ANALYZING, RECORDING, POSTING AND TRIAL BALANCE

Normal Balance of Accounts

Debit Credit
Asset Liabilities
Expense Capital/ Net Assets/ Equity
Withdrawal / Drawing Income
Investment

Some general rules about debiting and crediting the accounts are:
 Expense accounts are debitedand have debitbalances
 Revenue accounts are creditedand have creditbalances
 Asset accounts normally have debitbalances
 To increase an asset account, debitthe account
 To decrease an asset account, creditthe account
 Liability accounts normally have creditbalances
 To increase a liability account, creditthe account
 To decrease a liability account, debitthe account

Typical Chart of Accounts of a Service Business

Asset

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Liability

Capital / Equity / Net Assets

Income

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Expense

Non-Operating Revenues and Expenses, Gains, and Losses

Accountingsoftwarefrequentlyincludessamplechartsofaccountsforvarioustypesofbusinesses.Itis
expectedthatacompanywillexpandand/ormodifythesesamplechartsofaccountssothatthespecificneeds
ofthecompanyaremet.Onceabusinessisupandrunningandtransactionsareroutinelybeingrecorded,the
companymayaddmoreaccountsordeleteaccountsthatareneverused.

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MULTIPLE CHOICE QUESTIONS
1. The accounting cycle starts with the
a. Preparation of ledger accounts
b. Preparation of trial balance
c. Analysis of business transaction
d. Preparation of adjusting entries

2. After proper analysis, the business transaction is recorded in journal in a:

a. Chronological order
b. Reverse chronological order
c. Random order
d. None of the above

3. In accounting/bookkeeping, the term posting refers to:

a. Transfer of information from ledger to trial balance
b. Transfer of entries from journal to ledger
c. Preparation of financial statements from trial balance
d. None of the above

4. The collection or group of accounts in an organization is known as:

a. General journal
b. General ledger
c. Trial balance
d. Balance sheet

5. The right hand of a T-account is termed as:

a. Debit side
b. Credit side
c. Income side
d. Expense side

6. How would you post the following journal entry to ledger?

RentExpense 200
Cash 200
a. Cash account would be debited by 200 and rent expense account would be credited by 200
b. Rent expense account would be debited by 200 and Accounts payable account would be
credited by 200
c. Cash account would be debited by 200 and loss account would be credited b 200
d. Rent expense account would be debited by 200 and cash account would be credited by
200

7. A credit may signify:

a. An increase in a liability account
b. A decrease in a liability account
c. An increase in an asset account
d. An increase in an expense account

8. A form of statement that lists the titles and balances of ledger accounts at a given date is
known as:
a. Balance sheet
b. Income statement
c. Trial balance
d. Statement of retained earnings

9. The trial balance in which total debits equal total credits provides a proof that:
a. The ledger is in balance
b. The transactions have been correctly analyzed and recorded in proper accounts
c. The correct debit and credit balances have been computed for each account
d. No transaction has been completely omitted during the posting process

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 10. Which one of the following is not a fixed asset?
a. Machinery
b. Plant
c. Equipment
d. Inventory

11. Which of the following is not an intangible asset?

a. Goodwill
b. Patent
c. Prepaid expense
d. Copyright

12. Which of these is not included as a separate item in the basic accounting equation?
a. Assets
b. Liabilities
c. Capital
d. Revenue

13. The account format that displays debits, credits, balances and headings
a. General journal
b. General ledger
c. T-account
d. Ledger account

PROBLEM
Kareen Leon won a concession to rent out bicycles in the Burnham Park during the summer. During the month
of April, Leon completed the following transactions for her bicycle rental business:

April 2 Began business by placing P120,000 in a business checking account.

3 Purchased supplies on account for P1,500
4 Purchased ten bicycles for P25,000, paying P12,000 down and agreed to pay the balance in thirty
days
5 Paid P29,000 in cash for a furnished container to store the bicycles and use for other operations
6 Received P4,700 in cash for rentals during the first week of operation
8 Paid P4,000 in cash for shipping and installation costs (considered an addition to the cost of the
container)
to place the container at the park entrance
9 Hired a part-time assistant to help on weekends
10 Paid a maintenance person P750 to clean the grounds
13 Received P5,000 in cash for rentals during the second week of operation
16 Paid the assistant P480 for a weekend's work
17 Paid for the supplies purchased on April 3
18 Paid P550 repair bill on bicycles
20 Received P5,500 in cash for rentals during the third week of operation
22 Paid the assistant P480 for a weekend's work
23 Billed a company P1,100 for bicycle rentals for employees' outing
25 Paid the P3,00 fee for April to the Park Administration for the right to the bicycle concession
27 Received P4,100 in cash for rentals during the week
29 Paid the assistant P480 for a weekend's work
30 Transferred P5,000 to personal checking account

REQUIRED:
1. Prepare the journal entries for the April transaction.
2. Set up the following ledger accounts and post all the journal entries:
Cash ; Accounts Receivable ; Supplies ; Container ; Bicycles ; Accounts Payable ; Leon, Capital ;
Leon, Withdrawals ; Rental Revenues ; Wages Expense ; Maintenance Expense ; Repair Expense ;
Concession Fee Expense
3. Prepare a trial balance.

PROBLEM

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Claro Ventic operates the Ventic Nursery School. It provides day-care, school bus service and learning
programs to pre-school children. On January 31, 2019, the company’s trial balance is as follows:

Ventic Nursery School

Trial Balance
January 31, 2019

110 Cash 187,000

Accounts
120 Receivable 170,000
140 Equipment 104,000
150 Service Vehicle 1,740,000
210 Notes Payable 1,500,000
220 Accounts Payable 164,000
310 Ventic, Capital 537,000
2,201,000 2,201,000

During the month of February, the company completed the following transactions:
Feb 2 Paid the month's rent, P27,000
3 Received fees for this month's services, P65,000
4 Purchased supplies on account, P8,500
5 Paid for oil change on a service vehicle, P4,000
6 Ordered playground equipment, P100,000
8 Made payments on account, P17,000
9 Collected from customers on account, P120,000
10 Billed customers who had not yet paid for this month's services,
P70,000
11 Paid for the supplies purchased on February 4
13 Received and paid for the playground equipment ordered on
February 6, P100,000
17 Purchased equipment on account, P29,000
19 Paid this month's utility bill, P14,500
22 Received cash for one month's services from customers previously
billed, P50,000
26 Paid salaries of staff, P46,000
27 Received statement of account for gas and oil used by the service
vehicles during the month, P32,500
28 Made a cash withdrawal of P11,000

REQUIRED
130 Supplies
1. Prepare
320 the journal
Ventic, entries for the February transactions.
Withdrawals
2. Post
410 theSchool
entriesRevenues
to the ledger accounts. Be sure to make the appropriate posting references in the
journal
510 and ledger as you post. The following are the other accounts used by the company:
Salaries Expense
520 Rent Expense
530 Gas and Oil Expense
540 Utilities Expense
3. Prepare a trial balance as at February 28, 2019.

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