FABM 1 2020-2021 First Quarter Digital module PDF

Fundamentals of Accountancy, Business and Management 1-1 Quarter st  COVERAGE OF THE SESSION Accounting Key Concepts The Accounting Cycle Business Transactions (Service Company) The Accounting Equation Rules of Debit and Credit Journalizing using the...

Fundamentals of Accountancy, Business and Management 1-1 Quarter st  COVERAGE OF THE SESSION Accounting Key Concepts The Accounting Cycle Business Transactions (Service Company) The Accounting Equation Rules of Debit and Credit Journalizing using the 2-column General Journal Posting to the General Ledger Preparation of Trial Balance Adjusting Entries Depreciation of Plant Assets Worksheet Preparation of Statement of Comprehensive Income & Statement of Changes in Owner’s Equity DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  COVERAGE OF THE SESSION-FIRST QUARTER Accounting Key Concepts The Accounting Cycle Business Transactions (Service Company) The Accounting Equation Rules of Debit and Credit Journalizing using the 2-column DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  PhP - 2021 Richest man in the Philippines? ? Net worth of Pres. Aquino? Cost of a can of sardines?  o f r l d o w h e T ACCOUNTING What is Accounting? Language of business  HISTORY…. History of man Tigris-Euphrates Valley History of writing 5,000 years old √ Arithmetic Oldest Accounting Records – Clay Tablets GREEKS coined money system in 600 B.C. BARTER TRADE  1494 Everything About Arithmetic, Geometry and Proportion Fra Luca Bartolomeo de Pacioli’ - “Summa de Arithmetica, Geometria, Proportioni et Proportionalità"  1600 First college education of accountants First professional accounting organization 1854 A major force in world 20th Century trade and investment  Philippines Complete a 4-year college course Bachelor of Science in Commerce major in Accounting Bachelor of Science in Accountancy PRC - Professional Regulations Commission Marketing Agriculture Bachelor of Science in Commerce major in: Management Enterprise Economics Accounting Technology  Easy to hate and fear? Sleepless nights of assignments… Long hours of examination… migraines and drives you crazy!!!  Why love Accounting? Better person… Good decision maker Wise counselor SFAS #1/AICPA Accounting is an art of recording, classifying, summarizing in a significant manner, and in terms of money, transactions, and events, which are in part, or at least, of a financial character, and interpreting the results thereof.  Why ART? - requires the use of skills and creative judgment - own style of presenting ideas and relay communication with the users of accounting information  RECORDING - act of entering documents through writing or using mechanical or electronic devices as proof of evidence or activities performed or occurrence of events CLASSIFYING -process of sorting & grouping similar items of accounting transactions in an orderly and systematic manner SUMMARIZING - Bringing the data together in a form that further enhances the usefulness of accounting information Financial Character - transactions or events which involves financial value INTERPRETING - evaluating the information which needs to be understood; analysis on the outcome of the business transactions PICPA: - Accounting is a service activity which provides quantitative information primarily financial in nature about economic entities that is intended to be useful in making economic decision.  THE ACCOUNTING EQUATION A = L + C Assets Liabilities Capital -anything of value that is anything a company or the interest or investment of owned by the individual or individual owed or the individual in the business business borrowed Cash, land, building, etc. Accounts Payable, Notes Payable, Taxes payable Owner’s capital IMPORTANCE OF ACCOUNTING Accounting Concept – an abstract idea which serves as basis in the interpretation of accounting information. It explains & justifies the treatment of transactions, procedures or events. 01. Accruals Concept – revenue is recognized when earned, & expenses are recognized when assets 02. are consumed Business Entity Concept – the business & the owner are two separate entities 03. Going Concern Concept – the business firm will continue to carry activities for an indefinite period 04. Accounting Period Concept – profits of transactions is to be ascertained for a specified time 05. Accounting Cost Concept – Assets are recorded in accounts at its cost price 06. Dual Aspect Concept – transaction has a dual effect 07. Conservatism Concept – revenue is only recognized when there is a reasonable certainty that it will be realized, & expenses are recognized sooner, when there is a reasonable possibility that Consistency 08. they will be incurred Concept – once a business chooses to use a specific accounting method, it should continue using it on a go-forward basis 09. Matching Concept – expenses related to revenue should be recognized in the same period in which the revenue was recognized 10. Materiality Concept – transactions should be recorded when, not doing so might alter the decisions made by a reader of a company’s financial statements  HOW MUCH IS YOUR WORTH? (Statement of Assets, Liabilities & Net Worth)  Basic Terms Balance Sheet -statement of financial position, the elements of this statement are assets, liabilities and owner’s equity Income Statement-statement of Profit and Loss, showing the results of operation for a given period of time. Its elements are revenues (sale/professional fees), and expenses. (statement of comprehensive Income) Net Income/Net Loss - the difference between revenues and expenses Break Even -a condition where income is directly proportional to expense Capital Statement -statement that summarizes the changes in the owner’s equity account of a business Entity (statement of changes in Owner’s Equity)  Basic Terms Debit -an entry on the left side (debere – he who owes) Credit -an entry to the right side (credere- he who trusts) Journal -book of original entry Ledger -book of final entry Assets - the economic resources of an enterprise that are recognized and measured in conformity with the generally accepted accounting principles; things of value owned by the business.  Basic Terms Current Assets -Cash and other assets which are normally converted into cash or consumed within a short period of time (normally one year) Cash on Hand -currency on hand under the name of the company Cash in Bank -currency deposited in bank/s Petty Cash Fund -small bills or coins left on hand Accounts Receivable -claims from clients or customers resulting from services rendered by the company or by sale of merchandise Notes Receivable -claims from clients or customers which are expressed in writing like promissory notes Merchandise Inventory -goods or merchandise on hand and available for sale Prepaid Expenses -advance payments for use of facilities (prepaid rent), purchase of supplies (supplies on hand), and right for protection (prepaid insurance)  Basic Terms Non Current Assets -other properties used in the business for relatively long period of time. Land -ground area used in the operation of the business Building -structure used or occupied of the business Office Equipment -typewriters, calculators, & computers used by the business Store Equipment -weighing scales, cash registers, and freezers, among others used by the business Furniture & Fixture -cabinets, tables, chairs, and light fixtures in the building  Basic Terms Liabilities -these are the debts or financial obligations of the business that are recognized, measured in conformity with the generally accepted accounting principles and must be paid on a specific date. There are different kinds of debts and they are described according to the matter they are credited. Current Liabilities -debt which will be paid within a year or one accounting period Non-current liabilities -debts or loans which will be paid beyond one accounting period. Accounts Payable -amounts owed to creditors for purchase of goods or for services rendered Notes Payable -amounts expressed in written promise to pay the creditor on a specified date (e.g. loan from the bank) Taxes Payable -amounts due to the government like sales taxes and income taxes  Basic Terms Owner’s Equity -the interest of the owner in an enterprise which is the excess of an enterprise’s assets over its liabilities. It is made up of the proprietor’s original capital and the profits or losses of the business operation. Should the owner withdraw cash or part of the profits, the amount will be deducted from the owner’s equity. Owner’s Capital -amounts invested by the owner Owner’s Drawing -amounts withdrawn from the business for personal use to be deducted from the net earnings Revenues/Sales -the cash inflow or other properties received from the exchange of goods or services to customers. Examples are service fees, commissions earned, sales of goods, rents, and dividends earned. Contra-Assets -these are real accounts off-setted against an asset account ( Accumulated Depreciation and Allowance for Bad Debts) Expenses Basic Terms -the goods or services used in operating a business. Examples are salaries paid to employees (salaries expense), service of electric, waters and telephone companies (utilities expense), tax paid (tax expense) and advertising expense. Accrued Expenses -expenses already incurred but not yet paid Prepaid Expenses – expenses already paid but not yet incurred Accrued Income – income already earned but not yet received Unearned Revenue – income already received but not yet earned Liquidity – the ability to pay short-term debts of the business as they become due and capability to sell assets quickly to raise cash Profitability – the ability to generate earnings Solvency – the ability of the company to meet long-term debts and continue to operate into the future Business transaction -is an exchange of goods and services which must be recorded.  Basic Terms 3 Main Categories of Accounting 1. Public Accounting - Auditing, Management Advisory Service, Tax Accounting 2. Private Business Accounting – General Accounting, Cost Accounting, Budgeting 3. Government Accounting 3 Forms of Business Organization 1. Single Proprietorship 2. Partnership 3. Corporation 2 Types of Accounting Period 1. Calendar 2. Fiscal  Basic Terms 3 Types of Business Activities 1. Service Companies 2. Merchandising Companies 3. Manufacturing Companies 4 Financial Statements 1. Statement of Comprehensive Income 2. Statement of Changes in Owner’s Equity 3. Statement of Financial Position 4. Statement of Cash Flow 2 Types of Accounts 01.Nominal (temporary) 02.Real (permanent)  Basic Terms 5 Major Classifications of Accounts 1. Asset 2. Liability 3. Capital 4. Income 5. Expense 2 Kinds of Journal Entry 1. Single Entry 2. Compound Entry 2 Books of Accounts 1. Bookof original entry (Journal) 2. Book of Final entry (Ledger) Basic Terms 4 Phases of Accounting 1. Recording 2. Classifying 3. Summarizing 4. Interpreting 5 Types of Entry 1. Journal Entry 2. Adjusting Entry 3. Closing Entry 4. Reversing Entry 5. Correcting Entry 3 Types of Trial Balance 1. Unadjusted Trial Balance 2. Adjusted Trial Balance 3. Post – Closing Trial Balance  Basic Terms 3 Types of Cash 1. Petty Cash 2. Cash on Hand 3. Cash in Bank 4 Types of Special Journals 1. Cash Receipts Journal (cash received from cash sales, receivables interest earned) 2. Cash Disbursement Journal (payment for bills, debts, purchases o investment) 3. Sales Journal (goods sold on account) 4. Purchase Journal (goods purchased on account) 3 Entries in the Correction of Errors 1. Entry – Made  Basic Terms Accounting Cycle - the principal accounting procedure or steps employed to process transactions during a fiscal period. 1.Occurrence of business transactions evidenced by business document 2. Journalizing 3. Posting to the General ledger 4. Preparing the Trial Balance 5. Adjusting Entries 6. Preparing the Worksheet 7. Preparing the Financial Statements 8. Closing Entries 9. Preparing the post-closing trial balance Business Transactions (Service Business)  Analyze the common business transactions Definition Examples Business Entity Concept Value Received and Value Parted With DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT Business Transactions (Service Business)  data recorded in the accounting books  Economic activities of the firm Internal Transactions- activities within the firm External Transactions- activities involve in one enterprise and another Arganda (2016), DEPARTMENT Fundamentals of Accounting OF EDUCATION Bookkeeping – BUREAU 1.Pp.7 OF CURRICULUM DEVELOPMENT Business Transactions (Service Business) Examples: Purchased tools for cash Purchased office supplies on credit Paid for advertising in the local paper DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT Business Transactions (Service Business) A transaction is an exchange of values measurable in money. When there is a transaction, there is an exchange of values. Arganda (2016),.Fundamentals of Accounting Bookkeeping 1.Pp.7 Pasion, D.S. (1981). Bookkeeping Simplified. Pp.2 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT Business Transactions (Service Business) A value is acquired by giving away an equivalent value, may either be money, property or services. For every value received there is a value parted with Arganda (2016),.Fundamentals of Accounting Bookkeeping 1.Pp.7 Pasion, D.S. (1981). Bookkeeping Simplified. Pp.2 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  Business Entity Concept The business is always assumed to be distinct and separate from its owner or owners. In transactions therefore, entered into by the owner on behalf of the business should be recorded in the books of the firm. Arganda (2016),.Fundamentals of Accounting DEPARTMENT OF EDUCATION Bookkeeping – BUREAU 1.Pp.7 OF CURRICULUM DEVELOPMENT  Value Received and Value Parted With To analyze business transactions is to look at the point of view of the business. To analyze business transactions is to identify the value received and the value parted with DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT Purchased tools for cash tools Cash Purchased office supplies on credit Office Supplies Obligation or debt Completed repair work for S. Andolong and received cash Cash Services  Value Received and Value Parted With Fold and label your paper as shown below. TRANSACTIO VALUE VALUE PARTED NS RECEIVED WITH DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  The Accounting Equation  Illustrate Accounting Equation through Accounting elements (five major accounts) Effects of transactions Basic Accounting Equation DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  Business Transactions Examples: Purchased tools for cash Purchased office supplies on credit Paid for advertising in the local paper In every business transactions, there are elements/values present. These elements/values are classified into five major accounts. DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT FIVE MAJOR ACCOUNTS Assets Liabilities Capital Income Expenses DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  FIVE MAJOR ACCOUNTS Assets - economic resources owned by the business - include properties and other things of value whose ownership title is in the name of the business Two Types: a. Current – can be converted into cash within an accounting period or operating cycle b. Non-Current – tangible or fixed assets, with a useful life beyond one year DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  FIVE MAJOR ACCOUNTS Current Assets Non-Current Assets Cash * Land Inventories * Building Receivables * Equipment Prepaid Expenses * Furniture & Fixtures * Other Assets DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  5 Intangible Assets (RA 8293 – Intellectual Property Rights) 1. Copyright – legal right of the owner of intellectual property (right to copy) – Elements: work of authorship, original, fixed in a tangible medium of expression 2. Franchise – type of license that gives the right to produce a licensed product by the owner of the license 3.Goodwill – value of the business that exceeds its assets minus liabilities, representing the non-physical assets, such as the value created by a solid customer base, brand recognition or excellence of management 4. Patent –a government authority or license conferring a right or title for a set period, especially the sole right to exclude others from making, using or selling an invention 5. Trademark – a symbol, word or words legally registered or established by use as representing a company or product  FIVE MAJOR ACCOUNTS Liabilities - Are debts and obligations of the business to a party other than its owner Examples Accounts Payable Notes Payable Salaries Payable DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  FIVE MAJOR ACCOUNTS Capital - Represents the owner’s equity or investment in the business, synonymous to: Owner’s Equity or Proprietorship Owner’s Capital – owner’s investment Drawing- personal withdrawal DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  FIVE MAJOR ACCOUNTS Income - Gains from the business activities - Revenue arises as a result of business operations or from activities that tend to increase capital Examples Repair Income Laundry Income Service Income DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  FIVE MAJOR ACCOUNTS Expenses - Expenditures arise as a result of business operations or from activities that tend to decrease capital Examples Rent Expense Supplies Expense Advertising Expense DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  EFFECTS OF TRANSACTIONS Business Transactions affect accounting values. When there is a transaction, there is an Increase and Decrease of value DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  EFFECTS OF TRANSACTIONS Transaction 1 Mr. Gil opened a motor repair shop and invested P100, 000.00 cash. Effects (Analysis) The asset, cash, is increased by P100, 000. 00 The capital account, is also increased by P100, 000.00 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  EFFECTS OF TRANSACTIONS Transaction 2 Purchased repair supplies worth P25, 000 on credit from De Mesa Trading Effects (Analysis) The asset, repair supplies, is increased by P25, 000 The liability to Mr. De Mesa (Accounts Payable), is also increased by P25, 000 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  EFFECTS OF TRANSACTIONS Transaction 3 Paid the salary of assistant, P10, 000 cash Effects (Analysis) The asset, cash, is decreased by P10, 000 The capital account, (Salary Expense), is also decreased by P10, 000 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  ACCOUNTING EQUATION Therefore, from the effects of business transaction we could derive the accounting equation as: ASSETS = EQUITIES LIABILITY EQUITIES PROPRIETORSHIP/CAPITAL DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  ACCOUNTING EQUATION In simplest form: Assets = Liability + ASSETS = LIABILITY + CAPITAL Capital A = L + C DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  ACCOUNTING EQUATION Transaction 1 Mr. Gil opened a motor repair shop and invested P100, 000 cash. A = L + EFFECTS C Increased in asset, Cash- Cash = 0 + P100, 000 Increased in capital, Gil’s Gil’s, Capital Capital P100, 000 100, 000= 0 + 100,000 100, 000 = 100, 000 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  ACCOUNTING EQUATION Transaction 3 Paid the salary of assistant, P10, 000 cash A = L + EFFECTS C Decreased in asset, Cash- Cash = 0 + P10, 000 Salaries Decreased in Capital, Salaries Expense P10, 000 Expense (10, 000)= 0 + (10, 000) DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  ACCOUNTING EQUATION Transaction 2 Purchased repair supplies worth P25, 000 on credit from De Mesa Trading A = L + EFFECTS C Increased in asset, Repair Repair = Accounts Supplies-P25, 000 Payable + 0 Increased in Liability, Supplies De Mesa Accounts Payable-De Mesa Trading Trading P25, 000 25, 000= 25, 000 + 0 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  ACCOUNTING EQUATION Activity: Give the effects and tabulate the following transactions: 1.Invested cash PhP50,000.00 2. Purchase supplies for cash, PhP2,000.00 3. Rendered service and received cash, PhP8,000.00 4. Purchased equipment on account, PhP5,000.00 5. Rendered service on account, PhP9,000.00 6. Paid supplier of equipment, PhP4,000.00 7. Collected PhP6,000.00 from customer on DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  ACCOUNTING EQUATION TRANSACTIONS EFFECTS A S S E T S = LIABILITIES + CAPITAL Accounts Equipmen Receivabl Accounts Cash Supplies t e Payable 1 Invested cash PhP50,000.00 increase Asset-Cash 50,000.00 50,000.00 increase _____________________________________ Capital__________________ 50,000.00 50,000.00 2 Purchase supplies for cash, increase Asset-Supplies (2,000.00) 2,000.00 - Decrease Asset- PhP2,000.00______________ Cash______________ 48,000.00 2,000.00 50,000.00 Rendered service and 3 received cash, increase Asset-Cash 8,000.00 - 8,000.00 Increase PhP8,000.00__________________ Capital__________________ 56,000.00 2,000.00 58,000.00 Purchased equipment on __ 4 account, increase Asset-Equipment - - 5,000.00 5,000.00 - increase Liability-Accounts PhP5,000.00________________ Payable__ 56,000.00 2,000.00 5,000.00 5,000.00 58,000.00 Rendered service on increase Asset-Accounts 5 account, Receivable - - - 9,000.00 - 9,000.00 increase PhP9,000.00___________ Capital_________________ 56,000.00 2,000.00 5,000.00 9,000.00 5,000.00 67,000.00 6 Paid supplier of equipment, Decrease Asset-Cash (4,000.00) - - - (4,000.00) -  RULES OF DEBIT AND CREDIT  Apply the rules of debit and credit T-Account Rules of Debit and Credit DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  RULES OF DEBIT AND CREDIT Business transactions cause increases and decreases in the accounting values. To record these changes, a business firm makes use of accounts. An account is an accounting device used to summarize the increases and decreases in the asset, liability, capital, income and expenses of the business A simple form of account looks like a big letter “T” called “T- account” DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT RULES OF DEBIT AND CREDIT “T- account” DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT RULES OF DEBIT AND CREDIT “T- account” Left side Right side Debit (Debere) Credit (Credere) Dr Cr DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  RULES OF DEBIT AND CREDIT “T- account” Debit Credit Increase in Assets * Decrease in Assets Decrease in Liabilities * Increase in Liabilities Decrease in Capital * Increase Capital Increase in Drawing * Decrease in Drawing Increase in Expense * Decrease in Expense DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  RULES OF DEBIT AND CREDIT “T- account” Debit Credit +A Assets +L Liability +D Drawing +I Income +E Expenses +C Capital -L Liability -A Assets DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  RULES OF DEBIT AND CREDIT SUMMARY ACCOUNT DEBIT CREDIT NORMAL BALANCE Asset Increase Decrease Debit Liability Decrease Increase Credit Capital Decrease Increase Credit Drawing Increase Decrease Debit Revenue/Income Decrease Increase Credit Expenses Increase Decrease Debit DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  T-ACCOUNT Mr. Gil opened a motor repair shop and invested P100, 000 cash. Dr Cr +A +L EFFECTS T- ACCOUNT +D +I Increased in asset, Cash Gil’s +E +C Cash-P100, 000 Increased in Capital -L -A capital, Dr Cr Dr Gil’s Capital P100, Cr 000 100, 000 100, 000 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  T-ACCOUNT Fold and label your paper as shown below ACTIVITY TRANSACTI EFFECT 4: ACCOUNTING EQUATION T-ACCOUNT ONS S DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  ACCOUNTING EQUATION Activity: Give the effects and tabulate the following transactions in T-Account form: a. Invested cash PhP50,000.00 b. Purchase supplies for cash, PhP2,000.00 c. Rendered service and received cash, PhP8,000.00 d. Purchased equipment on account, PhP5,000.00 e. Rendered service on account, PhP9,000.00 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  T-ACCOUNT TRANSACTIONS EFFECTS Cash Accounts Receivable a 50,000.00 2,000.00 b e 9,000.00 6,000.00 g c f a Invested cash PhP50,000.00 increase Asset-Cash 8,000.00 4,000.00 3,000.00 ======= g ==== increase Capital 6,000.00 b Purchase supplies for cash, PhP2,000.00 increase Asset-Supplies 64,000.00 6,000.00 Equipment d Decrease Asset-Cash 58,000.00 5,000.00 ======== ======= ===== == c Rendered service and received cash, increase Asset-Cash PhP8,000.00 increase Capital d Purchased equipment on account, increase Asset-Equipment Supplies Capital b a PhP5,000.00 increase Liability-Accounts Payable 2,000.00 50,000.00 ======== c e Rendered service on account, PhP9,000.00 increase Asset-Accounts Receivable 8,000.00 increase Capital 9,000.00 e f Paid supplier of equipment, PhP4,000.00 Decrease Asset-Cash 67,000.00 ======= ===== Decrease Liability-Accounts Payable Accounts Payable 4,000.00 5,000.00 f d g Collected PhP6,000.00 from customer increase Asset-Cash 1,000.00 ========  JOURNALIZING - the process of chronologically recording transactions (evidenced by business documents) in the journal in the form of journal entries. The T-Account facilitates the recording of transactions in a journal (journalizing) A journal is a book of accounts where business transactions are recorded for the first time (book of original entry) Kinds a. General Journal b. Special Journal DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  GENERAL JOURNAL DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  GENERAL JOURNAL DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT The use of T-Account in JOURNALIZING Mr. Gil opened a motor repair shop and invested P100, 000 cash. Cash Gil’s Dr Cr Capital Dr Cr 100, 100, 000 000 Cash 100, Gil’s 000 100, Capital Initial Investment 000 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  JOURNALIZING Activity: Journalize the following transactions in a 2- column General Journal (for the month of October 2018): 1 Invested cash PhP50,000.00 3 Purchase supplies for cash, PhP2,000.00 9 Rendered service and received cash, PhP8,000.00 12 Purchased equipment on account, PhP5,000.00 DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  GENERAL JOURNAL DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT  GENERAL JOURNAL DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT END OF 1ST QUARTER DEPARTMENT OF EDUCATION – BUREAU OF CURRICULUM DEVELOPMENT THANK YOU VERY MUCH! Bureau of Curriculum Development