SENIOR HIGH SCHOOL

Region I
ALAMINOS CITY DIVISION
Alaminos City, Pangasinan

Project Write, Write, Write

Alternative Instructional Module

FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT 1
Quarter 1 – Module 6:
BUSINESS TRANSACTION ANALYSIS
Fundamentals of Accountancy, Business and Management 1
Alternative Instructional Module
Quarter 1 – Module 6: Business Transaction Analysis
First Edition, 2020

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Dr. Ronald B. Radoc, EPS, LRMS
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 11
FUNDAMENTALS OF
ACCOUNTANCY, BUSINESS AND
MANAGEMENT
Quarter 1 – Module 6:
Business Transaction Analysis
Introductory Message
For the facilitator:
Welcome to the Fundamentals of Accountancy, Business and Management I
Alternative Delivery Mode (ADM) Module on Business Transaction Analysis.

This module was collaboratively designed, developed and reviewed by

educators both from public and private institutions to assist you, the
teacher or facilitator in helping the learners meet the standards set by the K
to 12 Curriculum while overcoming their personal, social, and economic
constraints in schooling.

This learning resource hopes to engage the learners into guided and
independent learning activities at their own pace and time. Furthermore,
this also aims to help learners acquire the needed 21st century skills while
taking into consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing
them to manage their own learning. Furthermore, you are expected to
encourage and assist the learners as they do the tasks included in the
module.
For the learner:

Welcome to the Fundamentals of Accountancy, Business and Management I

Alternative Delivery Mode (ADM) Module on Business Transaction Analysis!

The hand is one of the most symbolized part of the human body. It is often
used to depict skill, action and purpose. Through our hands we may learn,
create and accomplish. Hence, the hand in this learning resource signifies
that you as a learner is capable and empowered to successfully achieve the
relevant competencies and skills at your own pace and time. Your academic
success lies in your own hands!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and
time. You will be enabled to process the contents of the learning resource
while being an active learner.

This module has the following parts and corresponding icons:

What I Need to This will give you an idea of the skills or

Know
competencies you are expected to learn
in the module.

What I Know This part includes an activity that aims

to check what you already know about
the lesson to take. If you get all the
answers correct (100%), you may decide
to skip this module.

What’s In This is a brief drill or review to help you

link the current lesson with the previous
one.

What’s New In this portion, the new lesson will be

introduced to you in various ways such
as a story, a song, a poem, a problem
opener, an activity or a situation.

What is It This section provides a brief discussion

of the lesson. This aims to help you
discover and understand new concepts
and skills.

What’s More This comprises activities for independent

practice to solidify your understanding
and skills of the topic. You may check
 the answers to the exercises using the
Answer Key at the end of the module.
What I Have This includes questions or blank
Learned
sentence/paragraph to be filled in to
process what you learned from the
lesson.

What I Can Do This section provides an activity which

will help you transfer your new
knowledge or skill into real life
situations or concerns.

Assessment This is a task which aims to evaluate

your level of mastery in achieving the
learning competency.
Additional In this portion, another activity will be
Activities
given to you to enrich your knowledge or
skill of the lesson learned. This also
tends retention of learned concepts.

Answer Key This contains answers to all activities in

the module.

At the end of this module you will also find:

References This is a list of all sources used in

developing this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any
part of the module. Use a separate sheet of paper in answering the
exercises.
2. Don’t forget to answer What I Know before moving on to the other
activities included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through
with it.
If you encounter any difficulty in answering the tasks in this module, do
not hesitate to consult your teacher or facilitator. Always bear in mind
that you are not alone.

We hope that through this material, you will experience meaningful

learning and gain deep understanding of the relevant competencies. You
can do it!
 What I Need To Know

This module was designed and written with you in mind. It is here to
help you master business transaction analysis. The scope of this module
permits it to be used in many different learning situations. The language
used recognizes the diverse vocabulary level of students. The lessons are
arranged to follow the standard sequence of the course.

This module has one lesson on:

 Lesson 1: Business Transaction Analysis

The MELC for this module are as follows:

1. Analyze common business transactions using the rules of debit and

credit

2. Solve simple problems and exercises in the analyses of business

transaction

After going through this module, you are expected to:

1. Describe the nature of transaction in a service business.

2. Analyze common business transaction using the rules of debit and

credit.
3. Solve simple problems and excercises.
 What I Know

Multiple Choice.
Direction. Read the following questions carefully and choose the letter of the
correct answer. Write it on your test notebook.

Pre – Test

1. The account that is debited every time a business receives money is?
a. Cash
b. Accounts Receivable
c. Sales
d. Service Income

2. Which of the following account is credited in every disbursement?

a. Account payable
b. Notes payable
c. Interest expense
d. cash

3. Which of the following account is increased for sales on account

transaction?
a. Accounts Receivable
b. Sales
c. Cost of Sales
d. Accounts payable

4. The effect of an inventory purchases and paid outright?

a. Increase in total assets
b. Increase in total liability
c. increase in total assets and liability
d. No effect on total assets and liability

5. Purchases of inventory on account increases which of the following

accounts?
a. Inventory
 b. Accounts payable
c. cash
d. Both Inventory and accounts payable

6. Which of the following is credited when a business earns revenue from

rendering of services?
a. Sales
b. Service Income
c. Accounts Receivable
d. Sale and Service income

7. Which of the following is correct rule for assets account?

a. Debit to increase and credit to decrease
b. Debit to increase and debit to decrease
c. Credit to increase and debit to decrease
d. Credit to increase and credit to decrease

8. Which of the following is correct for equity account?

a. Debit to increase and credit to decrease
b. Debit to increase and debit to decrease
c. Credit to increase and debit to decrease
d. Credit to increase and credit to decrease

9. Which of the following is correct for expense account?

a. Debit to increase and credit to decrease
b. Debit to increase and debit to decrease
c. Credit to increase and debit to decrease
d. Credit to increase and credit to decrease

10. Which of the following account has a credit normal balance?

a. Furniture
b. Cash
c. Salary expense
d. Interest payable

11. Which of the following has account has a credit normal balance?
a. Drawing
b. Capital
c. Supplies Expense
d. Utility Expense

12. Which of the following has a different normal balance?

a. Land
 b. Building
c. Furniture
d. Accumulated depreciation- Machinery

13. Which of the following is correct in a purchase of equipment for cash

transaction?
a. Total assets is increased
b. Total assets is decreased
c. No effect in cash and Equipment
d. No effect in total assets

14. Which account is debited when an owner withdraws money for personal
used?
a. Drawing
b. Capital
c. Cash
d. Investment

15. Which is affected every time a firm earns income?

a. Assets
b. Liabilities
c. Equity
d. Expense
 Lesson Business Transaction
1 Analysis

What’s In

Activity 1
Guide question:
1. Can you name the five accounting elements?
2. Can you give example for each account?
3. Can you tell when to increase or decrease an account?

Direction: Complete the table by indicating the normal balance of the

account.

Types of Normal
account Balance

1. Asset

2. Liability

3.
Equity/Capital

4. Revenue

5. Expense
Activity 2

Instruction: Indicate the normal balance by writing debit or credit in the

second column.

Account Titles debit or credit

1. Depreciation
2. Inventory
3. Credo, capital
4. Rent expense
5. Rent Income
6. Interest Receivable
7. Interest expense
8. Prepaid rent
9. Accumulated Depreciation
10. Accounts payable
11. Unearned income
12. Cash
13. Account receivable
14. Notes payable
15. Insurance Expense
16. Prepaid expenses
17. Gains
18. Notes Receivable
19. Land
20. Building
21. Furniture and fixture
22. Land Improvement
23. Taxes and licenses expense
24. Office equipment
25. Transportation equipment

What is It

Read the following concepts for you to gain better understanding about the
basic concept of accounting.

Business Transaction

Economic activities or event will take place once a business starts to

operate, it is called business transactions. A business transaction is a
business activity or event that affects a business financially. It involves an
exchange of values wherein one value is received in exchange for another.

Transactions and events will only be recorded if the accounting

elements namely- assets, liability, capital, revenue, and expenses are
affected. The effect is either increase or decrease. Recordable transaction is
also called accountable events while non-recordable is referred to as non-
accountable.

Example of business transaction:

1. Purchase of computer for office use, paying cash P20,000.
2. Mr. Castro, the owner Invested P 2,000,00.
3. Received a payment from a customer for a services rendered15,000.
4. Paid the employee salary for the month P30,000
5. Paid utility amounting to P 4,000.

Rules of Debit and Credit

Accounting is based on a double-entry record keeping system which

means that in recording of busines transaction the dual effect is always
observed. A debit entry (value received) must always go with a credit entry
(value parted with). For every entry there must be one or more debit and one
or more credit.
 An account is debited when an amount is entered on the left side of
the account and credited when an amount is entered on the right side. The
account type determines how the increase or decrease in it is recorded.
Increase in assets are recorded as debit (left side) while decrease in assets
are recorded as credit (right side). On the other hand, for liability and equity
it is the opposite.

Normal Balance and the rule of Debit and Credit

The normal balance of any account refers to the side of the account
where increase is recorded. Contra accounts, an account that is deducted to
the main account, has a normal balance opposite of the main account while
adjunct account, an account that is added to the main account has the
same normal balance as the main account.

Accounting Normal To To
Elements Balance Increase Decrease

Assets Debit Debit Credit

Liabilities Credit Credit Debit

Equity/Capital Credit Credit Debit

Revenue Credit Credit Debit

Expense Debit Debit Credit

ACCOUNTING FOR BUSINESS TRANSACTION

All transaction that can be measured reliably can be analyzed in

terms of effect on the accounting equation. Financial transaction will be
analyzed by means of financial transaction worksheet, it is a form to
determine the effect, increase or decrease in the assets, liability, equity,
revenue, and expense.

Illustration: Mr. Sy Opened a food stall on January 1, 2020. The following

were the business transaction on this date:
January 1: Invested P80,000 as initial investment to the business

ASSETS = LIABILITY + EQUITY

CASH 80,000 0 Sy CAPITAL 80,000

Note: The business assets will increase, and the investor will be given interest
for his investment.

January 5: Obtained a loan from a bank in the amount of 120,000, issuing

a promissory noted for that amount.

ASSETS = LIABILITY + EQUITY

Cash 80,000 0 Sy CAPITAL 80,000
Cash Notes payable 120,000 0
120,000
TOTAL Total Total
200,000 120,000 80,000

Note: The proceeds of the loan will increase the cash and liability of the firm
will increase.

January 17: Purchased machinery for cash P 50,0000

ASSETS = LIABILITY + EQUITY

Cash 80,000 0 Sy CAPITAL
80,000
Cash Notes payable 120,000 0
120,000
Machinery 0 0
50,000
Cash -50,000
TOTAL Total Total
200,000 120,000 80,000

Note: The total amount of assets did not change. The machinery account
increased but cash is decrease by the same amount.

January 20: Purchased supplies 4,800 cash.

ASSETS = LIABILITY + EQUITY
Cash 80,000 0 Sy CAPITAL
80,000
Cash Notes payable 120,000 0
120,000
Machinery 0 0
50,000
Cash -50,000
Supplies 4,800
Cash -4,800
TOTAL Total Total
200,000 120,000 80,000

January 10: Cash sales for the month amounted to 7,000.

ASSETS = LIABILITY + EQUITY
( + Revenue)
( - Expenses)
Cash 80,000 0 Sy CAPITAL
80,000
Cash Notes payable 120,000 0
120,000
Machinery 0 0
50,000
Cash -50,000
Supplies 4,800 0 0
Cash -4,800
Cash 7,000 Sales 7,000
TOTAL Total Total
207,000 120,000 87,000

Notes: Cash is increase by the amounted paid by the customers and the
income will increase the Equity or capital.

January 30: Paid utility expense for month P 2,000.

ASSETS = LIABILITY + EQUITY
( + Revenue)
( - Expenses)
Cash 80,000 0 Sy CAPITAL
80,000
Cash Notes payable 120,000 0
120,000
Machinery 0 0
50,000
Cash -50,000
Supplies 4,800 0 0
Cash -4,800
Cash 7,000 0 Sales 7,000
Cash - 0 Utility -2,000
2,000
TOTAL Total Total
205,000 120,000 85,000
Time to check your understanding. Ready?

What’s More
Activity 3

Direction: Determine the account titles affected by the following business

transactions. The first item serves as illustration.

Transaction Accounts Titles

1. Mr. Bee, the owner invested cash to the Cash Bee, capital
business.
2. Purchase of office supplies on account.

3. Payment of utility Expense.

4. Payment of accounts payable.

5. Collection of accounts receivable.

6. Obtaining a loan from ODB Bank.

7. Rendering of services for cash.

8. Payment of loan from ODB bank.

9. Drawing of Mr. Bee, the owners.

10. Purchase of Equipment on cash basis.

Activity 4:

Direction: determine the accounts affected by the foregoing

transaction and state the effect (Increase or decrease) on the
said account. Number 1 is done for you.

1. Purchase of equipment for cash.

Accounts Effect
Cash Decrease
Equipment Increase

2. Owner Invested cash to the business

Accounts Effect
3. Payment of employee salary for the month.

Accounts Effect

4. Loaned cash at Alaminos Bank.

Accounts Effect

5. Payment of Interest expense at Alaminos Bank

Accounts Effect

6. Purchase of Building on account

Accounts Effect

7. Bought inventory for cash.

Accounts Effect

8. collection of accounts receivable

 Accounts Effect

9. Payment of accounts payable

Accounts Effect

10. Cash drawing of the owner.

Accounts Effect

What I Have Learned

Activity 5
Direction: Discuss The following briefly. Minimum of 4 and maximum of 10
sentences. Write you answer on your test notebook.

1. When is business transaction eligible for recording?

2. Explain the normal balance and the rules of debit and credit?
 3. Explain the financial transaction worksheet?

Excellent Very Satisfactory Needs Points

(4 pts.) Satisfactory (2 pts.) Improvement Earned
(3 pts.) (1 pt.)
1.Understa Demonstrates Demonstrates Demonstrates Demonstrates
nding thorough considerable some limited
Informatio understanding understanding understanding understanding
n and of topic or of topic or of topic or of topic or
Ideas theme. theme. theme. theme.
2.Clarity of Communicates Communicates Communicates Communicate
Ideas ideas with a ideas with ideas with s ideas with
high degree of considerable some clarity. limited clarity.
clarity. clarity.

What I Can Do

Activity 6:

Direction: Fill up the Cashbook provided below. Identify the effects of the
learners activities on the cash account, Please check the column inflow if it
will increase the cash account and outflow if the activities will decrease it.
Do this on your activity notebook.
ACTIVITIES INFLOW OUTFLOW
1. Mother gave 100 pesos daily allowance.
2. Hire a tricycle going to school P30
3. Bought a morning snack at the canteen
P20
4. Purchased a pen at the school store P12
5. Paid lunch at the canteen 50
6. Borrowed P80 from a friend
7. Cellphone load P15
8. Afternoon snacks P15
9. Tricycle fare
10. Compute the remaining cash balance of
cash deficiency.

Assessment

Multiple Choice. Direction. Read the following questions carefully and

choose the letter of the correct answer. Write it on your test notebook.

1. The account that is debited every time a business receives money is?
a. Cash
b. Accounts Receivable
c. Sales
d. Service Income
2. Which of the following account is credited in every disbursement?
a. Account payable
b. Notes payable
c. Interest expense
d. cash

3. Which of the following account is increased for sales on account

transaction?
a. Accounts Receivable
b. Sales
c. Cost of Sales
d. Accounts payable

4. The effect of an inventory purchases and paid outright?

a. Increase in total assets
b. Increase in total liability
c. increase in total assets and liability
d. No effect on total assets and liability

5. Purchases of inventory on account increases which of the following

accounts?
a. Inventory
b. Accounts payable
c. cash
d. Both Inventory and accounts payable

6. Which of the following is credited when a business earns revenue from

rendering of services?
a. Sales
b. Service Income
c. Accounts Receivable
d. Sale and Service income

7. Which of the following is correct rule for assets account?

a. Debit to increase and credit to decrease
b. Debit to increase and debit to decrease
c. Credit to increase and debit to decrease
d. Credit to increase and credit to decrease

8. Which of the following is correct for equity account?

a. Debit to increase and credit to decrease
b. Debit to increase and debit to decrease
 c. Credit to increase and debit to decrease
d. Credit to increase and credit to decrease

9. Which of the following is correct for expense account?

a. Debit to increase and credit to decrease
b. Debit to increase and debit to decrease
c. Credit to increase and debit to decrease
d. Credit to increase and credit to decrease

10. Which of the following account has a credit normal balance?

a. Furniture
b. Cash
c. Salary expense
d. Interest payable

11. Which of the following has account has a credit normal balance?
a. Drawing
b. Capital
c. Supplies Expense
d. Utility Expense

12. Which of the following has a different normal balance?

a. Land
b. Building
c. Furniture
d. Accumulated depreciation- Machinery

13. Which of the following is correct in a purchase of equipment for cash

transaction?
a. Total assets is increased
b. Total assets is decreased
c. No effect in cash and Equipment
d. No effect in total assets

14. Which account is debited when an owner withdraws money for personal
used?
a. Drawing
b. Capital
c. Cash
d. Investment

15. Which is affected every time a firm earns income?

a. Assets
 b. Liabilities
c. Equity
d. Expense

Additional Activities
Activity 6

Direction: Prepare a financial transaction worksheet for the following

transaction.

June 1: The owner invested 90,000 cash to the business.

June 5: Purchased inventory worth 60,000 on account, no promissory note

was issued for this.

June 16: Sold the goods for 150,000 cash.

June 25: Paid rental amounting to 20,000.

June 27: Purchased equipment 30,000, a promissory note was issued.

June 30: Paid employee salary of 15,000.

ASSETS = LIABILITY + EQUITY

( + Revenue)
( - Expenses)
Cash 90,000 0 CAPITAL 90,000

Congratulations you have successfully learned business transaction analysis!

You can now move on to the next module on accounting cycle for service
business.
 Answer Key

What’s new/
What I What’s more
Activity 1
know Activity 3
1. Dr.
1. B 11. B 1. Cash, Bee capital
2. Cr.
2. A 12. D 2. Office supplies, Accounts
3. Cr.
3. A 13. D Payable
4. Cr.
4. D 14. A 3. Cash, Utility Expense
5. Dr.
5. B 15. C 4. Accounts payable, Cash
6. B 5. Cash, Accounts Receivable
7. A 6. Cash, Loan payable
Activity 2
8. C 7. Cash, Service Income
1. Dr. 16. Dr.
9. A 8. Loan payable, Cash
2. Dr, 17. Cr.
10. D 9. Bee drawing, Cash
3. Cr. 18. Dr.
10. Equipment, cash
4. Dr. 19. Dr.
Activity 4
Assessment 5. Cr. 20. Dr.
1. Cash, decrease
1. B 11. B 6. Dr. 21. Dr.
Equipment, increase
2. A 12. D 7. Dr. 22. Dr.
2. Cash, Increase
3. A 13. D 8. Dr. 23. Dr.
Capital, Increase
4. D 14. A 9. Cr. 24. Dr.
3. Salary expense, Increase
5. B 15. C 10. Cr. 25. Dr.
Cash, Decrease
 References

Printed Materials:
Fundamentals of Accountancy, Business, and Management 1, First Edition
by Joselito G. Florendo
Fundamentals of Accountancy, Business, and Management 1, 2017 by
Benedick Manalaysay
Fundamentals of Accountancy, Business, and Management, 2018-2019 ed.
By Rodiel C. Ferrer and Zeus Vernon B. Millan
Fundamentals of Accountancy, Business, and Management, 2017 by Feme
M. Palencia et. Al.
Fundamentals of Accountancy, Business, and Management, 18th Edition by
Win Ballada and Susan Ballada
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Department of Education – City Schools Division of Alaminos

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Telefax: (075) 205-0644/205-0643

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