Basic Accounting Course Outcomes (PDF)

briefly: 1) What do you mean by BASIC ACCOUNTI  COURSE OUTCOMES: 1) Understand the rationale for the basic accounting concepts and principles. (Up to here- August  AUGUST 27, 2024(TUESDAY) Hello Students! Welcome to this course, BASIC...

briefly: 1) What do you mean by BASIC ACCOUNTI  COURSE OUTCOMES: 1) Understand the rationale for the basic accounting concepts and principles. (Up to here- August  AUGUST 27, 2024(TUESDAY) Hello Students! Welcome to this course, BASIC ACCOUNTING! I am glad to be with you in this semester. Accounting is the language of business. Through a series of steps known as Accounting Cycle, it gathers information about business transactions  This course aims to build and solidify your knowledge of the basic accounting which is very useful in pursuing higher accounting studies, in building a career, or in managing your businesses in the future. Before starting, I would like to ask, how are you doing? I hope that you are in good health and very excited for this semester to start. Always keep in mind to  This course is divided into four modules which may include one or more lessons. Each module contains objectives, discussions and activities that will help you understand the Course Description Accounting transforms business transactions into intelligible information needed by various stakeholders in making decisions. While most business transactions are complex, learners must first develop a thorough principles that underpin these complex transactions. This course equips the learners with a thorough review of accounting: analysis of business transactions, accounting equation, journalizing, and posting, generation of trial balance, adjusting  entries, post-closing trial balance and reversing entries. Through case problems, learners are expected to complete the accounting cycle and prepare financial statements of a service COURSE OUTCOMES:  Understand accounting concepts and principles in conformity with PASC 1  Analyze business transactions and apply each steps of the accounting cycle.  Continue the accounting cycle from adjusting entries up to reversing entries.  Prepare Financial Statements for service and manufacturing entity.  Introduction to Basic Accounting Accounting is relevant in all walks of life, and it is absolutely essential in the world of business. Accounting is system that can measure business activities, processes that information into reports No business could operate very long without knowing how much it was earnings and how much it was spending. Without accounting, a business couldn’t function optimally; it wouldn’t know its financially, whether it’s making a profit or not and it wouldn’t know its financial situation. That is why, accounting is very important. After studying, you should be able to: 1. Know brief history of accounting, its definition and purposes. 2. Compare & contrast accounting and bookkeeping. 3. Understand the nature of accounting. 4. Identify the broad classification of accounting elements. 5. Identify the classification of assets, liabilities and equity. 6. Learn the forms of business organization and types of business activities. Presented below are jumbled letters that corresponds a specific word related to this lesson. Arrange the letters into the words that you think is somehow related to understanding Accounting. 1. ORCGDINER 6. STOGNPI 2. AAIONNRSCTT 7. GINPEEOOKKB 3. YETNR 8. NCISEPLIRP 4. ICCNAOTGNU 9. STOC 5. SSNGYFIILAC 10. YEONM (Up to here as of Aug. 27, 2024) Brief History of Accounting In the present accounting system, w/c includes innovative processes that are designed to fit the ever changing economy w/c also gives opportunity to the development of accounting profession. The history of accounting can be traced to the work of a Franciscan monk LUCA PACIOLI. On November 1494, he published a book, “ SUMYMA DE ARITHMETICA,GEOMETRIA, PROPORTIONALITA” meaning, ”Everything about Arithmetic, Geometry, Proportions and Proportionality” that contained the primary principles of Mathematics which lead him to create a set of accounting procedures. This books contained detailed calculation and recording which is the DOUBLE-ENTRY SYSTEM of BOOKKEEPING. Though he did not claim that the bookkeeping was discovered and established by him, still, he is known as the FATHER OF DOUBLE-ENTRY SYSTEM affirming that the purpose of bookkeeping was to “ give the trader without delay the information as to his assets and liabilities”. He also recommended the closing of books and the computation of periodic profit was necessary. So we give thanks to Luca Pacioli for his wonderful invention. Definitions of Accounting: According to the Accounting Standard Council (ASC) – “It is a service activity. Its function is top provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.” The American Accounting Association(AAA) also defines accounting as – “It is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the financial information.” American Institute of Certified Public Accountants (AICPA), largest organization of practicing accountants define accounting as follows: “It is an art of recording, classifying, summarizing in a significant manner and in terms of money, transactions, and events which are, in part at least, of a financial character, and interpreting All definitions give an emphasis on the most important ideas of Accounting as: 1. Accounting is all about quantitative information. 2. The information is of financial in character. 3. Usefulness of information in decision making. The definition of accounting cited by AICPA holds true because it is made to precisely fit the embellishment of the steps of accounting cycle. This definition includes the four basic functions of accounting – recording, classifying, summarizing, and interpreting.  Recording – the role of accounting involves the routine and the process of writing down the business transactions & events in the books of accounts in a chronological manner called Classifying – this involves sorting & grouping of transactions and events that are similar in nature, kind and classes. Classifying function is actually the process of posting the journal to the ledger.  Summarizing – this function of accounting includes the making of the financial statements and all accounting requirements. This function starts from the preparation of trial balance, journalizing the adjusting entries, worksheet completion down to closing, post-closing trial balance Interpreting – this is the analytical and interpretative works. In this function, financial statements are analyzed, interpreted and communicated to the users where these could be a great help in the decision-making process and for the improvement of the business. Bookkeeping Vs. Accounting  Bookkeeping, as defined by Rafael Lopez, “ is the process or recording systematically the business transactions in a chronological manner. It is systematic because it follows procedures and principles. It is chronological because the transactions are recorder in order of the date of occurrence. The recording aspect is just one of the four major functions of accounting. Since bookkeeping traditionally assumes the responsibility of recording functions, it runs short of classifying and summarizing aspects which form part in the completion of bookkeeping work.”  Accounting on the other hand, requires complete and accurate bookkeeping records necessary in the performance of its responsibility which is the analysis and interpretation of the financial reports. Bookkeeping and Accounting can be transliterated into a common saying that “one is useless without the other.” Philippine Accounting Standard (PAS. Presentation of Financial No. 1): Statements Four Basic Financial Statements: 1. STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) This statement is previously named as “Balance Sheet”. This financial statement shows what the business owns (Assets), how much the business owes (Liabilities) and how much is left for the business (Owner’s Equity). There are three major elements of. financial statement that are showed in this statement. ASSETS These are defined as “resources controlled by the enterprise as a result of past transactions and events and from which future economic benefits are expected to flow to the enterprise”. In layman’s term, assets are what the business owned and used in the operations. A) Current Assets – refer to all assets that.are expected to be realized, sold, or consumed within the enterprise’s normal operating cycle. 1. Cash – the account title to describe money, either in paper or in coins and money substitutes like check, postal money orders, bank drafts and treasury warrants. When cash is within the premise of the business, the account title is Cash on Hand and Cash in Bank if deposited in the bank.  2. Cash Equivalents – PAS no. 7 defines Cash equivalents as a short-term,.highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in values because of changes in interest rates. 3. Petty Cash Fund – an account title for money that is separately placed inside the box and set aside for petty account (Savings or Current) where it requires a withdrawal slip or issuance of check every time it makes disbursements.  4. Notes Receivable – this is a promissory note that is received by the business from the costumer arising from rendering of services, sale of merchandise, etc. 5. Accounts Receivable – the account title for amounts collectible arising form services rendered to a customer or client or sale of goods to customer on accounts. This constitute an oral or verbal promise to pay by a customer. 6. Estimated Uncollectible Accounts – this is an asset-offset or a contra-asset account. It provides for possible losses from uncollectible accounts. Although this is not an asset, it is classified as such because it is shown as a deduction from the Accounts Receivable account.  7. Advances to Employees – the account title for amounts collectible from employees for allowing them to make cash advances which are deductible against their salaries or wages. 8. Inventories – PAS No. 4, these are assets which are held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services. 9. Supplies Inventory or Unused Supplies – an account title for cost of stationery and other supplies purchased for use but are left on hand and still unused.  10. Prepaid Expenses – account title for expenses that are paid in advance but are not yet incurred or have not yet expired such as Prepaid Rental, Prepaid Insurance, Prepaid Interest. 11. Accrued Income – account title for income that is already earned but it has not yet been collected. In other words, it has a semblance of “receivable” account. B) Non-Current Assets 1. Property and Equipment – the International Accounting Standard no. 16 defines this as tangible assets which are held by an enterprise for use in production or supply of goods and services, for rental to others, or for administrative purposes, and which are expected to be used during more than one period such as: a. Land – an account title for the site where the building used as office or store is constructed. If land is reserved for future use, it is classified as “Investment Property”.  b. Building – an account title for a finished construction owned by the business where operations and transactions took place. c. Equipment – include calculators, typewriters, adding machines, computers, and the like. d. Furniture and Fixtures – include chairs, tables, counters, display cases and the like. 2. Accumulated Depreciation – this is an asset-offset or contra-offset account. This is shown as a deduction from property and equipment. Each property and equipment should be provided with their individual There are defined as “financial obligations of the business to its creditors. It represents the claim of the creditors over the assets of the enterprise.” a. Current Liabilities – are the financial obligations of the enterprise which are expected to be settled in the normal course of the operating cycle; it is due to be settled within one year from the Statement of Financial Position date. 1. Accounts Payable – an account title for a financial obligation of an enterprise that constitutes an oral or verbal promise to pay.  2. Notes Payable (short-term) – same as Accounts Payable in nature but only the obligation is evidenced by a promissory note. The enterprise is the one who issued the note. 3. Accrued Expenses – these are expenses incurred by the enterprise but are not yet paid. This normally occurs when the accounting period ended such as rent payable, salaries payable, interest payable, taxes payable, etc. it has semblance of “Payable” account. 4. Unearned Income – this is an account title for an income collected or received in advance but services have not been rendered yet. b. Non-current Liabilities 1. Notes Payable (long term) – same nature with that of Notes Payable (short term), but only, this requires payment for more than a year. 2. Mortgage Payable – a financial obligation of the enterprise which requires a fixed or tangible property to be pledged as a collateral to ensure payment.  Owner’s Equity or Capital This is the “residual interest in the assets of the enterprise after all its liabilities”. It is expressed in the equation as Assets Less Liabilities Equals Owner’s Equity or Capital. It is increase when there is Profit or additional contributions by the owner and decrease when there is Loss or withdrawal by the owner. Withdrawal – the owner’s withdrawals is likewise indicated by the use of the owner’s name with the word Drawings. Income & Expense Summary – this is temporary account created at the end of the accounting period where Income and Expense are temporarily closed to the account. 2. STATEMENT OF COMPREHENSIVE INCOME (INCOME STATEMENT) A. Income or Revenue – these refers to the “proceeds from services rendered by a servicing firm, income from use by entities of the resources of the enterprise like royalty income, rent income, interest income etc.” 1. Service Income – in general, this is the account title used for all types of income derived from rendering of services.  2. Professional Income – the account title generally used by professional for income earned from the practice of their profession or may be specified as Legal Fees from Lawyers, etc. 3. Rental Income – for income earned on buildings, space or other properties owned and rented out by the customer and usually covered by a promissory note. 4. Interest Income – for income received by the business arising from an amount of money borrowed by a costumer and usually covered by a promissory note.  5. Miscellaneous Income – for income earned by the business which is not the main line of its activity and could not be clearly classified. B. Expenses – these are the “gross outflow of economic benefits during the period arising in the course of ordinary activities of an enterprise when those outflow result in decrease in equity, other than those relating to distribution to owners.” represents cost of supplies that were used and consumed that bears specific titles as offices supplies expense, store supplies expense, etc. 2. Rent Expense – for the amount paid or incurred for use of property, usually premises. 3. Repairs and maintenance – for expenses incurred in repairing or servicing the buildings, machineries, vehicles, equipment, etc., which are owned by the business. 4. Salaries Expense – for compensation given to employee of a business. It may be specified as Office Salaries, etc. anticipated loss that the business may incur arising from uncollectible accounts. This is also known as Doubtful expense. 6. Depreciation Expense – for the portion of the cost of property and equipment or fixed assets that has expired based on rational and systematic allocation procedure. 7. Taxes and Licenses – for the amount paid for business permits, licenses and other government dues except the Income Tax paid. 8. Insurance Expense – account title for the expired portion of the insurance premium paid.  9. Utilities Expense – the account title for telephone, light and water bills. 10. Interest Expense – an expense incurred from borrowed money. This is separately shown as a deduction from Profit before finance charge to arrive a Profit. 11. Miscellaneous – any amount paid as expense which is not significant enough to warrant a particular classification. 12. Gas & Oil – the account title for gasoline, diesoline, lubricants, grease fluid, etc. for use by company vehicles. 3. STATEMENT OF CASH FLOWS Is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities. 4. STATEMENT OF CHANGES IN OWNER’S EQUITY Details the change in owner’s equity over an accounting period by presenting the movement in reserves comprising the owner’s equity. Forms of Business Organization 1. Single or Sole Proprietorship = This is the simplest form of business organization where capital is owned and provided by one person only, called Proprietor, who may manage the business by himself or hire another person to do so. = The sole owners bears the responsibility in whatever circumstances may happen to business, whether it succeeds or fails. Take note, the owner and the business are separate entity. Hence, the business pays its taxes & dues w/o affecting the personal assets of the owner. Because there is only one owner in a sole proprietorship business, the capital account is called, “Owner’s Equity”. 2. Partnership = This organization is formed by two or more persons which is called “Partners” who set forth agreements among themselves on how profits and losses are divided. Two or more persons may form partnership for the exercise of profession. A partner may contribute personal services to the partnership. 3. Corporation = As defined by the Corporation Code of the Philippines, “A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence”. This is biggest and most complex from of business organization. This is organized by at least (5) but not more than fifteen natural persons called “Incorporators” and the corporate charter which is called “Article of Incorporation” is registered with the Securities and Exchange Commission (SEC) which is filed together by-laws. In a corporation, capital is called “Share Capital” which is divided into units called “Par Value”. 4. Cooperative = This is formed by fifteen (15) or more natural person who are Filipinos citizen, of legal age, having a common bond of interest and are actually residing or working in the intended area of operation. Actually it operates similar to corporation. Their charter which is called “Articles of Cooperation” is registered with the Cooperative Development Authority(CDA). It has its Board of Directors who elected among its member. The General Assembly shall be the highest policy making body of the Cooperatives. Their voting share is on a one-man, one vote. Types of Activities 1. Service Concern = the business derived its income from services rendered to clients in case of professional services, like that of Accountants, Lawyers, Doctors, Dentists, etc., or to customers in the case of non- professional services. 2. Merchandising Concern = the business is engaged in buying goods or commodities or any form of finished products and sells them at a profit. It might be at a retail or wholesale basis. Grocery stores are best example of this nature of business.  3. Manufacturing Concern = the business is engaged in buying of raw materials and supplies to be processed or manufactured, converting them into finished products for sale at a profit, like that of a furniture shop, home appliances, etc. Bakeries and restaurants are no exceptions. 4. Hybrid Companies = are those involved in more than one type of activity which are manufacturing, merchandising and service. -That’s the End- Thank you  Accounting Cycle Step 1 & 2 The first step of the accounting cycle is analyzing the business transactions, in which different source of documents are presented. It includes the rules of debit and credit which are very helpful in journalizing – Step 2 of the accounting cycle. After journalizing the transactions, you need to post these entries into the ledger – Posting.  After finalizing the balances of each accounts, you can now prepare the Unadjusted Trial Balance – Step 4 of the accounting cycle. And would be divided into two parts for you to understand more every steps of the accounting cycle. Each part is given a set of activities that would enhance your knowledge and analytical skill.  Before starting the lesson. Let’s have a warm up activity! Look the ten accounting terms you can find in the table. Answer it for 10 mins. B A L A N C E S H E E T D G H G J F G H J T J I K U H S C C S H J G J C S L J H S A E W E J D C N G A A G A S X P H F S A S S E T S S M C D C E B N D J D S A A H X N Y F M O H D F V M F L N F S T J S B F S A R W R E G G D I N V E N T O R Y F S H F K U J N H A E R C A J V M D H Q T G I V S A A H T F S J S E L K U E S E B Z S I J V F D G B B M K A G K L E O K P R O F I T C M H J D S T S B S F B N K L J S D N H S F N X V D D H L I A B I L I T I E S  Accounting Cycle Step 1 & 2 Accounting cycle is a process of a detailed sequence of accounting procedures in a chronological order in an accounting period. Accounting process is a combination of a series of activities that begin with analyzing business transactions and ends with its financial statements at the end of the accounting period.  The steps of the accounting process need not be completed before we can come-up the financial statements. The preparation of financial statements is the 6th step of the accounting process. All the remaining steps are mere completion of accounting requirements. By being able to prepare financial statements, the purpose of accounting itself has been answered and the purpose of the reports preparation has been served to the respective users.  To make this topic more fun and learnable, let’s take a situational problem for you to understand more. After several years of being an actor, Mr. Daniel Padillas decided to start building his profession. Mr. Daniel Padillas who happened to be a medical practitioner in Quezon City also long before he started his showbiz life, opened a medical clinic in Bukidnon. With the help of his fiancé, Ms. Kathriyn Bernaros, who also happens to be an accountant. They both started the business for the first time. Ms. Kathryin reviewed her lessons on the different steps on accounting cycle which she tried to learn from her own business. She started with the chart of accounts of the business and proceeds with the journalizing of the transactions for the first month of operations.  CHARTS OF ACCOUNTS Assets Income Cash in Bank Medical Fees Income Accounts Receivable Prepaid Insurance Expenses Unused Medical Supplies Salary Expenses Furniture and Fixtures Utilities Expense Medical Equipment Taxes and Licenses Ambulance Car Salaries Expense Gas and Oil Miscellaneous Liabilities Professional Development Expense Account Payable Travelling Expense Notes Payable Owner’s Equity Del Luna, Capital Del Luna, Drawings  CHART OF ACCOUNTS When transactions are recorded in the general journal, account titles are being use. A list of account titles is prepared beforehand to guide the bookkeeper and accountant of what specific titles are to be used in describing the exchanges of values in a transaction.  Step 1: Identifying Transactions Ms. Kathriyn, remembered that not all transactions must be recorded. She remembered the basic rule, “Only transactions and events which are of financial bearing to the business are being recognized.” The basis of identifying transactions are the supporting business documents that are on file or yet to be filled as evidences of transactions to assure the reliability and verifiability of accounting records. The most common business documents are: Purchase Orders, Sales Invoices, Delivery Receipts, Receiving Report, Check Vouchers, Checks, etc.  A Check Voucher is a combination of a check and a voucher. This voucher creates a paper trail for the payment by the issuer of the check. The recipient of the voucher check detaches one voucher part and retains it for record keeping before cashing the check.  Sales Invoice is a document to be issued by the supplier to its customers upon completion of the work done and payable in cash..  Check This is used in lieu of cash. It bears the name of the bank and the name of the signatory with a signature appearing on it. It is acceptable as a medium of payment. It is considered good as cash. Purchase Order - this a commercial document and first official offer issued by a buyer to a seller indicating types, quantities and agreed prices for products or services.  It is an important record of the merchandise that a retailer has actually received from a supplier because it documents what is owed to the supplier in terms of payment for the goods received or the return of the goods, in some cases. She also made an emphasis on how to analyze business transactions – from the view point of the business.  If the transaction is “purchased” or “bought”, it is the business that is buying  If the transaction is “sold” it is the business that is selling  If the transaction is “paid”, it is the business that is paying  If the transaction is “collected”, it is the business that is collecting  If the transaction is “rendered services”, it is the business that is rendering services Don’t forget that always consider yourself as the business when making the analysis The value received or debit should first be determined before the value parted with or credit. Like example (your point of view) “If I’ll give you an apple and you will give me a mango in return as an exchange. What is the value received What did you receive? Mango What did you give away? Apple Debit = mango Credit = apple Debit and Credit can be literally translated as LEFT for debit (i.e., LEFT hand column of an account) and as RIGHT for credit (i.e., RIGHT hand side of an account  Debit Credit Value Received Value Parted With Mango Apple RULES OF DEBIT AND CREDIT Assets Liabilities Debit Credit Debit Credit Normal Decrease Side Decrease Normal Balance or Side Balance or Increase Side Increase Side  E RULES OF DEBIT AND CREDIT Equity Drawings Debit Credit Debit Credit Decrease Normal Normal Decrease Side Balance or Balance or Side Increase Side Increase Side RULES OF DEBIT AND CREDIT Expense Revenue or Income Debit Credit Debit Credit Normal Decrease Side Decrease Normal Balance or Side Balance or Increase Side Increase Side  Step 2: Journalizing Transactions She also continued remembering her lessons. She recalled that the definition of Journalizing is an act of recording transactions in the book of original entry called “Journal”. There are two kinds of journals. General Journal and Special Journals. An entry made in the journal is called Journal Entry. A journal entry may be “Simple or Compound”. A simple journal entry contains one debit item and one credit item. To understand, what is journalizing all about, one must fully appreciate the debits and credits in the accounting procedures. And this is connected with the Basic  The accounting equation is applicable to all business entities regardless of size and nature of business or forms of business organization. Assets, Liabilities and Owner’s Equity are called, “Accounting Values”  Assets tell us of what the business owns.  Liabilities tell us of what the business owes.  Owner’s Equity tells us how much is the claim of the owner. What it owns? What it owes? What is the owner’s claim? ASSETS = LIABILITIES + OWNER’S EQUITY  Assuming that Assets is P250,000, Liabilities is P175,000 and Owner’s Equity is equal to P75,000. Substituting the equation with the given data: ASSETS = LIABILITIES + OWNER’S EQUITY 250,000 = 175,000 + 75,000 This equation must be equal. Normal balance Debit Credit Credit Increased by Debit Credit  General Journal can that be of a “lose leaf” or “book bound” form. It has the following columnar headings:  Date Column – shows the date when the transactions took place. It must be in a chronological order, meaning, transactions should be recorded according to their date of occurrence.  Particulars – in this column, debit and credit items are written and a short explanation is written to describe what the transaction is about.  Folio – this column shows the reference or page number of account in a ledger. Folio is the Latin word for “page”.  Debit Column – the money column showing the peso amount of value received in a transaction.  Credit Column –the money column showing the amount of the value parted with in a transaction. This is an example of a general journal Date PARTICULARS F DEBIT CREDIT Jan 1 Cash in Bank P 3 0 0 0 0 0 - Besario, Capital P3 0 0 0 0 0 - To record initial cash invesment  In recording transactions in the General Journal, the credit item is always indented from the debit item. There is no sign of peso, no comma for the thousand and no decimal point for the centavo. Explanation on what the transaction is about must be written briefly and concisely. We have to leave one space before recording the next transaction. The account titles that are used in describing the exchanges of values are those listed in the Chart of Accounts. To illustrate how the recording process is, let’s move! “Bought a Car on account, P900,000 on Jan 3, 2020” (From the point of view of the business) What did the business receive? = Car = DEBIT What did the business give away? = On account = Accounts Payable = CREDIT Then we say, Date PARTICULARS F DEBIT CREDIT Ja 3 Car P9 0 0 0 0 0 - n Accounts Payable 9 0 0 0 0 0 - To record purchase of car on account  Need some more? ”Received cash, P15,000 from services rendered to a customer” (From the point of view of the business) What did the business receive? = Cash = DEBIT What did the business give away? = Services Rendered = Service Revenue = CREDIT Then we say, Date PARTICULARS F DEBIT CREDIT Jan 3 Cash P 1 5 0 0 0 - Service Revenue P1 5 0 0 0 - To record collection of cash from services rendered Note: For every services rendered, we always debit “Assets”, either it is Cash or Receivable; and it is always credited to “Revenue” account  Ms. Kathryn added more examples for Mr. Daniel to understand more ”Paid salaries to employees for the month, P150,000” (From the point of view of the business) What did the business receive? = Employee’s services = Salary Expense = DEBIT What did the business give  Then we say, Date PARTICULARS F DEBIT CREDIT Ja 3 Salaries Expenses P 1 5 0 0 0 - n Cash P1 5 0 0 0 - To record payment of employees’ salaries Note: For every expenses paid, we always debit the “expense” account title and credit, “cash” ”Bought a computer for the office P45,000, paying P25,000 and a note for the remaining balance” (From the point of view of the business) What did the business receive? = Computer = DEBIT What did the business give away? = Cash and a Note Cash = P 25,000 = CREDIT Notes Payable = P 20,000 = CREDIT  Then we say, Date PARTICULARS F DEBIT CREDIT Ja 3 Office Equipment P 4 5 0 0 0 - n Cash P2 5 0 0 0 - Notes Payable 2 0 0 0 0 - To record purchase of equipment ”Paid 50% of the account payable”  (From the point of view of the business) What did the business receive? = Accounts Payable = DEBIT (Since you are paying your liability, then we need to decrease the liability by debit) What did the business give away? = Cash = CREDIT  Then we say, Date PARTICULARS F DEBIT CREDIT Ja 3 Accounts Payable P 4 5 0 0 0 - n Cash P4 5 0 0 0 - To record payment of account Note: For every payment of liabilities, we debit the “Liability” account and credit “Cash” “Mr. Besario withdrew cash from the business, P12,000” (From the point of view of the business) What did the business receive? = Drawings of the owner = DEBIT What did the business give away? = Cash = CREDIT  Then we say, Date PARTICULARS F DEBIT CREDIT Ja 3 Besario Drawings P 1 2 0 0 0 - n Cash P1 2 0 0 0 - To record withdrawal of the owner Note: For every withdrawal of the owner, we always debit “drawings” account title and credit, “cash”  Now, Do it on your own! Since you are already familiar with this simple transactions, together with Mr. Padilla, answer this short activity. On the space provided, journalize each transactions properly. After several years with a large accounting firm, Ms. Hotel Del Luna decided to establish her own accounting practice. The following transactions of Ms. Del Luna, were completed during September 2019:  HOTEL DEL LUNA ACCOUNTING FIRM CHART OF ACCOUNTS Cash in Bank Consulting Revenue Accounts Receivable Salaries Expense Office Supplies Rent Expense Prepaid Insurance Utilities Expense Office Equipment Accounts Payable Notes Payable Del Luna, Capital Del Luna, Drawings  1. Ms. Del Luna invested P425,000 in the firm 2. Purchased supplies on account, P74,200. 3. Acquired P165,000 of office equipment from BibiKow Co, paying P75,000 down with the balance due in 20days. 4. Paid P49,200 on account for supplies purchased. 5. Paid the salaries for two weeks, P28,000. 6. Performed consulting services to Dazzling Blowey on account, P136,800.  7. Received and paid the telephone bills, P10,500. 8. Purchased supplies on cash, P58,600. 9. Paid the accounts from BibiKow Co, P25,000. 10. Ms. Del Luna withdrew P53,000 from the business for his personal use. 11. Paid an annual insurance starting Sept 1, 2019 – Sept 1, 2020 for 24,000. 12. Received cash from consulting walk-in customers, P32,500. 13. Received payment from Dazzling, P42,000 NAME:______SECTION: ______ DATE: _______