THE ACCOUNTING

EQUATION
(FUNDAMENTALS OF ABM 1

MARK Q. TURBANADA
ASSETS= LIABILITIES +
OWNER’S EQUITY
ASSETS INVESTED BY THE OWNER

JULY 1- PAOLO STARTED A DELIVERY SERVICE ON

JULY 1, 2013. THE FOLLOWING TRANSACTIONS
OCCURRED DURING THE MONTH OF JULY. HE
INVESTED PHP800,000 CASH AND CARS
AMOUNTING TO PHP200,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH 800,000 1,000,000

CAR 200,000
BORROWINGS FROM BANKS

JULY
2 – REYES BORROWED PHP100,000
CASH FROM PNB FOR USE IN HIS BUSINESS
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH 100,000 100,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH 900,000 100,000 1,000,000

CAR 200,000
ASSET PURCHASED FOR CASH

JULY
7 – BOUGHT TABLES AND CHAIRS
FROM OROCAN AND PAID PHP45,000
CASH
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP45,000)

FURNITURES PHP45,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP855,000 PHP100,000 PHP1,000,000

CAR PHP200,000

FURNITURE PHP45,000
ASSET PURCHASED ON ACCOUNT

JULY15 – VARIOUS EQUIPMENT WERE

PURCHASED ON ACCOUNT FROM FURTUNE
FOR PHP55,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
EQUIPMENT PHP55,000

ACCOUNTS PHP55,000
PAYABLE
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP855,000 PHP100,000 PHP1,000,000

CAR PHP200,000 PHP55,000

FURNITURE PHP45,000

EQUIPMENT PHP55,000
CASH WITHDRAWAL BY THE OWNER

JULY
18 – REYES MADE A CASH
WITHDRAWAL OF PHP5,000 FOR PERSONAL
USE
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP5,000)

DRAWING (PHP5,000)
PARTICULAR ASSET LIABILITIES EQUITY
/ ACCOUNT
TITLE
CASH PHP850,000 PHP100,000 PHP1,000,00
0
CAR PHP200,000 PHP55,000 (PHP5,000)

FURNITURE PHP45,000

EQUIPMENT PHP55,000
PAYMENT OF LIABILITY

JULY
20 – THE ACCOUNT DUE TO FORTUNE
WAS PAID IN CASH
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP55,000)

LIABILITY (PHP55,000)
PARTICULAR ASSET LIABILITIES EQUITY
/ ACCOUNT
TITLE
CASH PHP795,000 PHP100,000 PHP1,000,000

CAR PHP200,000 (PHP5,000)

FURNITURE PHP45,000

EQUIPMENT PHP55,000
DETERMINING PROFIT THROUGH
OPERATION
ACCRUAL BASIS OF ACCOUNTING VS. CASH BASIS
OF ACCOUNTING
ACCRUAL BASIS RECOGNIZES REVENUE WHEN
EARNED AND RECOGNIZES EXPENSES WHEN
INCURRED
PROFIT MEASURES THE PERFORMANCE OF THE
COMPANY. IF THE REVENUE EXCEEDS EXPENSES,
THEN IT IS A NET PROFIT; OTHERWISE IT IS A NET
LOSS
RECEIVED CASH FOR REVENUE EARNED

JULY21 – A CUSTOMER HIRED THE

SERVICES OF REYES. CASH WAS RECEIVED
FROM THE CUSTOMERS.
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP15,000

SERVICE PHP15,000
REVENUE
PAID CASH FOR EXPENSES INCURRED

JULY
22 – CASH WAS PAID FOR THE
FOLLOWING: GAS AND OIL, PHP500 AND
CAR REPAIRS, PHP1000.
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP1,500)

GAS AND (PHP5,000)

OIL
REPAIR EXP. (PHP1,000)
REVENUE RENDERED ON ACCOUNT

JULY24 – ANOTHER CUSTOMER HIRED THE

SERVICES OF REYES AND PROMISED TO PAY
PHP16,000 ON JULY 31.
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
ACCOUNTS PHP16,000
RECEIVABLE
SERVICE PHP16,000
REVENUE
PAID EXPENSES INCURRED

JULY 25 – PAID PHP500 FOR TELEPHONE

BILL
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP500)

TELEPHONE (PHP500)
EXP.
REVENUE EARNED WITH A
DOWNPAYMENT, BAL. ON ACCOUNT

JULY27 – ANOTHER CUSTOMER HIRED THE

SERVICES OF REYES. A BILL WAS ISSUED TO
THEM FOR PHP20,000, 50% OF WHICH WAS
COLLECTED
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP10,000

ACCT. PHP10,000
RECEIVABLE
SERVICE PHP20,000
REVENUE
CUSTOMER’S ACCOUNT COLLECTED IN
CASH

JULY
30 – THE CUSTOMER ON JULY 24 PAID
50% OF HIS ACCOUNT IN CASH
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP8,000

ACCT. (PHP8,000)
RECEIVABLE
PAID CASH FOR EXPENSES INCURRED

JULY31 – PAID PHP10,000 FOR RENTAL OF

OFFICE SPACE, AND SALARIES OF PHP9,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP19,000)

RENT EXP. (PHP10,000)

SALARIES (PHP9,000)
EXP.
THANK YOU !!!!!