of depositor, the bank account name and number,
and the amount deposited
5. This is a written evidence containing information about the nature and the amounts of the
transactions