1. What is Accounting according to the Accounting Standards Council?

(3 points)

2. Illustrate the Accounting Cycle. (3 points)

3. Identify the effect of the following transactions to the business. Draw  if it increases the major accounts,  if it
decreases the major account, and draw – if it doesn’t have effect to the major account. (15 points)
Owner’s
Transactions Assets Liabilities
Equity
1. A company paid the salaries of its employees
2. A firm renders services on account
3. Acquisition of machines on account
4. Payment of amount due to suppliers
5. Collected cash from customers on account
6. Incurred operating expense on account
7. Purchase of supplies on account
8. The owner invested additional equipment
9. Billed customers for delivery services on
account
10. Paid in advance the rent for July
11. Receipt of proceeds from bank loan
12. Rendered services to cash customers
13. Returned supplies purchased on account
14. Received a bill from the Water District
15. Owner withdraw cash for personal use

4. Dr. Manna Nam Bhal opened a medical clinic. The following are the transactions for January 2018: (35 points)

1- Dr. Bhal invested cash amounting to P 475 000, and a clinic furniture worth of P 125 000.
2- Bought medical equipment from Manila Medical amounting to P 325 000 by paying P 100 000 and the
balance with a note.
4- Bought medical supplies for cash, P 50 000.
5- The doctor withdrew cash for personal use, P 7 500.
7- Medical fees earned for the week amounted to P 25 000 from cash customers, and P 30 000 from clients on
account.
9- Made additional investment of P 150 000.
11- Full payment on the note is made.
14- Medical fees earned for the week amounted to P 15 000 in cash, and P 20 000 on account.
15- Collected the Sept. 7 account.
18- Bought medical supplies on account from Farma Sy, P 15 000.
28- Received a bill from electric company, P 10 000.
31- Paid for taxes and licenses, P 10 000, and salaries of attendants P 20 000.

Use the following accounts:

Cash on Hand; Accounts Receivable; Medical Supplies; Furniture and Fixtures; Medical Equipment; Accounts
Payable; Notes Payable; Bhal, Capital; Bhal, Drawing; Medical Income; Salaries Expense; Taxes and License; and
Utilities Expense