What are the

processes in the
accounting cycle?
 Identifying

Recording
Communicating

Interpreting Classifying

Analyzing Summarizing
 What are the
processes involved in
Bookkeeping?
 Identifying

Summarizing Recording

Classifying
What are the books
commonly used in
Bookkeeping?
 BOOKS OF
ACCOUNTS
IT REFERS TO THE FINANCIAL
RECORDS OR BOOKS IN WHICH ALL
FINANCIAL INFORMATION OF A
BUSINESS OR AN ENTITY IS
RECORDED AND MAINTAINED.
What is a journal?
 What is a journal?
• Books of original entry or primary entry
• transactions are recorded in a systematic manner, in
order by date.
• transactions are recorded in the journal through
“journal entries”
Journal Entry - is a record of any particular transaction
in the journal and the process of recording is called
“journalizing”.
What is a ledger?
 What is a ledger?
• also known as Book of final entry
• it refers to a book that consists of all the accounts of a
company.
• It is also considered the principal or main book of a
company as all information are contained in it.
• the process of transferring all entries from the Journal
to the ledger is called “Posting”.
 Why is it important
to know the books of
accounts?
Company A bought a
computer for office use,
paying cash of
₱50,000.
Business Transactions and
their Analysis as Applied to
the Accounting Cycle of a
SERVICE BUSINESS (Part
1)
Objectives:
Describe the nature and gives examples of
business transactions
Identify the different types of business documents
Analyze common business transactions using the
rules of debit and credit
Solve simple problems and exercises in the
analyses of business transaction
 Business Transaction
A business activity or event that affects
a business financially.
It involves the exchange of values
wherein on value is received in
exchange of another value given up.
 Business Transaction
In other words, it causes the effect on
any of the accounting elements—assets,
liabilities, capital, income and expense.
In order to qualify as valid or recordable Business
Transaction, the activity or event must meet the
following criteria:
1. It must be financial in nature.
2. It must be a transaction that involves the business
entity.
3. It must be a dual or “two-fold” effect on the
accounting elements.
4. It must be supported by a source document.
Examples of Business Transactions of a Service
Business:
a. Company A bought a computer for office use, paying
cash of P50,000.
b. Company A billed customers amounting to P95,000 for
services rendered.
c. Employees were paid cash of P20,000 for salaries this
month.
d. Mr. Ohner invested P2M in Company A to expand the
business
Examples of Business Transactions of a Service
Business:
e. Company A received office supplies amounting to
P5,000 which was purchased on credit.
f. Company A received a cash payment of P10,000 for
the sale of goods from last month.
g. Company A loaned P20M from HSBC to buy an
office building.
Examples of Business Transactions of a Service
Business:
h. Company A sold goods to customer B on credit.
Amount is P3,000 payable next month.
i. Company A paid Reypairs Company the amount of
P2,000 for fixing the office windows.
j. Company A soled a cabinet that is no longer used by
the company for P40,000.
A. RULES OF DEBITS and
CREDITS
Debits and credits originated from the
Latin words “debere” or “debitum” which
means “what is due” and “credere” or
“creditum” which means “something
entrusted or loaned”.
A. RULES OF DEBITS and
CREDITS
Debit means an entry will be made on the
left side of an account. It either increases an
asset and expense account or decreases a
liability and equity account.
Debit is abbreviated as “Dr.”
A. RULES OF DEBITS and
CREDITS
Credit means an entry will be made on the
right side of an account. It either increases a
liability and equity account or decreases an
asset or expense account.
Credit is abbreviated as “Cr.”
A. RULES OF DEBITS and
CREDITS
D Debit C Credit
E Expense L Liabilities
A Asset I Income
D Drawings C Capital
A. JOURNALIZING
The journalizing process starts when a business
transaction occurs.
Each business transaction is analysed as to what
accounting elements are affected.
Once the accounts are identified, the business
transactions are journalized starting with the
account to be debited and account to be credited
next.
A. JOURNALIZING
The rules of debit and credit are applied
when journalizing business transactions.
Journal Entry Format:
Date Particulars PR Debit Credit

(yyyy)

mmm dd Debited Account xx.xx

Credited Account xx.xx

Explanation
Examples of Business Transactions of a Service
Business:
a. Company A bought a computer for office use, paying
cash of P50,000.
b. Company A billed customers amounting to P95,000 for
services rendered.
c. Employees were paid cash of P20,000 for salaries this
month.
d. Mr. Ohner invested P2M in Company A to expand the
business
Examples of Business Transactions of a Service
Business:
e. Company A received office supplies amounting to
P5,000 which was purchased on credit.
f. Company A received a cash payment of P10,000 for
the sale of goods from last month.
g. Company A loaned P20M from HSBC to buy an
office building.
Examples of Business Transactions of a Service
Business:
h. Company A sold goods to customer B on credit.
Amount is P3,000 payable next month.
i. Company A paid Reypairs Company the amount of
P2,000 for fixing the office windows.
j. Company A sold a cabinet that is no longer used by
the company for P40,000.
Bring home Seatwork: Make A journal entry on
the board of each transactions.
1. Purchased equipment worth of PhP 5,000.00.
2. Paid the rent expense worth of PhP 500.00
3. Paid the electricity bill worth of PhP10,000.00
through check.
4. Purchased equipment worth of PhP 100,000.00 paid
45% as down payment.
5. Jan 1 - Purchased computer on account with VAT
included P2,016
6. Jan 3 - Paid for light, water, and telephone bills worth
1,000, 2,200 and 1200 respectively.
7. Jan 5 - 7,840 was spent for repairs of buses with 10%
VAT included
8.Jan 7 - Withdrew cash for personal-P5,000
9. Jan 8 - Fare earned worth 50,000 from passengers for
the week plus 12% VAT
10. Withdrew P5,000 for personal use.
SEATWORK #3.1 (Preparation of Journal Entries)

JOURNAL Company, a firm service rendering

computerized accounting services has the following
transactions for the month of May 2015:
May 1 Owner invested his savings worth
Php 8,500,000 into the business and
bought Php 1,500,000 worth of
equipment with it
May 3 Owner invested furniture and fixutres
worth Php 150,000
May 5 Rendered services to clients worth
Php 150,000 and received cash
payment immediately
May 7 Rendered services to clients worth Php 200,000 on
account
May 10 Rendered services to clients worth Php 600,000
with terms 50% down, balance on account
May 15 Paid salaries of employees worth Php 40,000
May 20 Received utility bills worth Php 50,000
May 22 Collected half of the amount due from May 7
May 25 Owner withdrew Php 15,000 cash for
personal use
May 30 Paid the total amount due for the
utilities