CBLM Journalized Tran

COMPETENCY-BASED
LEARNING MATERIAL
Sector:
Health, Social and Other Community Development Services
Qualifca on:
Bookkeeping NC III
Unit o Competency:
Journalize transac ons
Module Title:
Journalizing ransac!on "or Single #roprietorship
ASIAN INSTITUTE OF COMPUTER STUDIES

$%& 'ast (ate City )alk Commercial Center Jose *+ad Santos *venue
San Jose, City o" San &ernando, #ampanga
OD-.' O& INS /-C ION
Unit of Competency:
0 Date Developed3 Document No4 B##NCII 5 660
CBLM August 2013 Issued +y3
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BOOKKEEP !" !C AICS-SF
1Journalize ransac!ons2 Developed +y3

MARY-ANN VILLAR /'7ISION 8 OI
JOURNALIZE TRANSACTIONS
Module Title:
Module Description: This unit covers the knowledge, skills, nd ttitudes

in logging!recording "usiness tr ns ctions in n
ccounting #ourn l$
Nominal Duration
72 hours
Certification Level:
%OO&&EE'IN( NC III
Summary of Learning LO)$ 're* re ch rt o+ ccounts
Outcomes: LO $ An l-.e docu/ents
LO0$ 're* re #ourn l entr-
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Module Title:
Module Description: This unit covers the knowledge, skills, nd ttitudes

in logging!recording "usiness tr ns ctions in n
ccounting #ourn l$
Nominal Duration
72 hours
Certification Level:
%OO&&EE'IN( NC III
Summary of Learning LO)$ 're* re ch rt o+ ccounts
Outcomes: LO $ An l-.e docu/ents
LO0$ 're* re #ourn l entr-
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1O2ULE CONTENT
UNIT O3 CO1'ETENC4 5 JOURNALIZE TRANSACTIONS
1O2ULE TITLE
JOURNALIZIN( TRANSACTIONS 3OR SIN(LE 'RO'RIETORS6I'
1O2ULE 2ESCRI'TOR5
This module covers the knowledge, skills, and attitudes in preparing chart of
accounts, analyze documents and preparing journal entries for Single Proprietorship.
NO1INAL 2URATION5
72 hours
LEARNIN( OUTCO1ES5
t the end of this module you !"ST #e a#le to$
1. Prepare chart of accounts
2. nalyze documents
3. Prepare journal entry

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LEARNIN( OUTCO1E 7 ) 'RE'ARE C6ART O3 ACCOUNT
Contents5
%. &efinition and functions of 'ookkeeping and ccounting

2. Types of #usiness organization
(. Types of #usiness activities ).
'asic ccounting *+uation
. 'asic -inancial Statement
Assess/ent Criteri
%. ist of asset, lia#ility, e+uity, income and e/pense account titles are prepared
in accordance with 0enerally ccepted ccounting Principles.
2. 1hart of ccounts is coded according to industry practice.
Conditions
The students trainees must #e provided with the following$
1. 1alculator
2. Paper
3. earning !aterials
4. Pencil
5. *raser
Assess/ent 1ethod5
1. 3ritten e/amination
2. &emonstration
3. 4#servation
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Learning Activities
Le rning Outco/e 7)
)$ 're* re Ch rt o+ Accounts
Le rning Activities S*eci l Instructions
%. Re d information sheet on%.%5%
2. Answer self check for %.%5% 1ompare your answer to the answer key.
(. Re d information sheet on
Types of 'usiness
4rganization 6%.%52
). Re d information sheet on
Types
of 'usiness ctivities 6%.%5(
. Answer self check for %.%52 1ompare your answer to the answer key.
8. Answer self check for %.%5(
7. Re d information sheet on
'asic ccounting *+uation 6%.%5)
8$ Re d information sheet on
'asic -iancial Statement 6%.%5
9. Answer self check for %.%5) 1ompare your answer to the answer key.
%:. Answer self check for %.%5
'er+or/ 4peration Sheet 2.25( Seek assistance from your trainer if
you are not sure of your work.
*valuate your own work using the
Performance 1riteria.
&ocument all your activities
Present your work to your trainer for
evaluation.
Seek feed#ack from your trainer
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INFORMATION SHEET 1.1-1
Definition and Functions of Bookeeping and Accounting
Learning Objective: After reading this N!O"MAT ON S#$$T% &OU MUST 'e a'le to
differentiate (oo))eeping from Accounting*
6ISTOR4 O3 ACCOUNTIN(
4nce upon a time, uca Pacioli wrote a math #ook. ;t was just a little survey and should
have #een treated like ordinary #ooks of the time and read and then disappeared into
historical archives and forgotten. few #rief chapters on practical mathematics made
this one special.
The time was %)9). 1olum#us had discovered merica just two years #efore. The author
was a -ranciscan monk.
The chapter on practical mathematics addressed mathematics in #usiness. <e said

that the successful merchant needs three things$ sufficient cash or credit, an
accounting system that can tell him how he=s doing, and good #ookkeeper to operate
it. <is accounting system consisted of journals and ledgers. ;t rested on the invention
of dou#le5 entry #ookkeeping. &e#its were on the left side #ecause that=s what
>de#it? meant, >the left?. The num#ers on the right were named >credits?.
;f everything was done right, then the #ookkeeper could do a trial #alance 6>summa
summarium? . dd up all the de#its and then add up all the credits, he said. ;f
everything had #een done right, the totals should match. ;f not, >that would indicate a
mistake in your edger, which mistake you will have to look for diligently with the
industry and intelligence 0od gave you.? <e wrote.
&ou#le5entry #ookkeeping was so simple and met the needs of #usiness so well that it
caught on immediately.
% sic Accounting Conce*ts
Accounting 9 is the art of recording, classifying, and 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 the results thereof. 6 ;1P
- ;s #oth a science and an art, science #ecause of the e/istence of #ody of
knowedge governing practice called accounting theory@ art #ecause of the necessity
of applying creative skill and a#ility.
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- ;s a service entity. ;ts function is to provide +uantitative information primarily
financial in nature, a#out economic entities that is intended to #e useful in making
economic decisions. 6 S1 S- S Ao. %
:6AT IS ACCOUNTIN(;
The 1ommittee on Terminology of the merican ;nstitute of ccountants defines

accounting as >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 the results thereof.?
The preceding definition covers four distinct functions, namely,
%. Recording B the process of putting into writing the financial activities of the
enterprise chronologically. The term >chronologically? would mean that
financial activities are recorded in the order of their actual happening. This is
technically referred to as '44CC**P;A0. 'ookkeeping is defined as the systematic
and chronological recording of #usiness transactions and events.
2. Cl ssi+-ing B the process of grouping into specific classifications similar or
alike transactions.
(. Su// ri.ing B the process of preparing financial reports 6interchangea#ly used to
means >financial statements? from the recorded and classified transactions
and events of the enterprise.
). Inter*reting B the process that supplies answers to +uestions a#out the
profita#ility, sta#ility, solvency and li+uidity of an enterprise.
a. Profita#ility B the a#ility of the enterprise to generate profit from its
operations.
#. Sta#ility B refers to the a#ility of the enterprise to stay via#le, i.e.@ generate
profit for the owners, sustain operations and pay for long term financial
o#ligations.
c. Solvency B should mean that the enterprise is capa#le of paying its short
term o#ligations.
d. i+uidity B refers to the enterprise having sufficient cash.
% sic 'ur*ose o+ Accounting

The purpose or function of accounting is to provide +uantitative financial
information a#out economic entities that is intended to #e useful in making economic
decisions.
3IEL2S O3 ACCOUNTIN(
The specialized areas or #ranches of accounting may #e enumerated as follows$
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%. 3in nci l Accounting or (ener l Accounting B the area of accounting which is
concerned with the proper recording of the transactions and events of an
enterprise and the eventual preparation of financial reports. -inancial accounting
is called general accounting #ecause this is the primary area of accounting.
2. Accounting s-ste/s inst ll tion B the design and putting into place an orderly
arrangement of procedures, records, e+uipment and devices that will #e utilized #y
the organization for the logical and orderly gathering, processing and reporting of
financial and other information essential to the efficient conduct and evaluation of
the activities of the same organization. n accounting system can #e initially
installed for newly started #usiness. -or #usinesses with e/isting accounting
systems, a review thereof may #e warranted so that improvements, if any, are
effected into the system.
(. 1 n ge/ent dvisor- services B this area of accounting refers to services generally
consultancy e/tended to clients on matters of wide array of management
interests like accounting, finance, purchasing, production, marketing and other
aspects of the operations. The thrust of management of advisory services is to
aid management to come up with sound decisions given the availa#le
resources of the #usiness and choice of alternative course of action.
). (overn/ent ccounting B accounting for all transactions and events involving
receipt and disposition of government funds and property. This specialized
area of accounting is used #y the government and its political instrumentalities
like cities and municipalities.
. Accounting educ tion B concerned with the teaching of accounting as a field of
study. The curriculum for the accounting education in #usiness schools and
universities #asically includes topical discussions on all the specialized areas
or #ranches of accounting as well as su#jects on income and #usiness ta/ation,
management and finance.
8. Cost ccounting B emphasis is accounting for costs of manufacturing goods. 6The
costs to manufacture goods or merchandise are raw materials, direct la#or and
factory overhead . 1ost accounting seeks to assign values to a manufacturing
enterprise= finished and unfinished inventories and cost of sales as well. 1ost
accounting data is used #y management for planning and control.
7. T < services nd t < ccounting B accountants are fre+uently asked to prepare
income and #usiness ta/ returns for employers and clients. Ta/ accounting would
also include consultancy services on the impact of ta/ation on #usiness projects.
D. Intern l uditing B the e/amination and evaluation of the different activities of the
organization #y their own particular personnel who are called intern l uditors$
The purposes of such e/amination are to determine compliance to prescri#e
policies of the organization and seek necessary revisions to ensure relia#ility
and accuracy of accounting information and promote efficiency of operations.
;nternal auditing furnishes management with the results of the e/amination in
terms of details, analyses and recommendations regarding the activities that
were reviewed.
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ACCOUNTIN( AS A LAN(UA(E
ccounting, often called the language of #usiness, provides essential information

a#out the economic activities of an entity. ;t plays an important role in our economic
and social system.
%OO&&EE'IN( 2E3INE2
%ookkee*ing 9 the process of recording and classifying transactions and events of an

enterprise with a prescri#ed set of procedures or methods for the purpose of
esta#lishing a #asis for communicating financial information a#out the enterprise.
Technically, the said processes are the first two functions of accounting.
The term #ookkeeping literally means >keeping of the #ooks?. The #ooks #eing
referred to are the journal and the general ledger.
<ence, #ookkeeping is #asically the recording of the transactions and events in
the journal, and these transactions and events #eing classified in the general ledger.
%ookkee*ing =ersus 3in nci l Accounting
'ookkeeping is just a part of accounting as the latter encompasses the entire
process of recording, classifying, summarizing and interpreting transactions and events.
Re sons wh- the +in nci l ctivities o+ "usiness enter*rise /ust "e co//itted to writing5
%. 3uture re+erence 9 man is unfortunately not #iologically gifted with an unfalli#le

capacity to remem#er. <e needs a record of his activities for future recall or
reference.
2. % sis +or decision / king 9 the recorded financial activities of an economic
entity would serve as a #asis for decision making.
(. Re>uired "- l w 9 the law re+uires that #usinesses must put into record their
transactions and events for ta/ation and regulatory purposes.
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Sel+? Check )$)$)
&efinition and -unctions of 'ookkeeping and ccounting
1 tching T-*e 6% Point *ach . !atch 1olumn with 1olumn '. 3rite the etter of the correct
answer in column ' to the space provided in column .
1olumn 1olumn '
. 'ookkeeping
EEEEE %.The recording and reporting of financial
transactions, including the origination of the transaction,
its recognition, processing, and summarization in the -
inancial Statement.
'. ccounting
EEEEE 2. The recording of all financial transactions
undertaken #y a #usiness 6or an individual .
#ookkeeper 6or #ook5keeper , sometimes called an
accounting clerk@ a person who keeps the #ooks of an
organization. The organization might #e a #usiness, a
charity or even a local sports clu#.
1. Summarizing
EEEEE (. Technically called #ookkeeping.
&. 1lassifying
EEEEE ). ;tems are sorted and group.
*. Fecording
EEEEE . These reports are su#mitted to the
management at the end of each accounting period or
as the need arise.

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ANSWER KEY 1 1 1
De@ni!on and "unc!ons o" Bookkeeping and *ccoun!ng
1. B
2. A
3. E
4. D
5. C

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TAS& S6EET )$)$)
Title5 &efinition and functions of 'ookkeeping and ccounting
'er+or/ nce O"#ective$ 0iven 6condition , you should #e a#le to 6*er+or/ nce
following 6st nd rd .
Su**lies!1 teri ls$
1alculator
Paper
earning !aterials
Pencil
*raser
E>ui*/ent $
Ste*s!'rocedure5
%.
2.
(.
).
Assess/ent 1ethod5
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'er+or/ nce Criteri Checklist )$)$)
&efinition and functions of 'ookkeeping and ccounting
CRITERIA 4ES NO
2id -ou@$
%. 1an the student define ccounting
$4 &oes the student understand the -unctions of 'ookkeeping
(.
).

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Types of Business Organization
Account nts need to underst nd the three " sic +or/s o+ "usiness org ni.
tion5
According to Ownershi*
4 Single or Sole 'ro*rietorshi*$
sole proprietorship is a #usiness formed #y one person. This form od
#usiness gives individual a means of controlling the #usiness apart form his ot
her personal interest. egally however, the proprietorship is the same economic
unit as the individual received all profits or losses and is lia#le for all
o#ligations of the proprietorship. The life of a proprietorship ends when the
owner wishes it to, or at the owner=s death or incacity.
$4 ' rtnershi*$
This is a #usiness organization with two or more owners. The owners, called
partners, agree on the capital contri#utions, managemement or the firm,
distri#ution of profit or losses, anfd other matters pertaining to the operation of
the firm.
94 Cor*or tion.
This is a #usiness organization of not less than five persons. ;t is organized #y
operation of law. corporation is a #usiness unit that is legally separate from its
owner. The owners whose ownership is represented #y shares or stocks in the
corporation, do not directly control the operations of the corporation. ;nstead
they elect a #oard of directors who run the corporation for the #enefit of the
stockholders. ;n e/change for limited involvement in the corporation=s actual
operations, stockholders enjoy limited lia#ility. That is, they are lia#le only for
the amount paid for their shares. ;f they wish, stockholders can sell their shares
to other persons without affecting corporate operations. 'ecause of this limited
lia#ility, stockholders are often willing to invest in riskier, #ut potentially
profita#le activities. lso #ecause ownership can #e transferred without
dissolving the corporation, the life of corporation is unlimited and not su#ject to
the whims or health of a proprietor or partner.
According to N ture o+ %usiness5

4 Service Concern. This deals with the rendering of services to the customers.
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$4 Tr ding or 1erch ndising$ This type of #usiness deals with te #uying of goods
and selling the same goods in the same form for a profit.
94 1 nu+ cturing Concern. This involves purchase of raw materials and converting
these raw materials into finished products.
TRANSACTION
Transaction is the e/change of goods and services for a certain sum of money.
;t is an e/change of monetary values. ;n everytranscation, there is v lue received and v
lue * rted with.
= lue is anything suscepti#le of pecuniary estimation. ;t may represent money

itself, property other than money, services or rights. *very transaction should #e
authenticated #y a genuine #usiness form. */amples of such are the following
a. Sales invoices
#. Purchase invoices
c. 4fficial receipts d.
1ash vouchers e.
Gournal vouchers
he "olloAing ta+ula!on e plains some common types o" +usiness transac!ons and the values involved3
TRANSCATIONS VALUE RECEIVED VALUE PARTED

WITH
%. 'ought typewriter for office use, Typewriter
paying cash therefore. 1ash
2. Feceived cash as payment of 1ash
professional service rendered. Service
(. Payment of de#t owing to a creditor. 1ancellation of
). Payment of office rent. amount owed 1ash
. 'ought merchandise on credit. Fight to use property
8. Payment of cash for wages of !erchandise 1ash
employees. Services rendered #y &e#t or o#ligation to
7. Purchase of merchandise for cash. the employees pay the seller
D. Sale of merchandise on credit. !erchandise 1ash
4#ligation or de#t 1ash
9. Sale of merchandise for cash. collecti#le. !erchandise
%:.Feceipt of cash as payment of de#t 1ash !erchandise
owing to the #usiness. 1ash Felease of de#t
collecti#le from a
de#tor.
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Self- Check - !"
2i++erenti te the T-*es o+ %usiness Org ni. tion
Identi+ic tion5 Encircle the Letter on the correct nswer$

%. 3hich of the following is not a 'usiness 4rganizationH
a. Sole Proprietorship
#. Partnership
c. 1orporation
d. 1ooperative
e. Aone of the #ove
2. ;s the social science of managing people to organize and maintain collective

productivity toward accomplishing particular productive goals, which is usually
to generate profit.
#. Partnership
c. 1orporation
d. 'usiness
e. Aone of the #ove
(. ;t is a form of entity with one owner and the simplest possi#le form of
'usiness.
#. Partnership
c. 1orporation
d. 'usiness
e. Aone of the #ove
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A#S$%& '%( ! -"
&ifferentiate the Types of 'usiness 4rganization
%. *
2. &
(.
TAS& S6EET )$)$)

Su**lies!1 teri ls$
1alculator
Paper
earning !aterials
Pencil
*raser
E>ui*/ent $
Ste*s!'rocedure5
.
8.
7.
0> D. Date Developed3 Document No4 B##NCII 5 660
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Journalize ransac!ons2
Assess/ent 1ethod5 Developed +y3
CRITERIA 4ES NO
2id -ou@$
. 1an the student define ccounting
<4 &oes the student understand the -unctions of 'ookkeeping
7.
D.
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Types of Business Activities
ACTI=ITIES IN %USINESS OR(ANIZATIONS
!any types of decisions are made in #usiness organizations. ccounting provides

important information to make these decisions. The three types of organizational
activities are as follows$ financing, investing and operating.
3in ncing Activities
4rganizations re+uire financial resources to o#tain other resources used to produce

goods and services. They compete for these resources in financial markets. -inancing
activities are the methods an organization uses to o#tain financial resources from
financial markets and how it manages its resources. Primary sources of financing for
most #usinesses are owners and creditors, such as #anks and suppliers. Fepaying the
creditors and paying a return to the owners are also financing activities.
Investing Activities
!anagers use capital from financing activities to ac+uire other resources used in the
transformation process B that is, to transform resources from one form to a different
form, which is more valua#le, to meet the needs of the people. <aving the right mi/ of
resources is essential to efficient and effective operations.
n efficient #usiness is one that provides goods and services at low costs relative to
their selling prices. n effective #usiness is one that is successful in providing goods
and services demanded #y the customers.
;nvesting activities involve the selection and management including disposal and
replacement of long5term resources that will #e used to develop, produce, and sell
goods and services. ;nvesting activities include #uying of land, e+uipment, #uildings,
and other resources that are needed in the operation of the #usiness, and selling
these resources when they are no longer needed.
O*er ting Activities
4perating activities involve the use of resources to design, produce, distri#ute, and
market goods and services. 4perating activities include research and development,
design and engineering, purchasing, human resources, production, distri#ution,
marketing and selling, and servicing. 4rganizations compete in supplier and la#or
markets for resources used in these activities. lso, they compete in product markets to
sell the goods and services created #y operating activities.
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3UN2A1ENTAL CONCE'TS
Several fundamental concepts underlie the accounting process. ;n recording #usiness

transactions, accountants should consider the following$
%. Entit- Conce*t$ The most #asic concept in accounting is the entity concept. n
accounting entity is an organization or a section of an organization that stands
apart from other organizations and individuals as a separate economic unit.
Simply put, the transactions of different entities should not #e accounted for
together. *ach entity should #e evaluated separately.
2. 'eriodicit- Conce*t$ n entity=s life can #e meaningfully su#divided into e+ual

time periods for reporting purposes. ;t will #e aimless to wait for the actual last
day of operations for perfectly measure the entity=s net income. This concept
allows the users to o#tain timely information to serve as a #asis on making
decisions a#out future activities.
3or the *ur*ose o+ re*orting to outsiders, one -e r is the usu l ccounting *eriod '
cioli, the +irst uthor o+ n ccounting te<t, wrote in ) B 5 >'ooks should #e closed
each year, especially in a partnership, #ecause fre+uent accounting makes for
long friendship.?
(. St "le 1onet r- Conce*t$ The Philippine peso is a reasona#le unit measure and
that its purchasing power is relatively sta#le. ;t allows accountants to add and
su#tract peso amounts as though each peso has the same purchasing power
as any other peso at any time. This is the #asis for ignoring the effects of
inflation in the accounting records.
Self- Check - !)
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Types of 'usiness ctivities
1 tching T-*e 6% Point *ach . !atch 1olumn with 1olumn '. 3rite the etter of the correct
answer in column ' to the space provided in column .
1olumn 1olumn '
EEEEEEEE ;s the simplest type of #usiness which . !erchandising

renders service to a client or customer for a fee sample
are the schools airlines #ar#ershop parlors.
+++++++ ;s which #uys goods and merchandise '. Service

and sells these at higher prices sample of this
are #ookstore groceries #outi+ues.
EEEEE ;s one which #uys materials in its raw form, 1. !anufacturing

processes this into a finished products, then sells
this at a price higher than its cost sample of this are
garment factories, la#oratories food processing
companies.
ANSWER KEY 1.1-3
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Types of Business Activities
1. B
2. A
3. C
TAS& S6EET )$)$)

Su**lies!1 teri ls$
1alculator
Paper
earning !aterials
Pencil
*raser
E>ui*/ent $
Ste*s!'rocedure5
9.
%:.
%%.
$9 %2. Date Developed3 Document No4 B##NCII 5 660
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CRITERIA 4ES NO
2id -ou@$
9. 1an the student define ccounting
64 &oes the student understand the -unctions of 'ookkeeping
%%.
%2.
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Basic Accounting %*uation
Accounting Ele/ents or = lues

There are three accounting elements or values, namely$ assets, lia#ilities and capital.
4 ssets. ssets are economic resources owned #y the #usiness. They include
propertires and other things of value the ownership title of which is in the name of
the #usiness. ssets can #e grouped into current assets and noncurrent assets.
a. 1urrent ssets are those which can #e reasona#ly converted into cash
within a short period of time, usually within one accounting period or
within the regular operation of the #usiness or normal operating cycle of
the #usiness. Fegular operation of the #usiness or normal operating
cycle of the #usiness is the period #etween the render of service, in case
of service concern, to the receipt of cash, and the period #etween the
ac+uisition of materials to their conversion into cash, in case of
merchandising and manufacturing concern. The following are among the
current assets used #y the #usiness$
i. 1ash or 1ash on <and and ;n 'anks. This includes currency of cash
items on hand, peso or foreign currency deposits in #anks which are
unretricted and immediately availa#le for use int eh current
operations of the #usiness. 6S- S
ii. Feceiva#les represent amounts collecti#le from customers arising
from sales of merchandise, claims fro money lent, or the
performance of services. 6S- S such is presented in the #alance
sheet as account receiva#les. ;f the receiva#le is supported #y a
promissory note, it is presented as note receiva#le.
iii. ;nventories constitute items of tangi#le personal property 6S- S
which are$
%. !erchandise inventory finished goods B held for sale int eh
ordinary course of #usiness.
2. 0oods5in5process B in the process of production for such
sale.
(. Faw materials B to #e currently consumed in the production
of goods or services to #e availa#le for sale.
iv. Prepaid */penses are those which are already paid #efore they are
used or consumed.
#. Aoncurrent ssets are those assets not classified as current. They
include, among others, property, plant and e+uipment. Property, plant
and e+uipment are tangi#le assets used in te operation of the #usiness,
have useful life that e/ceeds #eyond one year, and are not intended for
sale. */amples are land, #uilding, e+uipment, furniture and fi/tures. 4ther
noncurrent assets are long5term investments, intangi#le assets, and
other noncurrent assets.
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$4 ia#ilities. ia#ilities are de#ts or o#ligations of the #usiness to a party other than
its owner. There are two classifications of lia#ilities$ current or short5term
lia#ilities and fi/ed or long5term lia#ilities.
a. 1urrent or short5term lia#ilities are those which are due for payment within
a short period of time or within one year from the #alance sheet date. These
o#ligations re+uire a current assets for payment. ;ncluded here are
accounts paya#le, notes paya#le accrued e/penses and unearned income.
i. ccounts Paya#le are inde#tedness arising from purchase of goods
and services in the ordinary course of #usiness.
ii. Aotes Paya#le are short5term inde#tedness supported #y written
promises to pay.
iii. ccrued */penses are e/penses already incurred #ut are not yet paid
as of the #alance sheet date.
"nearned income arises when payment for undelivered goods or

services not yet rendered are received. This item is included among
current lia#ilities #ecause it re+uires current assets for its
li+uidation, say the delivery of merchandise inventory.
#. -i/ed or ong5term ia#ilities are those which mature #eyond one year from
the #alance sheet date.
94 1apital. 1apital represents the owner=s e+uity or investment in the #usiness. 4ther
terms which can #e used synonymously are 4wner=s *+uity and Proprietorship.
T6E ACCOUNTIN( E UATION
The resources controlled #y a #usiness are referred to as its assets. -or a new
#usiness, those assets originate from two possi#le sources$
;nvestors who #uy ownership in the #usiness

1reditors who e/tend loans to the #usiness
Those who contri#ute assets to a #usiness have legal claims on those assets. Since
the total assets of the #usiness are e+ual to the sum of the assets contri#uted #y
investors and the assets contri#uted #y creditors, the following relationship holds
and is referred to as the ccounting e>u tion :
Assets D Li "ilities OwnersF E>uit-
"esources Claims on the "esources
Initially, owner equity is affected by capital contributions such as the issuance of stock. Once
business operations commence, there will be income (re enues minus e!penses, and "ains minus
$< Date Developed3 Document No4 B##NCII 5 660
Date /evised3

losses# and perhaps additional capital contributions and withdrawals such as di idends.
$t the end of a reportin" period, these items will impact the owners% equity as follows:
Assets D Li "ilities OwnersF E>uit-
I Fevenues
5 */penses
I 0ains
5 osses
I 1ontri#utions
5 3ithdrawals
These additional items under ownersJ e+uity are tracked in temporary accounts until
the end of the accounting period, at which time they are closed to ownersJ e+uity.
The accounting e+uation holds at all times over the life of the #usiness. 3hen a
transaction occurs, the total assets of the #usiness may change, #ut the e+uation will
remain in #alance. The accounting e+uation serves as the #asis for the #alance sheet,
as illustrated in the following e/ample.
The Accounting E>u tion ? A 'r ctic l E< /*le
&o better understand the accountin" equation, consider the followin" e!ample. 'ike eddler
decides to open a bicycle repair shop. &o "et started he rents some shop space,
purchases an initial in entory of bike parts, and opens the shop for business. )ere is a
listin" of the transactions that occurred durin" the first month:
2 te Tr ns ction
Sep % 4wner contri#utes P7 :: in cash to capitalize the #usiness.
Sep D Purchased P2 :: in #ike parts on account, paya#le in (: days.

Paid first monthJs shop rent of P%:::.
Sep %
Fepaired #ikes for P%%::@ collected P):: cash@ #illed customers for the P7::
Sep %7
#alance.
Sep %D
P27 in #ike parts were used.
Sep 2 1ollected P)2 from customer accounts.
Sep 2D Paid P :: to suppliers for parts purchased earlier in the month.
&hese transactions affect the accountin" equation as shown below.

$= Date Developed3 Document No4 B##NCII 5 660
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Assets D Li "ilities OwnerFs E>uit-
C sh %ike Accounts D Accounts 'eddler, Revenue

' rts Receiv "le ' - "le C *it l GE<*ensesH
Sep % 7 :: K 7 ::
Sep D 2 :: K 2 ::
Sep % 6%::: K 6%:::
Sep %7 ):: 7:: K %%::
Sep %D 627 K 627
Sep 2 )2 6)2 K
Sep 2D 6 :: K 6 ::
Totals$ 8D2 I 222 I 27 K 2::: I 7 :: I 6%7
P9(2 K P9(2
Aote that for each date in the a#ove e/ample, the sum of entries under the L ssetsL
heading is e+ual to the sum of entries under the L ia#ilities I 4wnerJs *+uityL heading.
;n most of these cases, the transaction affected #oth sides of the accounting
e+uation. <owever, note that the Sep 2 transaction affected only the asset side with an
increase in cash and an e+ual #ut opposite decrease in accounts receiva#le.
t the end of the month of Septem#er, the net income 6revenues minus e/penses is
closed to capital and the #alance sheet for the #usiness would appear as follows$
PeddlerJs 'ikes
'alance Sheet
Septem#er (:, 2:,,
Li "ilities
Assets
OwnerFs E>uit-
1ash 8D2 ccounts Paya#le 2:::

ccounts Feceiva#le 27 Peddler, 1apital 7(2
'ike Parts 222
Total ssets P9(2 Total ia#ilities P9(2
$> Date Developed3 Document No4 B##NCII 5 660

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The #ike parts are considered to #e inventory, which appears as an asset on the #alance
sheet. The ownerJs e+uity is modified according to the difference #etween revenues and
e/penses. ;n this case, the difference is a loss of P%7 , so the ownerJs e+uity has
decreased from P7 :: at the #eginning of the month to P7(2 at the end of the month.
Su// r-
The foregoing illustrations show the most common effects of transactions in the
accounting e+uation. They emphasize the fact that transactions do not affect the
e+uality of the sides of the e+uation.
;n as much as there are only three major items 6assets, lia#ilities and
proprietorship in the accounting e+uation, and knowing that all transactions may
affect or involve only these values, then, it may #e concluded that all transactions
can #e grouped into nine 69 types of effects as follows$
a. ;ncrease in ssets K ;ncrease in Proprietorship
#. ;ncrease in ssets K ;ncrease in ia#ilities
c. ;ncrease in Some form of ssets K &ecrease in other forms of ssets
d. &ecrease in ssets K &ecrease in Proprietorship
e. &ecrease in ssets K &ecrease in ia#ilities
f. ;ncrease in ia#ilities K &ecrease in Proprietorship
g. ;ncrease in some form of ia#ilities K &ecrease in other form of ia#ilities
h. ;ncrease in Proprietorship K &ecrease in ia#ilities
i. ;ncrease in some from of Proprietorship K &ecrease in other form
of Proprietorship
Self- Check ! -+
'asic accounting e+uation
State the accounting e+uation in the following selected transactions of &r. G. lvares
a. &r. lvarez esta#lished the lvarez !edical 1linic #y investing P D:,:::

cash.
$? Date Developed3 Document No4 B##NCII 5 660

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b. Professional fees of P %,::: were received in cash from a client.
c. Paid P 2,::: for medical supplies ordered and received.
d. Feceived P 7 : from a patient for a general check5up performed on him.
e. Paid the rent for the month, P ,:::.
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Pencil
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%(.
%).
%.
96 %8. Date Developed3 Document No4 B##NCII 5 660
Date /evised3
CRITERIA 4ES NO
2id -ou@$
%(. 1an the student define ccounting
0:4 &oes the student understand the -unctions of 'ookkeeping
%.
%8.

Date /evised3

Basic Financial State,ent
N ture o+ 3in nci l St te/ents

-inancial Statements are the means #y which the information accumulated and
processed in financial accounting is periodically communicated to those who use it. They
are designed to serve te needs of a variety of users, particularly owners and creditors.
Through the financial accounting process, the myriad and comple/ effects f the economic
activities of an enterprise are accumulated, analyzed, +uantified, classified, recorded,
summarized, and reported as information of two #asic types$ 6a financial position, which
relates to a point in time, and 6# changes in financial position, whoich relate to a period
of time. notes to the statements, which may e/plain headings, captions or amounts in the
statements or present information that cannot #e e/pressed in money terms, and
descriptions of accounting policies are an integral part of the statements.
3in nci l st te/ents re ccounting re*orts used to su// ri.e nd co//unic te +in nci l
in+or/ tion "out "usiness$
%ASIC 3INANCIAL STATE1ENTS
$ T6E %ALANCE S6EET

#alance sheet 6or statement of financial position presents three major
categories 6a assets, 6# lia#ilities, and 6c owner=s e+uity, the difference #etween total
assets and total lia#ilities. #alance sheet at any date presents an indication in
conformity with generally accepted accounting principles of the financial status of the
enterprise at a particular point of time.
% l nce Sheet summarizes a company=s financial position on a given date. ;t is

alternative called a statement ! !inancia" # siti n$
Aote that the #alance sheet has a heading consisting of three lines, the name of
the company, the title of the financial statement, and the date for which it was
prepared. Aote also that the #alance sheet consists of three segments, the assets
section, the lia#ilities section, and the owner=s e+uity section. -inally o#serve that the
information is e/pressed in monetary terms and that the total 6indicated #y a dou#le
ruled line of the assets6P2::,::: is e+ual to the sum of the lia#ilities 6P77,::: plus the
owner=s e+uity 6P%2(,::: . The #alance sheet is so named, in fact, #ecause #oth sides
must #e in #alance 6e+ual to each other .
RCA LAUN2R4 SER=ICES

% l nce Sheet
2ece/"er 0), K)0
9$ Date Developed3 Document No4 B##NCII 5 660

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ssets ia#ilities
1ash P %:,::: ccounts Paya#le P 2 ,:::
ccounts Feceiva#le 2:,::: Aotes Paya#le )2,:::
aundry Supplies D,::: Total ia#ilities P 77,:::
Prepaid ;nsurance %, ::
and D2.::: 4wners= *+uity
'uilding ) ,::: F. ddatu, 1apital P %2(,:::
aundry *+uipment ((, :: Total ia#ilities and
Total ssets P 2::,::: 4wners= *+uity 2::,:::
Assets5 ssets are economic resources of a company that are e/pected to provide
future #enefit to the company. #usiness may own many assets, some of which are
cash, accounts receiva#le, merchandise inventory, prepaid supplies, prepaid
insurance, land, #uilding, and investment made in other companies.
Li "ilities5 ia#ilities are economic o#ligations 6de#ts of the company. The e/ternal
parties to whom the economic o#ligations are owed are referred to as the creditors of
the company. "sually, although not e/clusively, a legal documents serve as evidence
of lia#ilities. These documents esta#lish a claim 6e+uity #y the creditors 6the
creditors= e+uity against the assets of the company. ia#ilities include such items as
amounts owed to suppliers 6accounts paya#le , ta/es paya#le, and mortgages owed on
the company=s property. company may also #orrow money from the #ank on a short B
or long5term #asis #y legal document called a note, which specifies the terms of the
loan. mounts of loan would #e listed as notes paya#le.
Owners E>uit-5 the owners= e+uity of a company is the owners= current investment in the
assets of the company. 6-or partnership, the owners= might #e referred to as the partners=
e+uity, for corporation, stockholders= e+uity . The owners= e+uity is affected #y the capital
invested into the #usiness #y the owner, #y the company=s earnings from its operations,
and #y withdrawals of capital #y the owner from the #usiness. -or a sole proprietorship, the
owners= e+uity is shown #y listing the owners= name, the word capital, and the amount of
the creditors have first legal claim to a company=s assets. 4nce the creditors= claims have
#een satisfied, the owner is entitled to the remainder 6residual of the assets. Sometimes the
total of the lia#ilities 6creditor=s e+uity is com#ined with the owners= e+uity and the result is
referred to as the total e+uity of the company.
M$ T6E INCO1E STATE1ENT

The income statemnt for a period presents the revenue, e/penses, gains, losses,
and net income 6lnet loss recognized during the period and there#y presents an
indication in conformity with generally accepted accounting principles of the results
of the enterprise=s profit5directed activities during the period.

Date /evised3

Inco/e St te/ent 9 is a financial statement summarizing the results of a company=s
income 6profit making activities for a specific time period.
F1 &M*FT;S;A0 0*A1N
Inco/e St te/ent
3or the 1onth Ended J nu r- ), K)
Fevenues$
dvertising Fevenues P DD,:::
*/penses
Fent */pense P %9,2::
Salaries */pense 2(,)::
4ffice Supplies */pense ),8::
"tilities */pense (,8::
Total */penses :,D::
Aet ;ncome P (7,2::
8$ C6AN(ES IN O:NERS E UIT4

n income statement is usually not sufficient to descri#e the total changes in
owners= e+uity during a period #ecause changes arise from sources other than profit5
directed activities. The total change in owners= e+uity is descri#ed #y three
statements$ an income statement, a statement of retained earnings, and a statement
of other changes in owners= e+uity.
Statement of Fetained *arnings B presents net income 6as shown in the income
statement and items such as dividends and adjustments of the net income of prior
periods.
Statement of other changes in owners= e+uity B presents additional investments #y

owners, retirements of owners= interest 6e/cept for the part considered to #e a
distri#ution of earnings , and similar events. ;f these other changes are simple and few
in num#er, they are often presented in notes to the financial statements rather than in
a separate statement.
B$ STATE1ENT O3 CAS6 3LO:S GASC S3AS 7 H

The primary purpose of cash flows is to provide relevant information a#out the
cash receipts and cash payments of an enterprise during the period.
9: Date Developed3 Document No4 B##NCII 5 660
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The information provided in a statement of cash flows, if used with related
disclosures and information in the other financial statements, should help investors,
and other to$
%. ssess the enterprise=s a#ility to generate positive future net cash plows.
2. ssess the enterprise=s a#ility to meet its o#ligations, its a#ility to pay dividends,
and its needs for e/ternal financing.
(. ssess the reasons for differences #etween net income and associated cash
receipts and payments.
). ssess the effects of an enterprise=s financial position of #oth its cash and
noncash investments and financing transactions during the period.
%ASIC ELE1ENTS O3 3INANCIAL STATE1ENTS
3in nci l 'osition

The #asic elements of the financial position of an enterprise are assets, lia#ilities and
owner=s e+uity.
a. Assets 9 economic resources of an enterprise that are recognized and measured
in conformity with generally accepted accounting principles. ssets also include
certain deferred charges that are not resources #ut that are recognized and
measured in conformity with 0 P.
#. Li "ilities 9 economic o#ligation of an enterprise that, are recognized and
measured n conformity with 0 P. ia#ilities also include certain deferred credits that
are not o#ligations #ut that are recognized and measured in conformity with
0 P.
c. Owner s E>uit- 9 the interest of owners in an enterprise which is the e/cess of
an enterprise=s assets over its lia#ilities.
4wner=s e+uity is defined in terms of assets and lia#ilities, just as residual interest is
defined in terms of economic resources and o#ligations. The relationship among
assets, lia#ilities and owners= e+uity implicit in the definition of owners= e+uity is$
Assets 9 Li "ilities D Owner s E>uit-
The financial position of an enterprise at a particular time comprises its

assets, lia#ilities and owner=s e+uity and the relationship among them, plus
those contingencies, commitments, and other financial matters that pertain to
the enterprise at that time and are re+uired to #e disclosed under 0 P. The
financial position of an enterprise is presented in the #alance shhet and in
notes to the financial statements.
Results o+ O*er tions
9; Date Developed3 Document No4 B##NCII 5 660

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The #asic element of the results of operations of an enterprise are revenue,
e/penses, and net income$
a. Revenue 9 gross increase in assets or gross decrease in lia#ilities recognized

and measured in conformity with 0 P that result from those types of profit5
directed activities of an enterprise that can change owners= e+uity.
#. E<*enses 9 gross decreases in assets or gross increases in lia#ilities recognized
and measured in conformity with 0 P that result from those types of profit5
directed activities of an enterprise that can change owners= e+uity.
c. Net Inco/e GNet LossH 9 the e/cess 6deficit of revenue over e/penses for an
accounting period, which is the net increase 6net decrease in owners= e+uity
6assets minus lia#ilities of an enterprise for an accounting period from profit5
directed activities that is recognized and measured in conformity with 0 P.
Self Check !-
-inancial Statements
The -ollowing data were taken from the adjusted trial #alance columns of the #usiness
of na Feyes
9< Date Developed3 Document No4 B##NCII 5 660
Date /evised3

. Feyes
djusted trial #alance
&ecem#er (%, 2:%(
1ash P ::.::
ccounts Feceiva#le 2::.::
4ffice supplies %::.::
ccounts Paya#le P %::.::
. Feyes, capital ::.::
. Feyes, drawing %::.::
Service ;ncome ::.::
Fent e/pense %::.::
3ages e/pense %::.:: EEEEEEEEE
Total P %,%::.:: P %,%::.::
KKKKKKKK KKKKKKKK
ANS:ER &E4 )$)?
-inancial Statements
. Feyes
9= Date Developed3 Document No4 B##NCII 5 660
Date /evised3

;ncome Statement
-or the month ended &ecem#er (%, 2:%(
Service ;ncome P ::.::

ess$ Fent e/pense P %::.::
3ages e/pense Aet %::.:: 2::.::
;ncome P (::.::
KKKKKKKK
. Feyes
'alance Sheet
&ecem#er (%,2:%(
1urrent ssets$
1ash P ::.::
ccounts Feceiva#le 2::.::
4ffice supplies %::.::
Total current assets P D::.::
ia#ilities
1urrent lia#ilities
ccounts Paya#le P %::.::
4wner=s *+uity
.Feyes, capital P ::.::

ess$ . Feyes, drawing %::.::
Aet capital P )::.::
dd Aet income (::.:: 7::.::
Total lia#ilities and owner=s e+uity P D::.::
KKKKKKK
9> Date Developed3 Document No4 B##NCII 5 660

Date /evised3

TAS& S6EET )$)$)
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1alculator
Paper
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Pencil
*raser
E>ui*/ent $
Ste*s!'rocedure5
%7.
%D.
%9.
2:.
Assess/ent 1ethod5
9? Date Developed3 Document No4 B##NCII 5 660

Date /evised3

CRITERIA 4ES NO
2id -ou@$
%7. 1an the student define ccounting
0>4 &oes the student understand the -unctions of 'ookkeeping
%9.
2:.
:6 Date Developed3 Document No4 B##NCII 5 660

Date /evised3

LEARNIN( OUTCO1E 7 ANAL4ZE 2OCU1ENTS
Contents5
%. Types of 'usiness &ocuments

2. ccount Title Selection
Assess/ent Criteri
%. &ocument are gathered, checked and verified in accordance with verification

and validation processes.
2. ccount titles are selected in accordance with standard selection process.
Conditions
1. 1alculator
2. Paper
3. earning !aterials
4. Pencil
5. *raser
6. Sample 'usiness &ocuments
Assess/ent 1ethod5
1. 3ritten test
2. Practical performance test
3. interview

Date /evised3

Learning Activities
Le rning Outco/e 7
)$ An l-se 2ocu/ents
%. Re d information sheet on
%.25%
2. Answer self check for %.25% 1ompare your answer to the answer key.
Type of 'usiness
4rganization 6%.252
). Answer self check for %.252 1ompare your answer to the answer key.
. 'er+or/ 4peration Sheet Seek assistance from your trainer if

%.252
you are not sure of your work.


evaluation.
:$ Date Developed3 Document No4 B##NCII 5 660

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Types of Business Docu,ents
Source 2ocu/ents
!erchandising #usinesses use various #usiness forms and documents to help
identify the transactions tat should #e recorded in the #ooks. These source
documents contain vital information a#out the nature and amount of te transactions.
The more common source documents along with their descriptions are shown.
1. S les Invoice is prepared #y the seller of goods and sent to the #uyer. This
document contains the name and address of the #uyer, the date of sale and
information B +uantity, description and price B a#out the goods sold. ;t also
specifies the amount of sales, and te transportation and payment terms.
2. The "ill o+ l ding is a document issued #y the carrier B a trucking, shippig or
airline B that specifies contractual conditions and terms of delivery such as
freight terms, time, place, and the person named to receive the goods.
3. The st te/ent o+ ccount is a formal notice to the de#tor detailing the accounts
already due.
4. The o+ici l recei*t evidences the recipt of cash #y the seller or the authorized
representative. ;t notes te invoices paid and other details of payment.
5. 2e*osit sli*s are printed forms with depositor=s name, account num#er and
space for the details of the deposit. validated deposit slip indicates that cash
and checks with the supplied details were actually deposited or credited to the
account holder.
6. check is a written order to a #ank #y a depositor to pay the ampount specified
in the check from his checking account to the person named in the check. The
entity issuing the check is the * -os while the receiver is the payee*
7. The *urch se re>uisition is a written re+uest to the purchaser of an entity from
an employee or user department of the same entity that goods are to #e
purchased.
8. The *urch se order is an authorization is a document containing information
a#out goods received from a vendor. ;t formally records the +uantities and
description of the goods delivered.
9. Receiving re*ort is a document containing information a#out goods received
from a vendor. ;t formally records the +uantities and description of the goods
delivered.
10. credit /e/or ndu/ is a form used #y the seller to notify the #uyer that his account is
#eing decreased due to errors or other factors re+uiring adjustments.
Self- Check -"!

Date /evised3

Types of 'usiness &ocuments
TRUE OR 3ALSE$ Put if the statement is TF"*, Put ' if the statement is
- S*
%. ;nvoice ;s issued when service is given to a customer
2. 1ash Moucher are &ocuments used when cash is paid #y the #usiness
(. 1hecks are Aegotia#le instruments used as a su#stitute for cash payments
drawn against the company=s current account
). Statement of ccounts are #ill presented to a customer for service rendered given
for which payment is demanda#le
. Promissory Aotes are written promise to pay for a certain sum of money at a
future date. The maker is the de#tor and it is addressed to the payee or creditor
:: Date Developed3 Document No4 B##NCII 5 660

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ANS:ER &E4 )$ ?)
Types of 'usiness &ocuments
%.
2.
(.
).
.
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22.
2(.
:; 2). Date Developed3 Document No4 B##NCII 5 660
Date /evised3
CRITERIA 4ES NO
2id -ou@$
2%. 1an the student define ccounting
$$4 &oes the student understand the -unctions of 'ookkeeping
2(.
2).
:< Date Developed3 Document No4 B##NCII 5 660

Date /evised3

Account Title Selection
USE O3 ACCOUNT TITLES
ccount titles are the terms used to identify the specific elements of accounting
to #e used in the recording process. ppropriate identification is necessary right at the
recording phase #ecause they are to #e #rought forward to accounting reports. 3hen
wrong accounts are used, the users of accounting reports are apt to #e misled and
conse+uently, make wrong decisions. */amples of accounts titles are given #elow$
ASSET TITLES
4 C sh 9 currency 6#ills and coins , checks, postal money orders and treasury
warrants received #y the #usiness.
$4 Notes Receiv "le B amounts collecti#le from customers for goods and services
rendered on credit or from others for loans granted. Such claims are evidenced
#y promissory note.
A *ro/issor- note is a written promise to pay a certain amount of money
⋆
on a specified or determina#le future date.

94 Accounts Receiv "le B claims from customers arising from goods sold or
services rendered on credit. ;t represents the de#tor=s oral promises to pay.
:4 Allow nce +or " d de"ts B is a contra asset account to provide for uncollecti#le
amounts. ;t is deducted from ccount Feceiva#le to present the amount still
collecti#le from de#tors.
;4 1erch ndise Inventor- B goods purchased #y the #usiness to #e sold at a profit.
<4 Interest Receiv "le B interest earned on notes on hand which has not #een
received in cash.
=4 Su**lies Unused B miscellaneous supplies which have #een #ought for office
use #ut are still unused as of the #alance sheet date. 4ther account titles which
can #e used are Supplies on <and, 4ffice Supplies, Store Supplies and -actory
Supplies.
>4 're* id Insur nce B already paid insurance premiums which are applica#le in the
future periods.
?4 3urniture nd 3i<tures B it includes ta#les, chairs, showcases, counters and
other similar assets owned and used #y the #usiness in its operation.
064 O++ice E>ui*/ent B heavy metallic and mova#le items in an office that are capa#le
of performing certain functions. */amples are typewriters, posting machines and
fa/ copier printer scanner machines other similar assets.
004 IT E>ui*/ent ? computers
0$4 2eliver- E>ui*/ent B includes assets used for transporting merchandise.
094 Tools 9 handy, small and usually metallic items used in performing certain
functions such as saws, hammers, pliers, scissors, screw drivers and jacks.
Tools, in general, have long useful life #ut do not have significant value.
:= Date Developed3 Document No4 B##NCII 5 660
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0:4 Accu/ul ted 2e*reci tion B it is a valuation account that reduces the total cost of
the fi/ed asset. ;t is another contra5asset account that represents the total amount
of depreciation e/penses charged in the past and current periods.
0;4 L nd B land owned #y the #usiness used for #uilding sites and other #usiness
purposes.
0<4 %uilding B #uilding owned and used #y the #usiness in its operation.
LIA%ILIT4 TITLES
%. Notes ' - "le B amounts due to the creditors which are supported #y a
promissory note.
2. Accounts ' - "le B amounts used for the creditors for the goods or services
#ought on credit and supported #y promissory notes. ;t is often referred to as
arising from purchases >on open account?
(. E<*enses ' - "le G ccrued e<*ensesH B o#ligations for e/penses already
incurred #ut not yet paid. */amples are >ta/es paya#le?, >salaries paya#le?, and
>accrued power and light e/pense?.
). Lo ns ' - "le B o#ligations arising from loans o#tained.
O:NER S E UIT4 TITLES

4 Owner s C *it l B amount of capital contri#utions of the owner or owners to the
#usiness.
$4 Owner s 2r wing B amount withdrawn #y the owner form the assets of the
#usiness for personal use.
INCO1E TITLES
%. S les B total sales of merchandise sold
2. 'ro+ession l 3ee Inco/e B amounts earned #y professionals such as 1P s,
doctors, lawyers, etc. for services render.
(. Rent Inco/e B amounts of rental earned for the period.
). Service Inco/e B amounts of income earned from services rendered of a service
concern #usiness.
. Interest Inco/e B amounts earned for lending money.
E 'ENSE TITLES
%. Cost o+ S les B cost of goods purchased and sold or materials manufactured
and sold.
2. Advertising E<*ense B e/penses incurred to promote the product of the
#usiness.
(. S les/en s S l ries B compensation given to sales agents.
). S les/en s Co//issions B compensation given to sales agents #ased on the
amount of their sales.
. S les/en s Tr velling E<*enses B travelling allowance given to sales agents.
8. O++ice S l ries B compensation of administrative employees.
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7. Su**lies E<*ense B amount of supplies used.
D. T <es B duties incurred in the current period.
9. Utilities E<*ense B amount of light and water consumed #y the #usiness,
%:. Re* ir nd 1 inten nce B e/penses incurred for repairing the assets of the
#usiness.
%%. % d 2e"ts B estimated amount of losses from uncollecti#le accounts of the
#usiness.
%2. 2e*reci tion E<*ense B allocated cost of fi/ed asset in the current period.
:? Date Developed3 Document No4 B##NCII 5 660

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Self- Check !"-"
ccount Title Selection
;dentify what *lement does the following ccount title

#elongs Put if it an SS*T
Put ' if it a ; '; ;TN

Put 1 if it a 43A*FS *O";TN
%. Aotes Feceiva#les
2. 'uilding
(. 1apital ).
&rawing
. Prepaid */pense
8. Aotes Paya#le
7. ccounts Feceiva#les
D. 1ash
9. ccounts Paya#le
%:.4ffice Supplies
;6 Date Developed3 Document No4 B##NCII 5 660

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AS3*F C*N )$ ?
ccount Title Selection
%.
2.
(. 1
). 1
.
8. '
7.
D.
9. '
%:.

Date /evised3

TAS& S6EET )$)$)
Su**lies!1 teri ls$
1alculator
Paper
earning !aterials
Pencil
*raser
E>ui*/ent $
Ste*s!'rocedure5
2.
28.
27.
2D.
Assess/ent 1ethod5
;$ Date Developed3 Document No4 B##NCII 5 660

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CRITERIA 4ES NO
2id -ou@$
2 . 1an the student define ccounting
$<4 &oes the student understand the -unctions of 'ookkeeping
27.
2D.

Date /evised3

;: Date Developed3 Document No4 B##NCII 5 660

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LEARNIN( OUTCO1E 7 0 'RE'ARE JOURNAL ENTR4
Contents5
%. 0enerally ccepted ccounting Principles

2. ccoutning *+uation
(. Gournalizing of Partnerships account titles
Assess/ent Criteri
4 Gournal entries are prepared in accordance with generally accepted accounting

principles.
$4 &e#it and credit account titles are determined in accordance with chart of
accounts.
94 */planation to jounal entry is prepared in accordance with the nature of
transaction.
Conditions
%. 1alculator
2. Gouranl Paper
(. earning !aterials
). Pencil
. *raser
8. Philippine -inancial Feporting Standards
Assess/ent 1ethod5
%. 3ritten test
2. Practical performance
test (. interview
Learning Activities
;; Date Developed3 Document No4 B##NCII 5 660
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Le rning Outco/e
0$ 're* re Journ l Entr-
%. Re d information sheet on
%.(5%
2. Answer self check for %.(5% 1ompare your answer to the answer key.
Type of 'usiness 4rganization
6%.(52
). Answer self check for %.(52 1ompare your answer to the answer key.
. Re d information sheet on
Type of 'usiness 4rganization
6%.(5(
1ompare your answer to the answer key.
8. Answer self check for %.(5(
Seek assistance from your trainer
7. 'er+or/ 4peration Sheet %.(5
if you are not sure of your work.
(

evaluation.
.enerally Accepted Accounting /rinciples

;< Date Developed3 Document No4 B##NCII 5 660
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(ener ll- Acce*ted Accounting *rinci*les G(AA'H
- *ncompass the conventions, rules and procedures necessary to define
accepted accounting practice at a particular time. the satandard generally
accepted accounting principles includes not only #road guidelines of general
application, #ut also detailed practices and procedures.
(AA' are conventional B that is, they #ecome generally accepted #y agreement 6often
tacit agreement rather than #y formal derivation from a set of postulates or #asic
concepts. The principles have developed on the #asis of e/perience, reason, custom,
usage, and to a significant e/tent, practical necessity.
;n recent years, the accounting principles #ulletins of the P;1P 1ommittee on

ccounting Principles have #een considered as the major source of generally accepted
accounting principles have #een considered as the major source of 0 P. ;n 4cto#er
%9D2 a new #ody, the ccounting Standards 1ouncil 6 S1 has #een designated to take
over the accounting standard5setting functions. The pronouncements of the S1, after
duly approved #y the Professional Fegulatory 1ommission 6PF1 , will constitute
generally accepted accounting principles in the Philippines. 1ertified Pu#lic
ccountants in the Philippines are governed #y the 1ode of Professional *thics
promulgated #y the #oard of ccountancy and approved #y the PF1 which among other
things, re+uires a 1P to see to t that financial statements, not otherwise restricted for
special or internal purposes, of his client or employer are presented in conformity with
0 P. ;n case of any departure from such principles, he shall indicate the nature of the
departure, the appro/imate effects thereof, and the reasons why compliance with the
principles would result in misleading statement, if such is a fact.
(AA' is divided into three sections5

%. 'erv sive 'rinci*les, which relate to financial accounting as a whole and
provide a #asis for the other principles.
2. %ro d o*er ting *rinci*les, which guide the recording, measuring, and
communicating processes of financial accounting, and
(. 2et iled *rinci*les, which indicate the practical application of the pervasive
and #road operating principles
UN2ERL4IN( 'RINCI'LES AN2 %ASIC CONCE'TS O3 ACCOUNTIN( )$

Relev nce
The accounting information communicated to users must #e relevant to
their decision5making process. Relev nce is the c * cit- to in+luence user s
decision$ Felevance is a very important concept to #e considered in
accumulating and communicating accounting information.
$ Entit- Conce*t
;ndividuals may own several types of #usiness, including sole
proprietorship, partnership or corporations. -urthermore, one individual may own
;= Date Developed3 Document No4 B##NCII 5 660
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all or part of several #usinesses. -rom an accounting standpoint, each #usiness
is treated as a separate economic entity. An entit- is considered to "e se* r te
+ro/ its owners nd +ro/ n- other "usiness$ Thus each #usiness has its own
accounting system and accounting records for identifying, measuring,
recording, retaining, and communicating its accounting information. n owner=s
personal financial activities are not included within the accounting records of
the #usiness owned unless this activity has a direct impact upon the #usiness.
0$ (oing Concern Conce*ts
To meet its goal, a company enters into many transactions that re+uire it
to carry out future commitments. The going concern is the gener l ssu/*tion / de
"- ccount nts th t the co/* n- will continue to o*er te long enough to /eet these
co//it/ents$ ;t is also called the continuity assumption. The going concern
concept is necessary for many of the accounting procedures. 4#viously not all
#usinesses are successful, #ut the going concern concept is valid in most
cases. ;f the #usiness appears on the verge of #ankruptcy, this assumption
should #e discarded.
$ 1onet r- Unit
;n the e/change of property or services, a unit of e/change value is used.
ccounting information a#out these transactions must #e recorded and
communicated in a form that is understood #y #oth e/ternal and internal users.
This re+uirement has led to the concept of the monetary unit. The /onet r- unit
conce*t /e ns th t the results o+ tr ns ctions re recorde nd co//unic ted in /onet r-
ter/s$ The monetary unit is peso, and therefore financial statements are
e/pressed in peson. ;n other countries the monetary unit is the national
currency of the particular country. The use of a monetary unit does not stop
accountants from showing other important, #ut nonmonetary information.
$ 6istoric l Cost
nother important concept related to the monetary concept is the
historical cost or simply, the cost concept* The historic l cost conce*t /e ns th t
tr ns ctions re recorded on the " sis o+ the *eso e<ch nge Gi$e$ the costH in the
tr ns ction$ 4nce a transaction is recorded, the cost involved in the transaction
is retained in the accounting records regardless of whether the value of the
property or services owned increases 6or decreases . -or instance, a company
may ac+uire land for P%::,:::. Several years later the land may have increased in
value to P%(:,:::. "nder the historical cost concept, the company would continue
to show the land in its accounting records at P%::,:::, the ac+uisition cost.
The increase in the value of any item may #e due to the effects of inflation.
;t may also #e due to specific changes in the supply of and the demand for the
type of item. ;n the past the peso has #een a relatively sta#le measuring unit. 3ith
the recent high rates on inflation, however, everyone has e/perienced the
;> Date Developed3 Document No4 B##NCII 5 660
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reduction in the purchasing power of the peso. There has also #een rapid
technological changes that have affected the supply of the demand for many
items. ;nflation and technological changes have #een so great in recent years
that accountants have modified #oth the monetary unit and the historical cost
concept, although not in the financial statements.
$ 1 teri lit-
!ateriality is like relevance in that #oth concepts are defined in terms of
what influences or makes difference to a user of accounting information. 1 teri
lit- is the conce*t th t ccounting in+or/ tion is use+ul when the /onet r- /ount
involved is l rge enough to / ke di++erence in user s decision$ 4nly material
accounting information should #e accumulated and communicated to users.
M$ Accru l
&etermination of periodic income and financial position depends on
measurement of economic resources and o#ligations and changes in them as
the changes occur rather than simply on recording receipts and payments of
money. *nterprise economic activity in a short period seldom follows the simple
form of a cycle from money to productive resources to product to money.
;nstead, continuous production, e/tensive use of credit and long5lived
resources, and overlapping cycles of activity complicate the evaluation of
periodic activities. s a result, noncash resources and o#ligations change in time
periods other than those in which money is received or paid. Fecording these
changes is necessary to determine periodic income and to measure financial
position. This is the essence of accrual accounting.
8$ 1 tching Conce*t
the term matching is often used in the accounting literature to descri#e the entire
process of income determination. The term is also often applied in accounting,
however, in a more limited sense to the process of e/pense recognition or in an even
more limited sense to the recognition of e/penses #y associating costs with revenue
on a cause and effect #asis.
Self- Check !)-
0enerally ccepted ccounting Principles
;dentify the ssumption of 0 P according to its division

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Put if the assumption is a ccounting ssumption
Put ' if the assumption is a ccounting Principles
%. !easurement in !oney ssumption

2. 0oing 1oncern ssumption (.
'usiness *ntity ssumption ).
1ost Principle
. ccrual or !atching Principle or e/pense recognition Principle
<6 Date Developed3 Document No4 B##NCII 5 660

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ANS:ER &E4 )$0?)
0enerally ccepted ccounting Principles
%.
2.
(.
).'
.'

Date /evised3

TAS& S6EET )$)$)
Su**lies!1 teri ls$
1alculator
Paper
earning !aterials
Pencil
*raser
E>ui*/ent $
Ste*s!'rocedure5
29.
(:.
(%.
(2.
Assess/ent 1ethod5
<$ Date Developed3 Document No4 B##NCII 5 660

Date /evised3

CRITERIA 4ES NO
2id -ou@$
29. 1an the student define ccounting
964 &oes the student understand the -unctions of 'ookkeeping
(%.
(2.

Date /evised3

Accounting %*uation
Le rning O"#ectives5
fter reading this ;A-4F! T;4A S<**T, N4" !"ST #e a#le to$
%. "nderstand the 'asic ccounting *+uation.
2. ist the assets, lia#ilities, proprietorship, income and
e/penses (. "nderstand the rules of de#it and credit
Accounting E>u tion nd 2ou"le Entr- Rule
;n the #alance sheet, the total of the assets is e+ual to the total of the lia#ilities
plus the capital or owner=s e+uity. This ; true for any #alance sheet #ecause a
company=s economic resources are financed either #y its creditors or #y its owners.
This e+uality may #e shown in e+uation form. The #asic accounting e+uation
6sometimes referred to as the #alance sheet e+uation is a follows$
Assets D Li "ilities C *it l!Owner s E>uit-

The ccounting e>u tion /ust lw -s re/ in in " lnce 9 the two sides /ust lw -s "e e>u
l$ This rule is one of the #asic rules in accounting. Since transactions normally #egins
the accounting process, each transaction must #e recorded so that this e+uality is
maintained.
2ou"el Entr- Rule

second rule, which complements the e+ualtiy rule, is the dou#le entry rule.
The dou"le entr- rule /e ns th t in recording tr ns ction t le st two ch nges /ust "e / de i"
the ssets, li "ilities, or c *it l$ These changes are made as entries in the accounting
records thus a dou#le entry must always #e made.
-or instance, if the owner invested P :,::: into the #usiness, assets 6cash would
#e increased #y P :,::: and owners= capital 6owners= e+uity would #e increased #y P
:,:::. The dou#le entry rule is o#served and the accounting e+uation is #alanced.
The Use o+ Accounts

An ccount is "usiness docu/ent th t is used to record nd ret in the /onet r- in+or/
tion +ro/ "usiness tr ns ctions$ Separate accounts are used for each asset, lia#ilities,
and owner=s e+uity item. The num#er, types and names of the accounts for each
company depend upon the particular company=s operations, whether it is a sole
proprietorship, partnership, or corporation, and the types of asset it owns and
lia#ilities it has incurred. gener l ledger is the entire set o+ ccounts +or co/* n-$ -or this
reason, sometimes accoutns are reerred to as ledger accounts*
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N ture nd Ele/ents o+ T?Account
simple format for the accounts in a manual system is called a T-Account
#ecause it looks like the capital letter T. s shown #elow, each T5account has three
#asic parts$ 6% a place at the top for the title of the particular asset, lia#ility, or
owners= e+uity item, 62 a left side, calleds de'it side, and 6( a right side, called the
credit side. The title of each account descri#es the nature f the account. The left 6de#it
and the right 6credit sides of each account are used for recording and retaining the
monetary information from #usiness transactions. A de"it entr- is /onet r- /ount
recorded Gde"itedH in the le+t si+e o+ n ccount$ A credit entr- is /onet r- /ount
recorded GcreditedH in the right side o+ n ccount$
Title o+ Accounts
Le+t Gde"itH side Right GcreditH side
To illustrate, look at the 1ash account shown #elow$
C sh No$ ) )
!K)! K) % l nce ')K,KKK !K ! K) ' ,

!K ! K) $KKK !)K! K) KK
) $KKK
'0 ,KKK '

0,KKK
! 8! K) % l nce ') ,KKK
I/*ort nt Rules
3e have stated several important rules that must #e followed in an aactual
accountingsystems. These rules are summarized as follows to help you remem#er
them and their relationship$
4 The accounting e+uation 6assets e+ual lia#lities plus pwners= e+uity must always
remain in #alance.
$4 ll increases in an account are recorded on one side of the account@ all
decreases are reecorded on the other side of the account.
94 The de#it and credit rule states that$
a. sset accounta are increased #y de#it entries and decreased #y credit
entries@
#. ia#ilities and owners= e+uity accounts are increased #y credit entries and
decreased #y de#it entries.
:4 The dou#le entry rule states that for all recorded transactions, the total amount
od the de#it entries must #e e+ual to the total amount of the credit entries.
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Rules o+ 2e"it nd Credit
2e"it means the left side of an account or to enter an amount on the left side of
the account.
Credit means the right side of an account or to enter an amount on the right
side of an account.
2e"it to5 Credit to5
%. ;ncrease assets %. &ecrease assets

2. &ecrease lia#ilities 2. ;ncrease lia#ilities
(. &ecrease proprietorship due to$ (. ;ncrease proprietorship due to$
a. withdrawal of assets #y the owner a. investment #y the owner
#. increase in e/penses and losses #. decrease in e/pense
and losses
c. decrease in income c. increase in income
% l nce o+ n Account
The " l nce o+ n ccount is the di++erence "etween the tot l incre ses nd decre
ses recorded in the ccount$ "sually the #alance of each account is computed when
the accounting information is to #e communicated in an accounting report. *ach asset
account normally has a de#it #alance #ecause the total increases 6de#its e/ceed the
total decreases credits in the account. *ach lia#ility and owners= e+uity account has a
credit #alance #ecause the total credits 6increases e/ceed the total de#its 6decreases
in each account.
Nor/ l % l nce o+ n Account

The normal #alance of any account refers to the side of the account B de#it or
credit B where increrases are recorded. sset, owner=s withdrawal and e/pense
accounts normally have de#it #alances@ lia#ility, owner=s e+uity and income
accounts normally have credit #alances. This result occurs #ecause increases in an
account are usually greater than or e+ual to decreases.

<< Date Developed3 Document No4 B##NCII 5 660
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0ournalizing Transactions
Conce*ts o+ Journ li. tion

4nce the information provided on #usiness documents has #een analyzed,
transactions are recorded in chronological order in the appropriate journals. ;n some
small #usiness, all transactions are recorded in a single journal.
Gournalization 6or journalizing is the act of recording transactions for the first
time in an accounting record#ook called the #ourn l$ The journal is often referred to
as >#ook of original entry?.
Gournalizing is the first step in the accounting cycle. ;t is the process of
recording #usiness transactions in a journal.
journal is a #ook of accounts wherein #usiness transactions are recorded for
the first time
3unctions o+ Journ ls
04 To show l in+or/ tion "out n ccount "le event in one *l ce$ $4 To *rovide
chroinologic l record o+ ccoutn "le events$
94 To + cilit te *osting tr ns ctions d t to the ledger$
T-*es o+ Journ ls
4 (ener l Journ l B is a #usiness document in which transactions are recorded,
the date of transaction, the accounts to #e de#ited and credited, thte amount of
de#it or credit, entries and e/planation of each transaction.
$4 S*eci l Journ l B a chronological recording of transactions possessing common
characteristics. */amples are$
a. Sales Gournal
#. Purchases Gournal
c. 1ash Feceipts Gournal
d. 1ash &is#ursement Gopurnal
Adv nt ges o+ S*eci l Journ ls

4 *liminate repetitive work.
$4 !akes possi#le division of la#or and hence, timely reports
94 Fesults in higher degree of control.
:4 Fesults in greater efficiency.
Journ l Entries 9 are the formal written record of transactions
=oucher S-ste/ B is a special arrangement of journals 6Sales Gournal, Purchases

Gournal, Moucher Fegister, 1heck Fegister, and 0eneral Gournal revolving around the
use of voucher 6a formal written authorization for an e/penditure . The voucher
register and check register take the place of the purchases journal and cash
dis#ursement journal.
<= Date Developed3 Document No4 B##NCII 5 660

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register is an accounting record#ook in which transactions of the same nature are
recorded@ may #e used either as journal or as su#sidiary ledger, or #oth.
'rocedures o+ Journ li.ing

;t is important that you understand the form of the general journal and carefully
learn procedures for journalizing each transaction. Shown #elow is a partial page form
of a general journal.
(ENERAL JOURNAL
' ge No
2 te Account Titles nd E<*l n tion 3 2e"it Credit
Self- Check !)-)
Gournalizing of Proprietor ccount Titles

<> Date Developed3 Document No4 B##NCII 5 660
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'ro"le/5
Gournal the following selected transactions of . &ela 1ruz Fepair Shop.
Gan % 5 . &ela 1ruz esta#lished the . &ela 1ruz Fepair Shop #y investing P :,:::
cash.
Gan 5 Purchased repair supplies on account P %,:::.
Gan %: 5 Fendered service to customer of P %,::: were received in cash.
Gan % 5 Fendered service to customer on account for P (,:::..
Gan 2 5 Paid the rent for the month, P ,:::.
Chart of Accounts
<? Date Developed3 Document No4 B##NCII 5 660

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Le rning O"#ective5 fter reading this ;A-4F! T;4A S<**T, N4" !"ST #e a#le to identifythe
different account titles to #e used in recording process.
Ch rt o+ Accounts
- ;s a list of all the accounts to #e used in recording a company=s transactions.
;t serves as a guide to the #ookkeeper. The accounts are so arranged #ased on
their positions in the financial statements. The same arrangement is o#served
in opening accounts in the ledger. This makes it easier for any#ody using the
#ooks of accounts to locate a particular account. Such accounts are divided
into sections and each title has a given code num#er.
Coding B this refers to the systematic assignment of sym#ols to the different

accounts #ased on classification and position in the financial statements.
Aum#ers or letters or com#inations of these two are often used in coding. The
following is an e/ample of chart of accounts with codes in the form of num#ers.
Illustr tion
A%C RE'AIR S6O'

Ch rt o+ Accounts
Assets Owner s E>uit-
:%% 1ash 2%% Santos, 1apital

:%2 Aotes Feceiva#le 2%2 Santos, &rawing
:%( ;nterest Feceiva#le 2%( Fevenue and */pense
:%) ccounts Feceiva#le Summary
:%)a llowance for #ad de#ts
:% Supplies "nused
:%8 Prepared ;nsurance Inco/e
:%7 -urniture and -i/tures (%% Service ;ncome
:%Da ccumulated &epreciation5 (%2 Fent ;ncome
-urniture and -i/tures
:%9 *+uipment
:%9a ccumulated &epreciation5
*+uipment
Li "ilities E<*enses
%%% Aotes Paya#le %% Salary */penses
%%2 ccounts Paya#le %2 Supply */penses
%%( ;nterest Paya#le %( Fent */penses
%%) Ta/es Paya#le %) dvertising */pense
%% Salaries Paya#le %8 'ad &e#t
%7 &epreciation
%D ight, 3ater and Telephone
%9 Ta/es and icenses
2: !iscellaneous */pense
=6 Date Developed3 Document No4 B##NCII 5 660
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USE O3 ACCOUNT TITLES
ccount titles are the terms used to identify the specific elements of accounting
to #e used in the recording process. ppropriate identification is necessary right at the
recording phase #ecause they are to #e #rought forward to accounting reports. 3hen
wrong accounts are used, the users of accounting reports are apt to #e misled and
conse+uently, make wrong decisions. */amples of accounts titles are given #elow$
ASSET TITLES
PC sh 9 currency 6#ills and coins , checks, postal money orders and treasury
warrants received #y the #usiness.
Notes Receiv "le B amounts collecti#le from customers for goods and services
rendered on credit or from others for loans granted. Such claims are evidenced #y
promissory note.
A *ro/issor- note is a written promise to pay a certain amount of money
⋆
on a specified or determina#le future date.

Accounts Receiv "le B claims from customers arising from goods sold or
services rendered on credit. ;t represents the de#tor=s oral promises to pay.
Allow nce +or " d de"ts B is a contra asset account to provide for uncollecti#le
amounts. ;t is deducted from ccount Feceiva#le to present the amount still collecti#le
from de#tors.
P1erch ndise Inventor- B goods purchased #y the #usiness to #e sold at a
profit.
Interest Receiv "le B interest earned on notes on hand which has not #een
received in cash.
PSu**lies Unused B miscellaneous supplies which have #een #ought for office
use #ut are still unused as of the #alance sheet date. 4ther account titles which can #e
used are Supplies on <and, 4ffice Supplies, Store Supplies and -actory Supplies.
P're* id Insur nce B already paid insurance premiums which are applica#le in
the future periods.
P3urniture nd 3i<tures B it includes ta#les, chairs, showcases, counters and
other similar assets owned and used #y the #usiness in its operation.
PO++ice E>ui*/ent B heavy metallic and mova#le items in an office that are
capa#le of performing certain functions. */amples are typewriters, posting machines
and fa/ copier printer scanner machines other similar assets.
IT E>ui*/ent ? computers
P2eliver- E>ui*/ent B includes assets used for transporting merchandise.
Tools 9 handy, small and usually metallic items used in performing certain
functions such as saws, hammers, pliers, scissors, screw drivers and jacks. Tools, in
general, have long useful life #ut do not have significant value.
PAccu/ul ted 2e*reci tion B it is a valuation account that reduces the total cost
of the fi/ed asset. ;t is another contra5asset account that represents the total amount
of depreciation e/penses charged in the past and current periods.
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PL nd B land owned #y the #usiness used for #uilding sites and other #usiness
purposes.
P%uilding B #uilding owned and used #y the #usiness in its operation.
LIA%ILIT4 TITLES
PNotes ' - "le B amounts due to the creditors which are supported #y a
promissory note.
PAccounts ' - "le B amounts used for the creditors for the goods or services
#ought on credit and supported #y promissory notes. ;t is often referred to as arising
from purchases >on open account?
PE<*enses ' - "le G ccrued e<*ensesH B o#ligations for e/penses already
incurred #ut not yet paid. */amples are >ta/es paya#le?, >salaries paya#le?, and
>accrued power and light e/pense?.
PLo ns ' - "le B o#ligations arising from loans o#tained.
O:NER S E UIT4 TITLES

POwner s C *it l B amount of capital contri#utions of the owner or owners to the
#usiness.
POwner s 2r wing B amount withdrawn #y the owner form the assets of the
#usiness for personal use.
INCO1E TITLES
PS les B total sales of merchandise sold
P'ro+ession l 3ee Inco/e B amounts earned #y professionals such as 1P s,
doctors, lawyers, etc. for services render.
PRent Inco/e B amounts of rental earned for the period.
PService Inco/e B amounts of income earned from services rendered of a
service concern #usiness.
PInterest Inco/e B amounts earned for lending money.
E 'ENSE TITLES
PCost o+ S les B cost of goods purchased and sold or materials manufactured
and sold.
PAdvertising E<*ense B e/penses incurred to promote the product of the
#usiness.
PS les/en s S l ries B compensation given to sales agents.
PS les/en s Co//issions B compensation given to sales agents #ased on the
amount of their sales.
PS les/en s Tr velling E<*enses B travelling allowance given to sales agents.
PO++ice S l ries B compensation of administrative employees.
PSu**lies E<*ense B amount of supplies used.
PT <es B duties incurred in the current period.
=$ Date Developed3 Document No4 B##NCII 5 660
Date /evised3


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COMPETENCY-BASED

ASIAN INSTITUTE OF COMPUTER STUDIES

OD-.' O& INS /-C ION

1Journalize ransac!ons2 Developed +y3

Module Description: This unit covers the knowledge, skills, nd ttitudes

$ Date Developed3 Document No4 B##NCII 5 660

1Journalize ransac!ons2 Developed +y3

Module Description: This unit covers the knowledge, skills, nd ttitudes

$ Date Developed3 Document No4 B##NCII 5 660

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UNIT O3 CO1'ETENC4 5 JOURNALIZE TRANSACTIONS

9 Date Developed3 Document No4 B##NCII 5 660

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%. &efinition and functions of 'ookkeeping and ccounting

The students trainees must #e provided with the following$

: Date Developed3 Document No4 B##NCII 5 660

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Le rning Activities S*eci l Instructions

%. Re d information sheet on%.%5%

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Definition and Functions of Bookeeping and Accounting

The chapter on practical mathematics addressed mathematics in #usiness. <e said

% sic Accounting Conce*ts

Accounting 9 is the art of recording, classifying, and summarizing, in a significant

< Date Developed3 Document No4 B##NCII 5 660

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The 1ommittee on Terminology of the merican ;nstitute of ccountants defines

The preceding definition covers four distinct functions, namely,

% sic 'ur*ose o+ Accounting

The specialized areas or #ranches of accounting may #e enumerated as follows$

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ccounting, often called the language of #usiness, provides essential information

%ookkee*ing 9 the process of recording and classifying transactions and events of an

%. 3uture re+erence 9 man is unfortunately not #iologically gifted with an unfalli#le

? Date Developed3 Document No4 B##NCII 5 660

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&efinition and -unctions of 'ookkeeping and ccounting

1olumn 1olumn '

06 Date Developed3 Document No4 B##NCII 5 660

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De@ni!on and "unc!ons o" Bookkeeping and *ccoun!ng

00 Date Developed3 Document No4 B##NCII 5 660

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Su**lies!1 teri ls$

0$ Date Developed3 Document No4 B##NCII 5 660

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&efinition and functions of 'ookkeeping and ccounting

$4 &oes the student understand the -unctions of 'ookkeeping

INFORMATION SHEET 1.1-2

09 Date Developed3 Document No4 B##NCII 5 660

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According to N ture o+ %usiness5

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= lue is anything suscepti#le of pecuniary estimation. ;t may represent money

TRANSCATIONS VALUE RECEIVED VALUE PARTED

0; Date Developed3 Document No4 B##NCII 5 660

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CBLM August 2013 Issued +y3

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