Accounting Transactions Analysis

Questions and Answers

What does the debit side of an account represent?

Value parted with

Total account balance

Value received (correct)

Account liabilities

What type of balance does an account show if the debit total is greater than the credit total?

Credit balance

Zero balance

Debit balance (correct)

In-Balance

Which account represents a liability with a credit balance of Php 15,000?

Bank Loan

Accounts Receivable

Accounts Payable (correct)

Cash

What term refers to the difference between debit total and credit total in an account?

Account Balance Signup and view all the answers

What is the total debit for the Cash account based on the provided information?

Php 45,000 Signup and view all the answers

Which of the following statements about the T-account is incorrect?

Debits and credits are always equal. Signup and view all the answers

What is indicated when debit total and credit total are equal?

In-Balance or closed account Signup and view all the answers

Which of the following terms refers to the abbreviation for debit?

Dr Signup and view all the answers

What is the normal balance for an asset?

Debit Signup and view all the answers

Which accounts represent liabilities?

Accounts Payable Signup and view all the answers

What is the normal balance for owner's equity?

Credit Signup and view all the answers

When office supplies are bought on account, which accounts are affected?

Debit Office Supplies Inventory, Credit Accounts Payable Signup and view all the answers

Which of the following accounts represent drawing?

B.Pozon, drawing Signup and view all the answers

How is the transaction for receiving cash for services rendered recorded?

Debit Cash, Credit Revenue Signup and view all the answers

What type of balance do expenses typically have?

Debit Signup and view all the answers

In the first transaction, what is the effect on owner's equity?

It increases by Php 100,000. Signup and view all the answers

What type of account is affected when Mr. T Gutierrez withdraws Php 25,000 from the business for personal use?

Owner's Equity-Drawing Signup and view all the answers

In the transaction where Mr. T Gutierrez invests Php 1,000,000 in the business, what is the debit entry recorded?

Asset-Cash Signup and view all the answers

Which of the following transactions involves an expense?

Salaries paid to employees for their services Signup and view all the answers

What is the correct classification of the Php 20,000 paid for salaries in the accounting records?

Expense-Salaries Expense Signup and view all the answers

When cash of Php 16,000 is received, which entry reflects the value parted with?

Credit, Owner's Equity Signup and view all the answers

Which account is credited when Mr. T Gutierrez withdraws cash for personal use?

Cash Asset Signup and view all the answers

What is the value parted with in the transaction where Mr. T Gutierrez withdraws cash of Php 25,000?

Asset-Cash Signup and view all the answers

In which type of account is the investment of Php 1,000,000 by Mr. T Gutierrez recorded?

Asset Signup and view all the answers

What is the primary function of accounting as a service activity?

To deliver quantitative financial information Signup and view all the answers

Which of the following activities is NOT a phase of accounting?

Forecasting Signup and view all the answers

What is the significance of quantitative information in accounting?

It helps in making informed judgments and decisions. Signup and view all the answers

Which of the following is a correct description of the recording phase in accounting?

Writing down transactions in chronological order Signup and view all the answers

Which aspect is highlighted as part of the art of accounting?

Recording financial information in a significant manner Signup and view all the answers

In the phases of accounting, what comes after classifying transactions?

Summarizing Signup and view all the answers

How does accounting help economic entities in decision making?

By delivering financial information that is useful for judgments Signup and view all the answers

What does the summarizing phase of accounting accomplish?

Completes financial statements and other requirements Signup and view all the answers

What is the main purpose of bookkeeping?

To record business transactions in a systematic manner Signup and view all the answers

Which of the following best defines a business transaction?

An event or transaction that affects an entity's assets, liabilities, and equity Signup and view all the answers

In a transaction where a ballpen is exchanged for a piece of paper, what is the value parted with?

Piece of paper Signup and view all the answers

What term describes the practice of recording transactions in the order they occur?

Chronological recording Signup and view all the answers

What is necessary for effective accounting?

Complete and accurate bookkeeping records Signup and view all the answers

When a business buys a car for Php 850,000, what is the value received?

The car Signup and view all the answers

What does the equation 'Value Received = Value Parted With' imply about business transactions?

Transactions must balance in value Signup and view all the answers

What is considered an external transaction?

A purchase of raw materials from a supplier Signup and view all the answers

Study Notes

Accounting Basics

Accounting provides quantitative financial information about economic entities to support informed decision-making.
Debits (Dr) originate from the Latin "debere," indicating what is received, while credits (Cr) come from "credere," indicating what is parted with.

Fundamental Concepts

Every transaction involves a value received (debit) and a value parted with (credit), maintaining the balance: Debit = Credit.
Elements in accounting include Assets (debit), Liabilities (credit), Owner's Equity (credit), Drawings (debit), Revenues (credit), and Expenses (debit).

T-Accounts

T-Accounts are visual representations of accounts, comprising a left (debit) side for values received and a right (credit) side for values parted with.
The balance of an account is determined by the difference between total debits and credits:
- Debit Balance: If debits > credits
- Credit Balance: If credits > debits
- Closed Account: If debits = credits

Transactions

Transaction analysis involves identifying value received and value parted with, categorized by account type and impact on financial statements.
Example transactions include:
- Cash investment by Mr. Gutierrez: Debit Cash, Credit Owner’s Equity.
- Cash withdrawal by Mr. Gutierrez: Debit Drawing, Credit Cash.
- Salary payment: Debit Salaries Expense, Credit Cash.
- Purchase of supplies on account: Debit Office Supplies, Credit Accounts Payable.

Phases of Accounting

Phases include Recording (journaling transactions), Classifying (sorting into categories), Summarizing (preparing financial statements), and Interpreting (analyzing financial data).

Bookkeeping vs. Accounting

Bookkeeping is focused on systematically recording transactions, while accounting involves analyzing and interpreting these records to produce financial reports.
Both processes are interdependent for effective financial management.

Business Transactions

Business transactions are classified as external (between entities) or internal (within the business), affecting assets, liabilities, and equity.
Each transaction must reflect equal value exchange (received versus parted).

Examples of Transaction Analysis

Transaction examples demonstrate the impact on accounts:
- Bought a car for cash: Value received is the car, and the value parted is cash.
- Each transaction adjusts respective accounts, providing insight into financial health.

Importance of Debits and Credits

Understanding the rules of debits and credits is crucial for accurate financial reporting.
Each account type has a normal balance reflecting its typical state, guiding how transactions should be recorded.

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Description

This quiz focuses on the analysis of accounting transactions, particularly the impact of cash investments on assets and owner's equity. Through various illustrations, it explores the formal journal entries related to these transactions. Participants will deepen their understanding of the implications of such entries in accounting practices.