LESSON 1

ACTIVITY
TASK 1
Business - Making a living or earning money via the production of goods or the purchase and
sale of goods is known as business. Having a business name does not remove the business entity
from the owner, meaning that the owner of the firm is responsible and liable for obligations
made by the business. It is also "any activity or venture engaged into for profit." The owner's
personal belongings may be taken if the company accrues debts. Corporate tax rates are not
permitted in a business structure. The proprietor is individually taxed on all income from the
business.
Asset - Any resource that a company or other economic organization owns or controls is
considered an asset in financial accounting. Anything that has the potential to provide positive
economic value qualifies. The ownership value that may be turned into cash is represented by
assets. Cash, inventories, and accounts receivable are examples of current assets, whereas land,
structures, and machinery are examples of fixed assets. Non-physical resources and rights known
as intangible assets are valuable to a company because they provide that company a competitive
edge. Goodwill, copyrights, trademarks, patents, and computer programs are examples of
intangible assets.
Debit and Credit - In accounting, debits and credits are entries made in account ledgers to
record value changes brought on by company transactions. A credit entry reflects a value transfer
from the account, whereas a debit entry represents a transfer of value to the account. Each
transaction involves the movement of money from credit to debited accounts. A renter might
include a credit for the bank account on which the rent check is written and a debit for the rent
expenditure account, for instance, when writing a rent check to a landlord. In a similar manner,
the landlord would record a credit in the tenant's rent income account and a debit in the account
where the check is placed.
Investment - Investment is the commitment of a resource to a long-term rise in value.
Investment necessitates the loss of a current resource, such as time, money, or effort. In finance,
the purpose of investing is to generate a return from the invested asset. A capital gain or loss
realized through the sale of a piece of property or investment, unrealized capital gains,
investment income like dividends, interest, or rental income, or a mix of capital gains and
income can all be included in the return. The return may also include foreign exchange profits or
losses as a result of shifting exchange rates. Riskier investments typically yield higher returns,
according to investors. A low-risk investment often yields a higher return.

Cash - Cash is defined in economics as money that is present in the form of coins and banknotes.
Cash is defined as current assets in bookkeeping and financial accounting, which include
currency or currency equivalents that may be retrieved immediately or soon after being held.
Cash is viewed as a tool to either prevent a decline in the financial markets or as a reserve for
payments in the event of a structural or accidental negative cash flow.

ANALYSIS
1. Why is accounting considered as the “language of business”?
- Accounting is considered a “language of business” it will serve as a bridge of
communication between the business and the users of the financial statement. The
business has to go through accounting so that users will understand what is the
situation of the business.

2. Why recording of business transactions is important?

-It needs accurate records to monitor the business's progress. Records can show if
your business is expanding, what products are selling, and what changes need to
make. Good records can increase a business's chances of success. To ensure that is
billing and being paid accurately, keeping track of transactions is therefore
essential. Everyone, including customers, detests paying for something don't need.
Transactions should never go beyond expectations, whether making recurring or
one-time payments.

3. What is the basic accounting equation?

- Asset = liabilities + equity is the basic accounting equation.

4. Discuss briefly the rules of debit and credit and explain why it’s relevant?
- Debit - Left side or the "value received" while Credit - Right side or the "value
parted with.” Debit is equal to Credit. The amount entered on the debit side of an
item's account will always have a corresponding amount entered on the credit side
on the credit side. The left will always equal to right.
APPLICATION
ASSET = LIABILITIES = EQUITY
1. P 350,000 = P 195,000 = P 155,000
2. P 600,000 = P 250,000 = P 350,000
3. P 680,000 = P 230,000 = P 450,000
4. P 970,000 = P 650,000 = P 320,000
5. P 275,000 = P 85,000 = P 190,000

TASK 3 Journalizing Service Concern Transaction

Dr. Jonathan Alegre opened a medical clinic in Kapalong, Davao del Norte to
serve his constituents in the area. With the use of a two-column General Journal, record
the completed transactions during the first month of its operation using the given chart
of accounts

Transaction:
Sept 1 Cash on Hand 950,000
Furniture and Fixture 250,000
J. Alegre, Capital 1,200,000

Sept 2 Medical Equipment 750,000

Cash on Hand 200,000
Notes Payable 550,000

Sept 4 Unused Medical Supplies 100,000

Cash on Hand 100,000
Sept 5 J. Alegre, Drawing 15,000
Cash on Hand 15,000

Sept 7 Cash on Hand 50,000

Account Receivable 60,000
Medical Fees Income 110,000
Sept 9 cash on Hand 350,000
J. Alegre, Capital 350,000

Sept 11 Notes Payable 550,000

Cash on Hand 550,000

Sept 14 Cash on Hand 40,000

Account Receivable 70,000
Medical Fees Income 110,000

Sept 15 Cash on Hand 60,000

Account Receivable 60,000

Sept 18 Unused Medical Supplies 30,000

Accounts Payable 30,000

Sept 28 Cash on Hand 40,000

Account Receivable 70,000
Medical Fees Income 110,000

Sept 30. Taxes and Licenses 20,000

Salaries Expense 45,000
Utilities Expense 40,000
Cash on Hand 105,000

Total 3,490,000 3,490,000