MISAMIS UNIVERSITY Prepared by: Document Code: Module Reference

Ozamiz City MU-SHS-LM-058 No.

Office of the Vice President MARTHY D. DALID 3.1
for Academic Affairs Instructor
Checked by: Revision Date: Units:
BASIC EDUCATION June 30, 2020 2.0
DEPARTMENT ROJ Z. COMPO
Associate Principal Program
Chairman
LEARNING Reviewed by: Revision No.: Subject Code:
MODULE 0 Acctg. 1 (major)
ANALYN S. CLARIN
Principal
Approved by: Prerequisite: Co-requisite:

CYNTHIA S. SUPERABLE, DScN

OIC/AVP Office of the VPAA
Descriptive Title: THE ACCOUNTANCY PROFESSION
MU-ACA-041A/30May2020

Module 3.1

SOLVING PROBLEMS APPLYING THE ACCOUNTING EQUATION

I. Course Outcome : CO3: Perform operations involving simple cases with the use
accounting equation.
II. Learning Outcome/s : LO3.1: Solve problems applying the accounting equation.
III. Time Frame : 2 Hours
IV. Introduction :
In this session, you will understand the relationship between asset, liability, and equity;
and the rules of debit and credit.

Below are key concepts for reading. Details of these concepts are discussed further in
the textbook Fundamentals of Accountancy, Business and Management 1 by Nick L. Aduana
(Copyright 2016 by C&E Publishing).

The Accounting Equation

The five accounting elements where various account titles have been categorized are assets,
liabilities, capital or equity, income and expense. These elements are interrelated in the
recording process and in the preparation of financial statements.

Basic rule to remember: Every business transaction affects two or more accounting elements.
This basic principle serves as the bedrock of the recording process and financial statements
preparation. It reflects the relationships of the accounting elements.

The fundamental accounting equation that denotes ownership of resources of the business is
expressed as follows:

ASSETS = EQUITIES

In the parlance of accounting, the term equity represents rights or claims over assets of the
business. These are two claims on the assets of the business. These two claims are:

1. the claim of the owner/s in the form of capital and

2. the claim of the creditor in the form of liability.

Along this line, the basic accounting equation can be expanded as follows.

PROPERTY OFMISAMIS UNIVERSITY Page 1 of 4

 ASSETS = LIABILITIES + CAPITAL

ASSETS = CREDITOR’S EQUITY + OWNER’S EQUITY

The claims of the creditor against the assets are called liabilities, while the claim of the owner
or owners is called capital or owner’s equity.

V. Learning Materials : 1. A. Handouts (printed copy)

Module 3.1: SOLVING USING THE ACCOUNTING
EQUATION
B. Word-file Document (soft copy)
Filename 3: The Accounting Equation.docx
2. Powerpoint Presentation
Filename: Introduction to Accounting.ppt
This file can also be accessed online through our MU-
OLE or Group Page.
3. Video Tutorial
Filename: The Accounting Equation.mp4
ACCOUNTING BASICS - Debits and
Credits Explained.mp4
4. This file can also be accessed online through our MU-
OLE or Group Page.
5. Writing Materials: Pen and paper

VI. Supplementary
Learning Resources : A. Books
1. Frias, Solita A. Fundamentals of Accountancy, Business
and Management: A Textbook in Basic Accounting 1.
Phoenix Publishing House. 2016.
2. Aduana, Nick L. Fundamentals of Accountancy, Business
and Management 1. C&E Publishing, Inc. 2016
3. Lopez, Rafael Jr. M. Basic Accounting for Non-
Accountants (Simplified Procedural Approach) Volume
1. Ms. Lopez Printing & Publishing 2016-2017

B. Website Address/URL
1. https://www.accountingverse.com
2. https://www.accountingplay.com

VII. Learning Activities : 1. Home-based Activities

1.1 A. Watch the powerpoint presentation and read through the

PROPERTY OFMISAMIS UNIVERSITY Page 2 of 4

 handouts, “Module 3.1: SOLVING USING THE
ACCOUNTING EQUATION”. Guide Question:
a. What is the relationship between asset, liability
and equity?
1.2 Watch and listen to the video tutorial uploaded on our MU
OLE/Group Page to go back to the discussion on the
Accounting Equation.
1.3 Do “Activity 1: Solving for the Accounting Equation” on
page 4 of this module.

VIII. Equipment : None

IX. Student Feedback : Your feedback is important. Please don’t leave this blank. This
portion will allow us to evaluate how this module is going. Your
feedback will help improve this module for future revision.

1. Which part of this module did you find interesting? Why?

2. Which part of this module did you consider challenging? Why?

PROPERTY OFMISAMIS UNIVERSITY Page 3 of 4

 ACTIVITY 1

SOLVING FOR THE ACCOUNTING EQAUTION. (38 PTS.)

DIRECTION: Supply the missing amount/percentage for each case. Write your answers on
the space provided and if applicable, any solutions on a separate sheet of paper.

A.
BASIC ACCOUNTING ELEMENTS

Element Case 1 Case 2 Case 3 Case 4

ASSETS 100,000.00 120,000.00 3. _____٪ 150,000.00
LIABILITIES 45,000.00 2. 4. _____٪ 30٪
P____________
OWNER’S 1. 65,000.00 75 ٪ 5.
EQUITY P____________ P____________

Element Case 5 Case 6 Case 7 Case 8

REVENUE 525,000.00 488,000.00 8. _____٪ 285,000.00
EXPENSES 145,000.00 7. 9. _____٪ 10.P____________
P____________
NET
INCOME(LOSS) 6. 357,000.00 (20%) (P34,500.00)
P____________

B.
ELEMENT CASE 1 CASE 2 CASE 3
(IN PESO AMOUNT)
ASSETS 500,000.00 4._____________ 700,000.00
LIABILITIES 1._____________ 500,000.00 7._____________
CAPITAL, 100,000.00 400,000.00 8._____________
BEGINNING
REVENUE 600,000.00 5._____________ 9._____________
EXPENSES 700,000.00 600,00.00 500,000.00
NET INCOME 2.______________ (100,000.00) (80,000.00)
(LOSS)
ADDITIONAL 3.______________ 80,000.00 0.00
INVESTMENT
WITHDRAWAL 100,000.00 200,000.00 100,000.00
CAPITAL, ENDING 350,000.00 6._____________ 400,000.00

PROPERTY OFMISAMIS UNIVERSITY Page 4 of 4