Business

Accounts

BSA (Bachelor of Science in

Accountancy)

Sectors Concerned

Legend: *Red Text are the board subjects

 Sole Proprietorship

Partnership

Corporation

FAR (Financial Accounting and Reporting)

AFAR (Advance Financial Accounting and Reporting)

Management

Law

Public and other users of Financial Statements

 Service

Merchandising

Manufacturing

FAR 1 (Assets)
FAR 2 (Liabilities & Capital)
FAR 3 (Special Topics )

Operations

Management Advisory Service

Taxation

RFBT (Regulatory Framework for Business)

 Barbershop, CPA's, lawyers (GPP), Engineers, Doctors

Retailer, Wholesaler

Foods/Equipment/Gadgets

IFRS (International Financial Reporting Standards)/ IAS (International Accounting Standards)/ GAAP (Generally Accepted Ac

Partnership, Consignment, Cost, Derivatives, Business Combination, Consolidated FS)

Us helping the management deciding in their courses of action

Financial Statements

It need to be correct (A=L+C)

It needs to be legal

Figure 1: Your Journey, Accountancy

4 years
 ACCOUNTING CYCLE

Sales, Cost, GP, Decision Making

Pay taxes (individual, corporation, partnership, estate, donor's tax, OPT

Audit (checking the accountant's work if there are material misstatements according to ISA (International
Auditing Standards)

Obligations and Contracts, Law on Sales, Pledge, Partnership, Corporation, Cooperatives

rs
 Financial Statements

Audit Theories

Audit Problems
 Balance Sheet/ Financial Position
Income Statement
Statement of Cash Flows
Statement of Changes in Owners Equity
Notes to Financial Statements
 A=L+C
Revenue, Expenses
Cash (Investing, Operating, Financing)
Capital, Drawings, Profit
Supplemental
Analyzing Business Transaction (Double Entry Bookeeping)
Normal Balances of Account

Asset = Liabilities + Capital

Relationships Pattern Dr. Cr.
Assets to Liabilities Increase Increase
Direct
Decrease Decrease

Assets to Capital Increase Increase

Direct
Decrease Decrease

Assets to Assets Inverse Increase Decrease

Liabilities to Capital Inverse Increase Decrease

Decrease Increase

CONCEPTS
 Example:

BSA Company incurs the following transactions during the year

a.1) On October 1, BSA Company loaned P500,000 from BSMA Company with an annual interest of 12%
Cash 500,000
Notes Payable 500,000
b.1) BSA Company invested P300,000 on his capital account

Cash 300,000
BSA, Capital 300,000
c.) Purchased an equipment amounting to P100,000 on cash
Equipment 100,000
Cash 100,000
d.) BSA Company recording its accrual of interest during the year
Interest Expense 15,000
Interest Payable 15,000
500,000 X .12 X 3/12
PRACTICE
ng the year
0,000 from BSMA Company with an annual interest of 12%. a.2.) Payment of the loan amounting to P500,000
Notes Payable 500,000
Cash 500,000
capital account b.2) Paid Operating Expense amounting to P300,000

Expense 300,000
Cash 300,000
P100,000 on cash

terest during the year d.1.) At the end of the year, BSMA company revised the interest to 6%
Interest Payable 7500
Interest Expense 7500

PRACTICE
 Asset = Liabilities + Capital
Dr. Cr.
a.1) 500,000 500,000
a.2) -500,000 -500,000
b.1) 300,000 300,000
b.2) -300,000 -300,000
c.) -100,000 100,000
d.) 15,000 -15,000
-7,500
7500
revised the interest to 6%
-100,000 100,000 7,500 -7,500
Total Dr. 0 0

T-ACCOUNT ANALYSIS
 Treatment in Capital Normal Balance
Revenue Added Cr

Expense Deducted Dr

Drawings Deducted Dr

Total Cr.

T-ACCOUNT ANALYSIS
 ENTRY MADE
Overstated Interest Expense 15,000
Overstated Interest Payable 15,000
500,000 X .12 X 3/12

b.3.1) Services rendered on account in the amount of P600,000

Accounts Receivable 600,000
Service Revenue 600,000
b.4.) BSA withdrawals amounting to 60,000 during the year
Drawings 60,000
Cash 60,000
 SHOULD BE ENTRY CORRECTING ENTRY
Interest Expense 7500 Interest Payable 7500
Interest Payable 7500 Interest Expense 7500
500,000 X .06 X 3/12

b.3.2) Collection of Accounts Receivable

Cash 600,000
Accounts Receivable 600,000