BASIC ACCOUNTING

Part 1
Accounts, Debit, and Credit
Journal Entry
Lesson Objectives

• Define and explain accounting and double-entry bookkeeping.

• Prepare correct journal entries.
• Develop the values of accountability and responsibility, and skills in critical
thinking and decision making.
Stewardship
• It is a commitment to Jesus Christ as his disciple. (John 12:26)
• It is about Management, being prudent with what he gave us at
first. (Matt. 25:14-30)
• It is a lifestyle. (Matt. 6:25-33)
• It involves carefully using everything we’ve been entrusted with.
(Ps 24:1)
• Knowing that It all belongs to God. (Haggai 2:8)
• God gives His property to us for our enjoyment & investment. (1
Timothy 6:17)
• To keep perspective, God asks that we give Him the first.
(Firstfruit, Tithes, Partnership)
• Those who live by the ownership principle, God Rewards (Matt.
25:28).
• Those who steal from God, God disciplines. (Luke 16:1&2; Matt.
25: 29&30)
Accounting in Daily Life
• Do your parents ask how you spend your allowance every day?
• When deciding between buying a bottle of soya drinks or fruit juice, what is the
basis of your decision? Do you compare the prices of both and then decide?
• Are you able to access your AOLIS account? Go check out the “Finances” tab.
What is Accounting?
• “Accounting is the process of
IDENTIFYING, RECORDING,
and COMMUNICATING
economic events of an
organization to interested
users.” – (Weygandt, J., n.d.)
Identifying
• Involves selecting economic events that
are relevant to a business transaction.
• The economic events of an organization
are referred to as transactions.
• Examples of economic events or
transactions of a bakery business:
• sales of bread and other bakery products
• purchases of flour that will be used for
baking
• purchases of trucks needed to deliver the
products
Recording
• This involves keeping a chronological diary of events that are measured in pesos.
• The diary referred to in the definition are the following:
• Journals
• Ledgers
 COMMUNICATING
Occurs through the preparation and distribution of financial and other
accounting reports.
Activity: Let’s learn
what accounting is all
about!
• Watch and answer the following
questions after watching the video:
• Why will you tell banks or investors
about your business?
• When talking about accounting with
external users, it is called which type of
accounting?
• Why do you want to make it look like
you made nothing when dealing with
the government?
 THE ACCOUNTING EQUATION
Assets = Liabilities + Equity
The left side of the The right side represents
equation represents the claims of the
what the company different parties to the
owns. company’s assets.
Elements of the
Accounting Equation
• Assets - are resources that
an entity owns in order to
derive some future benefit.
• Liabilities
- are one of the
claims of external parties
from the entity.
• Equity - The equity reflects
the residual claims or net
assets of the owners of the
entity.
Assets
• Cash - it is the money that we use comprising of the bills and coins we use in our
everyday lives in order to buy the goods that we want and avail the services that
we need.
• Accounts Receivable - This represents amounts that are collectible from
customers. They arise when a business sell its goods or services on account or on
credit.
• Inventories - goods which are normally held for sale by the store in its normal
operations.
• Normal Balance = Debit
Assets
• Equipment – includes machinery, furniture, fixtures, vehicles, computers,
electronic devices, and office machines which are used to make a profit.
• Land and Building – are owned by the company so that they can use them for their
business to operate normally.
• Intangible Assets – these are assets that cannot be seen or touched. Example
would be a computer software used by a store for its operation.
Liabilities
• Accounts Payable – are obligations to pay supplier/s
after a certain number of days.
• Unearned Revenue – are obligations to customers for
payments received before a service has taken place.
• Normal Balance = Credit
Equity
• Capital – any contribution of the owner which increases the assets of
the business or decreases its liabilities will increase the capital
account. On the other hand, withdrawals of cash for personal use by
the owners will decrease this account.
• Normal Balance = Credit

• Revenues – are the total amount of income generated by the sale of

goods and services related to the primary operations of the business.
• Normal Balance = Credit

• Expenses – are the money spent, or costs incurred, by a business in

their effort to generate revenues.
• Normal Balance = Debit
The Double Entry
Bookkeeping
• “Double-entry bookkeeping is the concept that
every accounting transaction impacts a
company’s finances in two ways. The general
ledger is the record of the two sides of each
transaction.” – The Investopedia Team, 2021
• “Double entry, a fundamental concept underlying
present-day bookkeeping and accounting, states
that every financial transaction has equal and
opposite effects in at least two different
accounts. It is used to satisfy the accounting
equation.” – Hayes, 2021
Activity: Double-Entry
Accounting/Debit and Credit
• Read these articles:
• “A Relatively Painless Guide to Double-Entry
Accounting” by Ryan Smith from this link:
https://bench.co/blog/accounting/double-
entry-accounting/
• “Debits and Credits: A Simple, Visual Guide” by
Nick Zarzycki from this link:
https://bench.co/blog/bookkeeping/debits-
credits/

• Answer a formative quiz that will be posted in MS

Teams.