Fabm1 q3 Mod6 Rulesofdebitsandcredits Final

Fabm1 q3 mod6 rulesofdebitsandcredits final
Introduction To Financial Accounting (University of the Philippines System)
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Fundamentals of
Accountancy, Business and
Management 1
Quarter 3 – Module 6:
Rules of Debit and Credit

Fundamentals of Accountancy, Business and Management – Grade 11
Alternative Delivery Mode
Quarter 3 – Module 6: Rules of Debit and Credit
First Edition, 2020
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Fundamentals of
Accountancy, Business
and Management 1
Quarter 3 – Module 6:

Introductory Message
This Self-Learning Module (SLM) is prepared so that you, our dear learners,
can continue your studies and learn while at home. Activities, questions,
directions, exercises, and discussions are carefully stated for you to understand
each lesson.
Each SLM is composed of different parts. Each part shall guide you step-by-
step as you discover and understand the lesson prepared for you.
Pre-tests are provided to measure your prior knowledge on lessons in each

SLM. This will tell you if you need to proceed on completing this module or if you
need to ask your facilitator or your teacher’s assistance for better understanding of
the lesson. At the end of each module, you need to answer the post-test to self-
check your learning. Answer keys are provided for each activity and test. We trust
that you will be honest in using these.
In addition to the material in the main text, Notes to the Teacher are also
provided to our facilitators and parents for strategies and reminders on how they can
best help you on your home-based learning.
Please use this module with care. Do not put unnecessary marks on any part
of this SLM. Use a separate sheet of paper in answering the exercises and tests.
And read the instructions carefully before performing each task.
If you have any questions in using this SLM or any difficulty in answering
the tasks in this module, do not hesitate to consult your teacher or facilitator.
Thank you.

What I Need to Know
This module was designed and written with you in mind. It is here to help you
master identifying the business and nonbusiness transactions, to enumerate the
types of business documents, to recite the rules of debit and credit and to apply these
in simple cases.
At the end of this module, you are expected to:

a. determine the rules of debit and credit and
b. analyze common business transactions using the rules of debit and
credit (ABM_FABM11-III-g-j-27).

What I Know
Directions: For each transaction, state the accounts to be debited and accounts to
be credited with their corresponding amount. Complete the table below.
Write your answers on a separate sheet of paper.
Debit Credit Amount

1
2
3
4
5
6
7
8
9
10
Romeo Masigasig is an event planner. The transactions that he had in his

business were:
1. He invested P110,000 in cash to start his own business.

2. He paid P5,100 monthly rent.
3. He bought furniture for the office for P15,000 cash.
4. He paid for the laptop computer worth P54,000.
5. He performed services for P12,000 in cash.
6. He performed services for P10,800 on credit.
7. He bought a fax machine for P7,500.
8. He received P5,400 from clients on account.
9. He paid P10,000 for salaries.
10. He withdrew P4,500 cash for personal use.

Lesson
1 Rules of Debit and Credit
Analyzing and recording transactions using the accounting equation is

useful in explaining a basic understanding of how transactions affect the business.
One way on how to analyze transactions is by using the T-account following the
principles of debit and credit.
What’s In
Directions: Write TRUE if the analysis for each transaction is correct and FALSE if
it is not. Write your answers on a separate sheet of paper.
1. The owner invested P30,000 cash in her nail salon.
Analysis:
Increase in Asset: Cash P30,000
Increase in Owner’s Equity Owner’s Capital P30,000
2. The businessman bought supplies for P3,000 cash.
Analysis:
Increase in Asset: Laundry Supplies P3,000
Increase in Liability: Accounts Payable P3,000
3. The owner purchased furniture for P5,500 on account.
Analysis:
Increase in Asset: Furniture and Fixtures P5,500
Decrease in Asset: Accounts Receivable P5,500
4. The business bought a lot for P50,000 paying cash of P20,000 with the
balance covered by a promissory note.
Analysis:
Increase in Asset: Land P50,000
Decrease in Asset: Cash P20,000
Increase in Liability: Notes Payable P30,000

5. The owner withdrew cash of P6,000 from the business.
Analysis:
Decrease in Asset Cash P6,000
Decrease in Owner’s Equity Owner’s Capital P6,000
6. The owner invested cash of P30,000 in an automotive repair shop on February

2, 2020.
Analysis:
Increase in Asset Cash P30,000
Increase in Owner’s Equity Owner’s Capital P30,000
7. The owner paid P150 for business permits.
Analysis:
Decrease in Owner’s Equity Taxes and Licenses P150
Decrease in Asset Cash P150
8. The owner bought machinery and equipment costing P15,000 by paying

P10,000 from the business funds and issuing a promissory note for the
balance.
Analysis:
Increase in Asset Machinery and Equipment P15,000
Increase in Asset Cash P10,000
Increase in Liability Notes Payable P25,000
9. The owner bought tools for P7,000 cash.
Analysis:
Increase in Asset Tools P7,000
Increase in Liability Accounts Payable P7,000
10. The owner of the business paid P12,000 for advertising.
Analysis:
Decrease in Owner’s Equity: Advertising Expense P12,000
Decrease in Asset: Cash P12,000
Notes to the Teacher / Facilitator
This module prepares students to understand the rules of

debits and credits. They must learn to analyze and solve
problems using the rules of debits and credits.

What’s New
The basis of the rules of debits and credits is how the effects of the transaction
on the accounting elements are treated. Changes in assets, liabilities, owner’s equity,
revenue, and expenses are shown either on the left or on the right side of an account.
The left side of an account is called the debit side and the right side is called the
credit side. To show the effects of debit and credit entries to an account, postings are
made to T- Accounts. T-Account is a representation to separate debit from credit in
the form of “T”, whereas debit entry is put in the left while credit entry is in the right
side.
Account Title
Debit Credit
T-Account
When analyzing and solving transactions using the T-accounts, the

accounting equation must always be considered. The equation is as follows:
Assets = Liabilities + Owner’s Equity
This equation presents the resources controlled by the enterprise, the

present obligations of the enterprise, and the residual interest in the assets. The
logic of debiting and crediting is related to the accounting equation. Transactions
may require additions to both sides (left and right sides), subtractions from both
sides (left and right sides), or an addition and subtraction on the same side (left or
right side), but in all cases the equality must be maintained (Ballada, 2019).

What Is It
The recorded increase and decrease in the T-Account is determined by the

account type. If there is an increase in assets, you will record it as debits (on the left
side of the T-Account). If there is a decrease in assets, you will record it as credits
(on the right side). Debit is the normal balance of the asset accounts.
Assets
Debit Credit
+ -
Increases Decreases
Normal Balance
Increases in liabilities are recorded on credits and decreases on debits. The

same rule applies with the owner’s equity accounts—increases are recorded on
credits and decreases are on debits.
Liabilities Owner's Equity
Debit Credit Debit Credit

- + - +
Decreases Increases Decreases Increases
Normal Balance Normal Balance
For income and expense accounts, the rules of debits and credits are based
on the relationship of these accounts to owner’s equity. If there is an income, it will
increase owner’s equity while if there is an expense, it is considered as a decrease in
owner’s equity. If there is an increase in income, it will be recorded as credits and if
there is an adjustment (decrease), it will be recorded as debits. Increases in expenses
are recorded as debits and decreases are as credits.
Income Expenses
Debit Credit Debit Credit

- + + -
Decreases Increases Increases Decreases
Normal Balance Normal Balance

Adapted from Basic Financial Accounting and Reporting, 21st Edition

The illustration below summarizes the rules of debit and credit.
The side from which the account recorded its increase is the normal
account balance of the specific account. The accounts which have a normal debit
balance are asset, owner’s withdrawal, and expense. The accounts which have a
normal credit balance are liability, owner’s equity, and income accounts.
Debit Credit
Assets Liabilities
Drawings Equity
Expenses Income
For better understanding, the rules of debit and credit will be applied to
Sarimanok Ads Design owned by Maria Matulungin.
April 1: Matulungin deposited P350,000 to start her new business.
Assets (Increase) = Owner's Equity (Increase)
Cash Matulungin, Capital

Debit (+) Credit (-) Debit (-) Credit (+)
4-1 ₱350,000 4-1 ₱350,000
Illustration adapted from Basic Financial Accounting and Reporting, 22nd Edition
Analysis:
Increase in Asset: Cash P350,000 Debit
Increase in Owner’s Equity: Matulungin, Capital P350,000 Credit
April 2: Matulungin bought a computer amounting to P50,000 by

issuing a note payable to Ardiente Computer Store.
Assets (Increase) = Liabilities (Increase)
Computer Notes Payable

4-2 ₱50,000 4-2 ₱50,000

Analysis:
Increase in Asset: Computer P50,000 Debit
Increase in Liability: Notes Payable P50,000 Credit
April 3: Matulungin paid P15,000 to SB Spaces for rent covering the

months of April, May, and June.
Assets (Decrease) = Assets (Increase)
Cash Prepaid Rent

Debit (+) Credit (-) Debit (+) Credit (-)
4-1 ₱350,000 4-3 ₱15,000 4-3 ₱15,000
Analysis:
Decrease in Asset: Cash P15,000 Credit
Increase in Asset: Prepaid Rent P15,000 Debit
April 4: Ralph Polo gave P18, 000 as an advanced payment for services
on the next three months.
Assets Increase) = Liabilities (Increase)
Cash Unearned Revenues

4-1 ₱350,000 4-3 ₱15,000 4-4 ₱18,000
4-4 18,000
Analysis:
Increase in Assets: Cash P18,000 Debit
Increase in Liability: Unearned Revenues P18,000 Credit
April 5: Matulungin bought computer in the amount of P145,000.00

on cash basis.
Assets (Decrease) = Assets (Increase)
Cash Computer
4-1 ₱350,000 4-3 ₱15,000 4-2 ₱50,000
4-4 18,000 4-5 145,000 4-5 145,000

Analysis:
Increase in Asset: Computer P145,000 Debit
April 9: Matulungin purchased computer supplies in the amount of

P25,000 on account.
Assets (Increase) = Liabilities (Increase)
Computer Supplies Accounts Payable

4-9 ₱25,000 4-9 ₱25,000
Analysis:
Increase in Asset: Computer Supplies P25,000 Debit
Increase in Liability: Accounts Payable P25,000 Credit
April 11: Matulungin collected P88,000 in cash for services rendered.
Cash Service Revenues

4-1 ₱350,000 4-3 ₱15,000 4-11 ₱88,000
4-4 18,000 4-5 145,000
4-11 88,000
Analysis:
Increase in Owner’s Equity: Service Revenues P88,000 Credit
April 16: Matulungin paid P18, 000 cash for utilities.
Assets (Decrease) = Owner's Equity (Decrease)
Cash Utilities Expense

4-1 ₱350,000 4-3 ₱15,000 4-16 ₱18,000
4-4 18,000 4-5 145,000
4-11 88,000 4-16 18,000

Analysis:
Decrease in Owner’s Equity: Utilities Expense P18,000 Debit
April 17: Matulungin billed the clients P35,000.00 for services rendered
during the month.
Accounts Receivable Service Revenues

4-17 ₱35,000 4-11 ₱88,000
4-17 35,000
Analysis:
Increase in Asset: Accounts Receivable P35,000 Debit
Increase in Owner’s Equity: Service Revenues P35,000 Credit
April 19: Matulungin partially paid April 9 purchase of computer

supplies at P17,000.
Assets (Decrease) = Liabilities (Decrease)
Cash Accounts Payable

4-1 ₱350,000 4-3 ₱15,000 4-19 ₱17,000 4-9 ₱25,000
4-4 18,000 4-5 145,000
4-11 88,000 4-16 18,000
4-19 17,000
Analysis:
Decrease in Liability: Accounts Payable P17,000 Debit
10

April 20: Matulungin collected P25,000 cash from clients for
billings dated April 17.
Assets (Increase) = Assets (Decrease)
Cash Accounts Receivable

4-1 ₱350,000 4-3 ₱15,000 4-17 ₱35,000 4-20 ₱25,000
4-4 18,000 4-5 145,000
4-11 88,000 4-16 18,000
4-20 25,000 4-19 17,000
Analysis:
Decrease in Asset: Accounts Receivable P25,000 Credit
April 21: Matulungin withdrew P20,000 from the business for personal
use.
Cash Matulungin, Withdrawals

4-1 ₱350,000 4-3 ₱15,000 4-21 ₱20,000
4-4 18,000 4-5 145,000
4-11 88,000 4-16 18,000
4-20 25,000 4-19 17,000
4-21 20,000
Analysis:
Decrease in Owner’s Equity: Matulungin,Withdrawals P20,000 Debit
April 27: Matulungin received P8,000 for advertising bill.

Liabilities (Increase) = Owner's Equity (Decrease)
Accounts Payable Advertising Expense

Debit (-) Credit (+) Debit (+) Credit (-)
4-19 ₱17,000 4-9 ₱25,000 4-27 ₱8,000
4-27 8,000
11

Analysis:
Increase in Liability: Accounts Payable P8,000 Credit
Decrease in Owner’s Equity: Advertising Expense P8,000 Debit
April 30: Matulungin paid P15,000 for the salary of the assistant.
Cash Salaries Expense

4-1 ₱350,000 4-3 ₱15,000 4-30 ₱15,000
4-4 18,000 4-5 145,000
4-11 88,000 4-16 18,000
4-20 25,000 4-19 17,000
4-21 20,000
4-30 15,000
Analysis:
Decrease in Owner’s Equity: Salaries Expense P15,000 Debit
After recording the transactions in their respective T-accounts, determine

the account balance of each account. Let us look at the T-account of cash as an
example. Then do the tasks that follow.
Cash
Debit (+) Credit (-)
4-1 ₱350,000 4-3 ₱15,000
4-4 18,000 4-5 145,000
4-11 88,000 4-16 18,000
4-20 25,000 4-19 17,000
481,000 4-21 20,000
4-30 15,000
Balance P251,000 230,000
1. Determine the balance for each side of the T-Account.

2. Subtract the two balances.
*The higher value side will be its account balance which must be its normal
account balance.
12

Debit (+) Credit (-) Notes Payable Debit (+) Credit (-)
4-9 P25,000 Debit (-) Credit (+) 4-30 P15,000
Debit (-) Credit (+)

4-4 P18,000
Debit (-) Credit (+) Debit (+) Credit (-)

Prepaid Rent 4-1 P350,000 4-16 P18,000
13

What’s More
Directions: TRUE or FALSE. Write True if the statement is correct and False if it is
not. Write your answers on a separate answer sheet.
1. The left side of the T-account is called the debit.
2. Assets are increased by credit.
3. Assets is equal to the sum of liabilities and owner’s equity.
4. Increases in liability accounts are credited.
5. Decreases in asset accounts are credited.
6. An increase in rent expense is a debit by the rules of debit and credit.
7. Income is increased by credit.
8. Expenses are increased by debit
9. Decreases in liability accounts are debited.
10. Assets, and expense accounts have debit account balances.
What I Have Learned
Directions: Complete the table by identifying whether the normal account balance
falls under debit or credit. Write D for debit and C for credit on a separate
sheet of paper.
Normal Account
Balance
1. Assets
2. Liabilities
3. Owner’s Equity
4. Income
5. Expenses
14

What I Can Do
Directions: Record the transactions directly into the T-accounts. The transactions
are independent from one another. Write your answers on a separate
sheet of paper.
Use the following account titles:

Cash Owner’s Withdrawals
Accounts Receivable Professional Fees
Office Equipment Salaries Expense
Office Furniture Rent Expense
Accounts Payable Utilities Expense
Owner’s Capital Miscellaneous Expense
a. The owner deposited P280,000 in the name of his business.
b. He purchased a 4-in-1 equipment from Limay Equipment for P4,950, paying

P1,000 in cash and the balance on account.
c. He bought chairs and tables for the office for P12,300 cash.
d. He purchased furniture from Orion Company for P2,750 in cash.
e. He received and paid the telephone bill from Ph Telecom amounting to P1,080.

f. He billed his customers P12,940 for services on account.
g. He paid P1,850 the electric bill from BEBECO.
h. He paid P3,500 for the membership fee.
i. He received P17,650 in cash for services rendered.
j. He paid P1,000 to partially settle accounts with Orion Company.
k. He paid P8,400 for the monthly rental of the place.
l. He paid P3,500 for the salaries of employees.
16

Assessment
Directions: Establish the following T-Accounts. Write your answers on a separate sheet
of paper.
Cash Masunurin, Capital

Accounts Receivable Masunurin, Withdrawals
Supplies Laundry Revenues
Prepaid Insurance Salaries Expense
Equipment Rent Expense
Furniture and Fixtures Utilities Expense
Accounts Payable Miscellaneous Expense
On January 1, 2017, Jaime Masunurin opened BLS Laundry Shop. Throughout the
month of January, the following transactions were completed:
a. He deposited P400,000 in a bank account in the name of the business.

b. He bought chairs and a table and paid them with P5,700 cash.
c. He bought supplies on account from Morong Supply Inc. P3,250.
d. He paid P5,750 for the monthly rental of the place.
e. He bought washing machines and dryers from Bataan Equipment Corp.
amounting to P115,000. He paid them with P35,000 in cash and the balance on
account.
f. He earned P19,250 revenues on cash basis for the first half of the month.
g. He bought insurance for one year for P5,800.
h. He paid accounts to Bataan Equipment Corp. worth P7,000.
i. He paid P7,000 for the electric bill.
j. He earned P12,350 revenues on cash basis for the second half of the month.
k. He paid P7,400 for the salaries of the part-time assistants.
l. He withdrew P4,500 cash for personal use.
m. He paid accounts to Morong Supply Inc. worth P2,750.
n. He paid P2,800 to the city government for sidewalk repair assessment.
o. He paid miscellaneous expenses for the month worth P1,000.
17

Additional Activities
Directions: Establish the T-Accounts for the following accounts. Write your
answers on a separate sheet of paper.
Cash Atienza, Capital

Accounts Receivable Atienza, Withdrawals
Cleaning Supplies Cleaning Revenues
Prepaid Insurance Salaries Expense
Cleaning Equipment Rent Expense
Service Vehicle Advertising Expense
Notes Payable Telephone Expense
Accounts Payable Miscellaneous Expense
Lee Atienza recently established a business that will operate as Atienza

Cleaning Service. The following are his transactions for February 2020:
Feb. 1 He invested P62,000 cash in his business.
3 He acquired cleaning supplies on account worth P21,400.
5 He acquired cleaning equipment on account amounting to
P15,600.
6 He bought a service vehicle worth P47,000; paid P10,000 and
the balance will be paid within 30 days; issued a note
payable.
7 He paid P7,300 for the rent.
9 He received P31,800 cash for cleaning services rendered.
10 He paid P1,700 for a newspaper advertisement.
12 He bought an insurance premium covering 6 months, recorded
as prepaid insurance for P4,800.
13 He paid P9,000 on account.
14 He paid P2,200 for miscellaneous expenses.
15 He billed customers with P18,600 for cleaning services rendered.
16 He paid P8,400 for salaries.
20 He collected P9,800 from the customers on account last
February15.
22 He paid the note payable worth P2,400.
25 He paid P900 for the telephone bill.
28 He paid P1,700 for the salaries of full-time and part-time
employees.
28 He billed P22,500 from customers for cleaning services rendered.
28 He withdrew P10,000 from the business.
18

19
WHAT I KNOW
Debit Credit Amount

1 Cash Masigasig, Capital ₱110,000
2 Rent Expense Cash ₱5,100
3 Furniture Cash ₱15,000
4 Office Equipment Cash ₱54,000
5 Cash Service Revenue ₱12,000
6 Accounts Receivable Service Revenue ₱10,800
7 Office Equipment Cash ₱7,500
8 Cash Accounts Receivable ₱5,400
9 Salaries Expense Cash ₱10,000
10 Masigasig, Drawings Cash ₱4,500
WHAT'S IN
1. TRUE 2. FALSE 3. FALSE 4. TRUE 5. TRUE

6. TRUE 7. TRUE 8. FALSE 9. FALSE 10. TRUE
W HAT'S MORE
1. TRUE 2. FALSE 3. TRUE 4. TRUE 5. TRUE

6. TRUE 7. TRUE 8. TRUE 9. TRUE 10. TRUE
W HAT I HAVE LEARNED

Normal Account
Balance
1. Assets Debit
2. Liabilities Credit
3. Owner's Equity Credit
4. Income Credit
5. Expenses Debit
Answer Key
20
WHAT I CAN DO
Cash Owner's Capital Utilities Expense Cash

a ₱280,000 ₱280,000 g ₱1,850 ₱1,850
Office Equipment Cash Accounts Payable Miscellaneous Expense Cash

b ₱4,950 ₱1,000 ₱3,950 h ₱3,500 ₱3,500
Office Furniture Cash Cash Professional Fees

c ₱12,300 ₱12,300 i ₱17,650 ₱17,650
Office Furniture Cash

Accounts Payable Cash
d ₱2,750 ₱2,750 j ₱1,000 ₱1,000
Utilities Expense Cash

Rent Expense Cash
e ₱1,080 ₱1,080
k ₱8,400 ₱8,400
Accounts Receivable Professional Fees

Salaries Expense Cash
f ₱12,940 ₱12,940
l ₱3,500 ₱3,500
21
ASSESSMENT
Cash Furniture and Fixtures Salaries Expense

a 400,000 b 5,700 b 5,700 k 7,400
f 19,250 c 5,750
j 12,350 e 35,000 Balance ₱ 5,700 Balance ₱ 7,400
g 5,800
i 7,000 Accounts Payable
k 7,400 i 7,000 c 3,250 Rent Expense
l 4,500 m 2,750 e 80,000 d 5,750
m 2,750
n 2,800 Balance ₱ 73,500 Balance ₱ 5,750
o 1,000
Masunurin, Capital
Balance ₱353,900 a 400000
Miscellaneous Expense
Balance ₱ 400,000 n 2,800
o 1,000
Supplies Masunurin, Withdrawals Balance ₱ 3,800

c 3,250 l 4,500
Balance ₱ 3,250 Balance ₱ 4,500
Prepaid Insurance Laundry Revenues

g 5,800 f 19,250
j 12,350
Balance ₱ 5,800
Balance ₱ 31,600
Equipment
e 115,000
Balance ₱ 115,000
22
ADDITIONAL ACTIVITIES
Cash Cleaning Equipment Cleaning Revenues

1 62,000 6 10,000 5 15,600 9 31,800
9 31,800 7 7,300 15 18,000
20 9,800 10 1,700 Balance ₱ 15,600 28 22,500
12 4,800
13 9,000 Service Vehicle Balance ₱ 72,300
14 2,200 6 47,000
16 8,400 Salaries Expense
22 2,400 Balance ₱ 47,000 16 8,400
25 900 28 1,700
28 1,700 Notes Payable
28 10,000 22 2,400 6 37,000 Balance ₱ 10,100
Balance ₱ 45,200 Balance ₱ 34,600
Rent Expense
Accounts Payable 7 7,300
13 9,000 3 21,400
Accounts Receivable 5 15,600 Balance ₱ 7,300
15 18,000 20 9,800
28 22,500 Balance ₱ 28,000 Advertising Expense
10 1,700
Balance 30,700 Atienza, Capital
₱
1 62,000 Balance 1,700
₱
Cleaning Supplies Balance ₱ 62,000
3 21,400 Telephone Expense
25 900
Balance 21,400 Atienza, Withdrawals
₱
28 10,000 Balance 900
₱
Prepaid Insurance Balance ₱ 10,000
12 4,800 Miscellaneous Expense
14 2,200
Balance 4,800
₱
Balance 2,200
₱
References
Ballada, Win. 2018. "Basic Financial Accounting and Reporting 21st Edition."
Fundamentals of Accountancy Business and Management 1. 2016. DepEd K to 12

Curriculum Guide.
Fundamentals of Accountancy Business and Management 1. 2016. DepEd K to 12

Teacher’s Guide.
Tugas, Florence C., Herminigilda E. Salendrez, and Joy S. Rabo.

2016. Fundamentals of Accountancy Business and Management 1. Vibal
Group Inc. Quezon City Phils.
Valencia, Edwin G., Roxas, Gregorio, F.2014. Basic Accounting Concepts, Principles,
Procedures, and Applications. Valencia Educational Supply. Philippines
23

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Fabm1 q3 Mod6 Rulesofdebitsandcredits Final

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Fabm1 q3 mod6 rulesofdebitsandcredits final

Introduction To Financial Accounting (University of the Philippines System)

Studocu is not sponsored or endorsed by any college or university

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Published by the Department of Education Secretary:

SENIOR HS MODULE DEVELOPMENT TEAM

SDO-BATAAN MANAGEMENT TEAM:

REGIONAL OFFICE 3 MANAGEMENT TEAM:

Printed in the Philippines by Department of Education – Schools Division of Bataan

Office Address: Provincial Capitol Compound, Balanga City, Bataan

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Pre-tests are provided to measure your prior knowledge on lessons in each

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At the end of this module, you are expected to:

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Debit Credit Amount

Romeo Masigasig is an event planner. The transactions that he had in his

1. He invested P110,000 in cash to start his own business.

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1 Rules of Debit and Credit

Analyzing and recording transactions using the accounting equation is

1. The owner invested P30,000 cash in her nail salon.

2. The businessman bought supplies for P3,000 cash.

3. The owner purchased furniture for P5,500 on account.

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6. The owner invested cash of P30,000 in an automotive repair shop on February

7. The owner paid P150 for business permits.

8. The owner bought machinery and equipment costing P15,000 by paying

9. The owner bought tools for P7,000 cash.

10. The owner of the business paid P12,000 for advertising.

Notes to the Teacher / Facilitator

This module prepares students to understand the rules of

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When analyzing and solving transactions using the T-accounts, the

Assets = Liabilities + Owner’s Equity

This equation presents the resources controlled by the enterprise, the

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The recorded increase and decrease in the T-Account is determined by the

Increases in liabilities are recorded on credits and decreases on debits. The

Debit Credit Debit Credit

Normal Balance Normal Balance

Debit Credit Debit Credit

Normal Balance Normal Balance

Rules of Debit and Credit

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April 1: Matulungin deposited P350,000 to start her new business.

Assets (Increase) = Owner's Equity (Increase)

Cash Matulungin, Capital

April 2: Matulungin bought a computer amounting to P50,000 by

Assets (Increase) = Liabilities (Increase)

Computer Notes Payable

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April 3: Matulungin paid P15,000 to SB Spaces for rent covering the

Assets (Decrease) = Assets (Increase)

Cash Prepaid Rent

Cash Unearned Revenues

April 5: Matulungin bought computer in the amount of P145,000.00

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April 9: Matulungin purchased computer supplies in the amount of

Assets (Increase) = Liabilities (Increase)

Computer Supplies Accounts Payable

April 11: Matulungin collected P88,000 in cash for services rendered.