Basic Accounting  Part 2

Integrity
 “And he called him, and said unto him, How is it that I hear
this of thee? give an account of thy stewardship; for thou
mayest be no longer steward..” Luke 16:2
 Accounting Cycle
Posting to Accounts
Topics Outline
Extracting Balance
Trial Balance
 Describe describe the nature of business transactions and give examples

Identify identify the different types of business documents

Learning Analyze
analyze common business transactions using the rules of debit and
credit
Objectives
solve simple problems and exercises in the analysis of business
Solve transactions

learn the value of integrity in identifying and recording business

Learn transactions
The
Accounting
Cycle
 Identification and measurement of external transactions and
internal events. At this stage, the documents used by the
business are analyzed whether it has financial impact or effect.

Analyzing
Transactions
Only financial transactions are recorded and that the amount
can be measured. These two conditions must exist in order that
a particular transaction is recognized or recorded. As defined,
financial transactions are those activities that change the value
of an asset, liability or an equity.
Financial Transactions
 Receipt of cash from a client as advance
payment to repair a computer. In this case
(asset) will increase. At the same time, the
advances from client (liability) will also
increase. The advances from client is a
liability because the business has the
obligation to render future service to the
client.
 Payment of electric bill is a financial
transaction. This will decrease the cash
(asset) and reduce the income of the
business at the same time.
Non-Financial Transactions
 hiring and termination of employees
 recognition from the government as most
outstanding business
 death of owner
Business Documents
 Official Receipt or Cash
Receipt
 Charge Invoice or Sales
Invoice
 Check or Cash Voucher
Sample Official Receipt
Sample Sales Invoice
Sample Check Voucher
Preparation of Journal Entries (Journalizing)

 Using specialized journals (such as those for sales, purchases, cash receipts, and
cash disbursements) and the general journal, transactions and events are entered
into the accounting records. These are called the books of original entry.
Rules on Debits and Credits
 The name of the account to be debited is always listed first. The debited account is
listed on the first line with the amount in the left side of the register.
 The credited account is listed on the second line and is usually indented. The
credited amount is recorded on the right side of the register.
 The total amount of debit should always equal the total amount of credit.
Chart of Accounts
Chart of Accounts Coding System
Analyzing  Mr. Laban Deyro opened his laundry business in Iloilo City
Transactions on August 1, 2021. The following transactions occurred
during the month of August 2021:
& Journalizing
 Invested PHP500,000 to his business. The trade name of the business
8/2/2021
was “MR. LABANDERO”
8/3/2021Hired Allan and Allie who will manage his business
Purchase of computer for the administrative office worth P50,000
8/3/2021
payable after 30 days.
8/4/2021Collections from various customers for the day - PHP3,000

Date Account Debit Credit

8/2/2021 Cash 500,000
Journalizing Labandero, Capital 500,000

Transactions Mr. Labandero investment

8/3/2021 No journal entry – hiring of
Allan and Allie
8/3/2021 Office Equipment 50,000
Accounts Payable 50,000
Purchase of computer
payable in 30 days.
8/4/2021 Cash 3,000
Service Revenue 3,000
Collection from customers
 8/5/2021 Purchase store supplies from Labada Store - PHP10,000
8/7/2021 Collections from various customers for the day - PHP8,000
MR. LABANDERO entered an exclusive contract with Sikat Hotel where
8/8/2021
the business will do all the laundry of the hotel.
Sikat Hotel availed the services of MR. LABANDERO amounting to
8/9/2021
PHP15,000. Payment will be made on August 20, 2021.
Date Account Debit Credit
8/5/2021 Supplies 10,000
Journalizing Cash 10,000

Transactions Purchase of store supplies

8/7/2021 Cash 8,000
Service Revenue 8,000
Collection from customers
8/8/2021 No journal entry – Exclusive
contract with Sikat Hotel
8/9/2021 Accounts Receivable 15,000
Service Revenue 15,000
Sikat Hotel service payable
1/20/2021
 8/10/2021Collections from various customers for the day - PHP12,000
8/12/2021Purchase a washing machine amounting to PHP50,000
8/15/2021Collections from various customers for the day - PHP20,000
8/19/2021Paid electricity bill for the month amounting to PHP18,000

Date Account Debit Credit

8/10/2021 Cash 12,000

Journalizing Service Revenue

Collections from customers
12,000

Transactions 8/12/2021 Store Equipment 50,000

Cash 50,000
Purchase of washing machine
8/15/2021 Cash 20,000
Service Revenue 20,000
Collection from customers
8/19/2021 Utilities Expense 18,000
Cash 18,000
Electricity bill for the month
 8/20/2021Received payment from Sikat Hotel amounting to PHP15,000
8/21/2021Paid salaries of Allan and Allie - PHP15,000
Mr. Laban Deyro needed money for the hospitalization of his son.
8/22/2021
He withdrew PHP18,000 from the business.
Paid airfare ticket of PHP1,500 for the travel of Mr. Deyro to
8/25/2021
Manila to negotiate a contract with Sosyal Hotel
Date Account Debit Credit
8/20/2021 Cash 15,000
Journalizing Accounts Receivable 15,000
Collections from Sikat Hotel
Transactions 8/21/2021 Salaries Expense 15,000
Cash 15,000
Salaries of Allan and Allie
8/22/2021 Owner’s, Withdrawal 18,000
Cash 18,000
Owner’s withdrawal for personal
8/25/2021 Travel Expense 1,500
Cash 1,500
Airfare ticket for business affairs
 8/26/2021Paid taxes to the City of Iloilo, PHP4,000
8/27/2021Purchased office supplies amounting to PHP12,500
8/28/2021Collections from various customer for the day - PHP5,000
Sosyal Hotel availed the services of MR. LABANDERO
8/29/2021
amounting to PHP15,000 payable on September 25, 2021.

Date Account Debit Credit

8/26/2021 Taxes & Licenses 4,000
Journalizing Cash 4,000
Taxes to the city of Iloilo
Transactions 8/27/2021 Supplies Expense 12,500
Cash 12,500
Office supplies purchase
8/28/2021 Cash 5,000
Service Revenue 5,000
Collection from customers
8/29/2021 Accounts Receivable 15,000
Service Revenue 15,000
Sosyal Hotel availed service
Posting to the
T-Account
 A T-account is an informal
term for a set of financial
records that uses double-
entry bookkeeping.
 The term describes the
appearance of the
bookkeeping entries. First,
a large letter T is drawn on a
page.
 The title of the account is
then entered just above the
top horizontal line, while
underneath debits are listed
on the left and credits are
recorded on the right,
separated by the vertical
line of the letter T.
(Liberto, 2021)
General
Ledger:
Posting of
Journal Entries
General
Ledger:
Posting of
Journal Entries
General
Ledger:
Posting of
Journal Entries
General
Ledger:
Posting of
Journal Entries
Extracting
Balances
Preparing a
Trial Balance
Extracting
Balances
Preparing a
Trial Balance