Subject Code: BAINTE1L

Subject Title: Integrated Accounting Fundamentals with SAP

Subject Description: This is an introductory course in accounting that will develop

learner’s appreciation of accounting as the “Language of Business”
and provide knowledge about the basic accounting principles and
concepts that will help them in analyzing, recording and summarizing
business transactions and events. They will learn here the major
business organization. Learners will also obtain an understanding of
the nature, business transactions, financial statements, and peculiar
accounting problems of different types of business operations like
service, merchandising and manufacturing businesses. It also covers
the following: special journals and payroll accounting.

No. of Units: 6

Class Schedule: Face-to-Face: Thursday 02:00 pm – 06:00 pm

Synchronous: Monday 02:00 pm – 06:00 pm

Course Learning Outcomes:

At the end of the course, the student must be able to:
1. Know the different classifications of adjusting entries
2. Prepare adjusting entries

About the Instructor:

- BS Accountancy (CEU Manila) Class of 2015
- BSBA Major in Management Accounting (CEU Malolos) Class of 2013
- Tax Accountant, Sevilla and Associates
- CPA Lecturer in various Universities
- Former Tax Associate, SGV and Co.
- Former Financial Analyst Supervisor, Manila Electric Company

 Boris A. Sevilla, CPA, CTT

Contact Information:
Facebook Account: Boris Sevilla
Email Address: basevilla@nu-baliwag.edu.ph / borcpa2015@gmail.com
Contact Number: 0916-538-9272

SM Baliwag Complex, Dona Remedios Trinidad Highway, Brgy. Pagala, Baliwag, Bulacan
(+63) 927-533-0342 – (+63) 923-949-5265 admissions-nubaliwag@nu.edu.ph
Topics: ADJUSTING ENTRIES

DISLAIMER: The information content provided in this course material is designed to provide
helpful information on the subjects discussed. Some information’s are compiled from different
materials and summarized from different books. Some information’s are based on contributors'
perspective and understanding. References are provided for informational purposes only and do
not constitute endorsement of websites or other sources. Readers should be aware that the
websites/electronic references listed in this course material may change. Hence, the contributors do
not claim any information presented in the materials and do not reflect their own work.

MODULE 3:
Adjusting Entries

Content:

Classifications:

1. Accruals
2. Deferrals
3. Estimates

ACCRUALS – it updates the accounting values by giving accounting recognition to

expired transactions that remain unrecorded.
- In other words, the transactions happened already as of cut-off date, but they still
remain unrecorded.

Types:
 Accrual of expenses – expenses that have been incurred but are not yet paid as of
the cut-off date.

Pro-forma adjusting entry:

Expense xxx
Liability (Accrued Exp or Payable) xxx

 Accrual of Income – income earned but not yet recorded or collected.

Pro-forma adjusting entry:

Asset (Receivable) xxx

Income xxx

SM Baliwag Complex, Dona Remedios Trinidad Highway, Brgy. Pagala, Baliwag, Bulacan
(+63) 927-533-0342 – (+63) 923-949-5265 admissions-nubaliwag@nu.edu.ph
DEFERRALS – these are adjusting entries that update accounts because the books of
accounts have recognized the transactions pertaining to future periods.

Types:
 Prepayment of expenses – these are expenses that are paid in advance.
Expenses paid by the business now but will be utilized in the future.

 Expense Method – it implies that this method uses an expense account at the time
of payment.

Pro-forma adjusting entry:

Asset Account xxx

Expense Account xxx

 Asset Method – it implies that this method uses an asset account at the time of
payment.

Pro-forma adjusting entry:

Expense Account xxx

Asset Account xxx

 Pre-collection of income – it refers to advances made by the customers awaiting

future services.

 Income Method – it considers the pre-collected amount as income at the time of

collection.

Pro-forma adjusting entry:

Income Account xxx

Liability Account xxx

 Liability Method – it indicates that liability account is credited upon receipt of pre-
collection.

Pro-forma adjusting entry:

Liability Account xxx

Income Account xxx

SM Baliwag Complex, Dona Remedios Trinidad Highway, Brgy. Pagala, Baliwag, Bulacan
(+63) 927-533-0342 – (+63) 923-949-5265 admissions-nubaliwag@nu.edu.ph
ESTIMATES

Types:

 Provision for Depreciation

o Depreciation – is a reduction in the value of an asset because of the passage
of time, or wear and tear.
o Straight – line method = it is the most common method in computing for
depreciation

Cost−Salvage Value
Annual Depreciation =
Useful Life

Pro-forma adjusting entry:

Depreciation Expense xxx

Accumulated Depreciation xxx

 Provision for Doubtful Accounts

o Doubtful accounts are customers’ accounts arising from sale of goods or
services on credit but become doubtful of collection.

Pro-forma adjusting entry:

Doubtful Accounts Expense xxx

Allowance for Doubtful Accounts xxx

VI. References:

- Various accounting textbooks

SM Baliwag Complex, Dona Remedios Trinidad Highway, Brgy. Pagala, Baliwag, Bulacan
(+63) 927-533-0342 – (+63) 923-949-5265 admissions-nubaliwag@nu.edu.ph