Podcast
Questions and Answers
Which activities are considered financial transactions?
Which activities are considered financial transactions?
- Receipt of cash from a client as advance (correct)
- Termination of an employee
- Acquisition of goods on credit (correct)
- Hiring new staff members
What must be true for a transaction to be recorded in accounting?
What must be true for a transaction to be recorded in accounting?
- It must involve a physical exchange of goods.
- It should not have any financial impact.
- It should involve at least two parties.
- It must have a measurable amount. (correct)
What is the first step in the accounting cycle?
What is the first step in the accounting cycle?
- Preparation of a trial balance
- Transactions and/or events (correct)
- Posting
- Journalizing
Which of the following statements is true regarding business transactions?
Which of the following statements is true regarding business transactions?
Which document is essential for analyzing business transactions?
Which document is essential for analyzing business transactions?
What is an example of a non-financial transaction?
What is an example of a non-financial transaction?
Which of the following is not a rule of debits and credits?
Which of the following is not a rule of debits and credits?
What is the primary purpose of journalizing in the accounting cycle?
What is the primary purpose of journalizing in the accounting cycle?
What is the amount Pedro invested in his computer repair business?
What is the amount Pedro invested in his computer repair business?
Which of the following correctly reflects the rules for recording debits and credits?
Which of the following correctly reflects the rules for recording debits and credits?
What entry should be made for Pedro hiring Juana Magaling as a secretary?
What entry should be made for Pedro hiring Juana Magaling as a secretary?
When recording a journal entry, what is the format for writing the debited account?
When recording a journal entry, what is the format for writing the debited account?
What amount did Pedro collect for repairing Jean's computer?
What amount did Pedro collect for repairing Jean's computer?
What should be the correct journal entry for Pedro depositing his investment?
What should be the correct journal entry for Pedro depositing his investment?
What is meant by the term 'books of original entry' in accounting?
What is meant by the term 'books of original entry' in accounting?
Which account would you use to record actual cash transactions?
Which account would you use to record actual cash transactions?
What is the account code for accounts payable?
What is the account code for accounts payable?
When would you use the account 'Prepaid Expenses'?
When would you use the account 'Prepaid Expenses'?
Which of the following accounts falls under owner's equity?
Which of the following accounts falls under owner's equity?
For which type of expense would you record under 'Salaries Expense'?
For which type of expense would you record under 'Salaries Expense'?
What would the account code for Inventory typically be assigned?
What would the account code for Inventory typically be assigned?
Which account would you use for items that will be sold in the future?
Which account would you use for items that will be sold in the future?
What purpose does the account 'Service Revenue' serve?
What purpose does the account 'Service Revenue' serve?
What is the correct journal entry to record the salary payment of Juana on February 25, 2016?
What is the correct journal entry to record the salary payment of Juana on February 25, 2016?
Which entry corresponds to Pedro's purchase of office supplies on February 19, 2016?
Which entry corresponds to Pedro's purchase of office supplies on February 19, 2016?
When Maria invested PHP60,000 to start her barbershop on January 18, 2016, what was the journal entry?
When Maria invested PHP60,000 to start her barbershop on January 18, 2016, what was the journal entry?
What is the correct journal entry for the payment of PHP10,000 rental for January 2016?
What is the correct journal entry for the payment of PHP10,000 rental for January 2016?
How should the journal entry for collections from Malakas Company on January 17, 2016, be recorded?
How should the journal entry for collections from Malakas Company on January 17, 2016, be recorded?
What journal entry reflects the withdrawal of PHP30,000 by Peter Pawn for his son’s tuition?
What journal entry reflects the withdrawal of PHP30,000 by Peter Pawn for his son’s tuition?
In preparing a chart of accounts, which step is involved?
In preparing a chart of accounts, which step is involved?
What entry corresponds to the purchase of office equipment with a 40% down payment?
What entry corresponds to the purchase of office equipment with a 40% down payment?
What information should be placed in the reference column of the ledger?
What information should be placed in the reference column of the ledger?
What is the first step in posting from the journal to the ledger?
What is the first step in posting from the journal to the ledger?
What purpose does inserting the account number in the journal serve?
What purpose does inserting the account number in the journal serve?
What should be noted on the credit side of the ledger?
What should be noted on the credit side of the ledger?
Which step outlines placing the account number in the journal's reference column?
Which step outlines placing the account number in the journal's reference column?
What is specified about the general ledger in the context given?
What is specified about the general ledger in the context given?
What action is related to the completion of posting in the journal?
What action is related to the completion of posting in the journal?
What are debits posted on in the ledger?
What are debits posted on in the ledger?
Flashcards
Business Transaction
Business Transaction
An activity that affects the value of a business's assets, liabilities, or equity.
Non-business Transaction
Non-business Transaction
An activity that does not affect the value of a business's assets, liabilities, or equity.
Financial Transaction
Financial Transaction
An activity that increases or decreases (changes) the value of assets, liabilities, or owner's equity.
Accounting Cycle
Accounting Cycle
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Step 1 (Transactions)
Step 1 (Transactions)
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Financial Impact
Financial Impact
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Business Documents
Business Documents
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Rules of Debits & Credits
Rules of Debits & Credits
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Journal Entry for Business Investment
Journal Entry for Business Investment
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Journal Entry for Asset Purchase
Journal Entry for Asset Purchase
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Debit
Debit
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Credit
Credit
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Accounting Equation
Accounting Equation
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Books of Original Entry
Books of Original Entry
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Assets
Assets
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Liabilities
Liabilities
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Owner's Equity
Owner's Equity
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Income
Income
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Expenses
Expenses
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Chart of Accounts
Chart of Accounts
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Account Code
Account Code
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Account Description
Account Description
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Journal Entry
Journal Entry
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Account Receivable
Account Receivable
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Account Payable
Account Payable
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Office Supplies
Office Supplies
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Salary Expense
Salary Expense
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Ledger
Ledger
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Journal
Journal
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Posting
Posting
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Debit Side
Debit Side
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Credit Side
Credit Side
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Reference Column
Reference Column
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Account Number
Account Number
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Cross-Reference
Cross-Reference
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Study Notes
FABM 1 - Business Transactions and Analysis
- Course focuses on business transactions in a service business
- Instructor: Noel Garcia Tubice
- Covered topics include business transactions, their analysis, and application to the accounting cycle for a service business.
Course Content
- Content Standards: Define and examine business transactions, types of transactions, and debits/credits. Includes business documents and their rules (e.g. debits and credits)
- Performance Standards: Ability to identify business and non-business transactions, enumerate types of business documents, explain the rules of debit and credit, apply these rules to simple cases
- Learning Competencies: Develop the ability to describe and give examples of business transactions. Learn to identify various business documents and analyze business transactions using debit and credit rules.
- Codes: Identifies the code for each learning competency (ABM_FABM 11-IIIg-j-25, ABM_FABM 11-IIIg-j-26, ABM_FABM 11-IIIg-j-27)
Accounting Cycle
- A continuous process for accumulating, summarizing, and reporting financial information
- Steps involved: Transactions, Journal Entries, Posting, Trial Balance, Worksheet, Adjusting Journal Entries, Financial Statements, Closing the Books
Step 1: Transactions and/or Events
- Identify external and internal transactions
- Analyze whether transactions have a financial impact
- Financial transactions change asset, liability, or equity value
- Examples of financial transactions : -Receiving cash from a client in advance -Paying for electrical bills
- Examples of non-financial transactions : -Hiring or terminating employees -Government recognition -Business closing or death of owner
Step 2: Preparation of Journal Entries (Journalization)
- Transactions recorded using specialized journals
- Debits (DR) and credits (CR) used to record transactions
- Rules on Debits and Credits: -Debit account name listed first -Debit amount on left side of the register -Credit account name on the second line, indented -Credit amount on right side of the register -Total debit should equal total credit
Step 2: Example Transactions (Matapang Computer Repairs)
- Specific journal entries for various business transactions provided (Feb 14, 2016, Feb 15, 2016, Feb 16, 2016, etc.)
Step 3: Posting to the Ledger
- Copying transaction summaries from journals to ledgers (general and subsidiary ledgers)
- Ledgers maintain running balances
- Essential for financial tracking
- Procedure: Determine the correct account, transfer essential information (date, explanation, amounts), place page number of a journal, and place corresponding account number in a journal
Step 3: Chart of Accounts
- A listing of accounts used in financial record-keeping
- Provides foundation for financial statements
- Steps for creating a chart of accounts: Create three columns- List all assets, liabilities, owner's equity, income and expenses in the first column- Choose an account code, and describe the account's purpose in the third column
Step 3: Example Chart of Accounts
- Example chart of accounts with codes (for assets, liabilities) and brief descriptions are provided
Step 4: Unadjusted Trial Balance
- Summarizing balances at the end of an accounting period
- Data transfer from ledgers to worksheet
- Accounts organized by asset, liability, owner's equity, income, and expenses
- Presented in the example provided (Matapang Computer Repair's Unadjusted Trial Balance for February 29, 2016).
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Description
This quiz focuses on the analysis of business transactions in a service business context. Learners will explore types of transactions, business documents, and how debits and credits affect the accounting cycle. Get ready to apply your knowledge of business transactions and their rules effectively!