Mae Therese B. Yares 11-St. Theresa of Calcutta G-31
THE ACCOUNTING PROCESS
1. ANALYZING
- gathering all source documents and analyzing it
- accounts involved
- amount involved
- increase/decrease to the amount
- debit/credit
Example 1:
Assets Liabilities Equity
Investment by owner Cash P100,000 NE Capital P100,000
cash, P100,000
Purchase of equipment (Cash P60,000) NE NE
for cash, P60,000 Equipment P60,000
Payment of rental, P6,000 (Cash P6,000) NE (Rent expense P6,000)
Purchase of supplies on Supplies P4,000 Account Payable P4,000 NE
account, P4,000
Provided repair services Cash P10,000 NE Service Revenue P10,000
for cash, P10,000
Withdrawal of cash by (Cash P4,000) NE (Drawings P4,000)
owner, P4,000
Paid salaries of part-time (Cash P3,000) NE (Salaries expense P3,000)
employees, P3,000
Payment of P500 for (Cash P500) NE (Utilities expense P500)
utilities expense
Remember!
It should have the same sign so that it would be balance
() – decrease
NE – No effect
Assets- resources
- cash, account receivable, supplies, equipment
Liabilities- financial obligations, settlement
- all payables
Equity- liabilities are deducted
- all expenses, drawings, capital, service revenue
2. RECORDING
- inputs information in the journal
- also known as journalizing
- debit/credit
Example 2:
Kim Palacio started her own consulting firm, Palacio Consulting, on June 1, 2017. The following
transactionsoccured during the month of June.
June 1 Palacio invested P80,000 cash in the business.
2 Paid P8,500 for office rent for the month.
3 Purchased P5,000 of supplies on account.
5 Paid P900 advertisement in Cebu Daily News.
9 Received P7,000 cash for services provided.
12 Withdrew P6,000 cash for personal use.
15 Rendered services on account, P5,000.
17 Paid P4,000 for employees’ salaries.
, 2 Rent expense 8,500-
Cash 8,500-
3 Supplies 5,000-
Account payable 5,000-
5 Advertisement expense 900-
Cash 900-
9 Cash 7,000-
Service revenue 7,000-
12 K. Palacio Drawings 6,000-
Cash 6,000-
15 Account receivable 5,000-
Service revenue 5,000-
17 Salaries expense 4,000-
Cash 4,000-
20 Account payable 5,000-
Cash 5,000-
23 Cash 2,500-
Account receivable 2,500-
25 Cash 12,000-
Note Payable 12,000-
29 Equipment 25,000-
Account payable 25,000-
30 Miscellaneous expense 500-
Cash 500-
Remember!
Debit Credit Debit Credit
- expenses - income 1. equipment 1. cash
- assets - gains 2. rent expense 2. cash
- amounts owed - lender 3. cash 3. service revenue
- losses - giver 4. supplies 4. account payable
- borrower 5. cash 5. capital
- receiver 6. supplies 6. cash
7. advertising expense 7. accounts payable
8. drawings 8. cash
9. salary expense 9. cash
10. utility expense 10. cash
11. account receivable 11. service revenue
12. account payable 12. cash
13. cash 13. account receivable
3. CLASSIFYING
- grouping of similar transactions and events into specific account titles
- journalized transactions and events are classified in ledgers
- also known as posting
- T-account
Example 3: Classify the journalized tansactions and events in example 2.
CASH
Debit Credit
June 1 80,000 June 2 8,500
9 7,000 5 900
23 2,500 12 6,000
25 12,000 17 4,000
101,500 20 5,000
76,600 30 500
24,900
ACCOUNTS RECEIVABLE
THE ACCOUNTING PROCESS
1. ANALYZING
- gathering all source documents and analyzing it
- accounts involved
- amount involved
- increase/decrease to the amount
- debit/credit
Example 1:
Assets Liabilities Equity
Investment by owner Cash P100,000 NE Capital P100,000
cash, P100,000
Purchase of equipment (Cash P60,000) NE NE
for cash, P60,000 Equipment P60,000
Payment of rental, P6,000 (Cash P6,000) NE (Rent expense P6,000)
Purchase of supplies on Supplies P4,000 Account Payable P4,000 NE
account, P4,000
Provided repair services Cash P10,000 NE Service Revenue P10,000
for cash, P10,000
Withdrawal of cash by (Cash P4,000) NE (Drawings P4,000)
owner, P4,000
Paid salaries of part-time (Cash P3,000) NE (Salaries expense P3,000)
employees, P3,000
Payment of P500 for (Cash P500) NE (Utilities expense P500)
utilities expense
Remember!
It should have the same sign so that it would be balance
() – decrease
NE – No effect
Assets- resources
- cash, account receivable, supplies, equipment
Liabilities- financial obligations, settlement
- all payables
Equity- liabilities are deducted
- all expenses, drawings, capital, service revenue
2. RECORDING
- inputs information in the journal
- also known as journalizing
- debit/credit
Example 2:
Kim Palacio started her own consulting firm, Palacio Consulting, on June 1, 2017. The following
transactionsoccured during the month of June.
June 1 Palacio invested P80,000 cash in the business.
2 Paid P8,500 for office rent for the month.
3 Purchased P5,000 of supplies on account.
5 Paid P900 advertisement in Cebu Daily News.
9 Received P7,000 cash for services provided.
12 Withdrew P6,000 cash for personal use.
15 Rendered services on account, P5,000.
17 Paid P4,000 for employees’ salaries.
, 2 Rent expense 8,500-
Cash 8,500-
3 Supplies 5,000-
Account payable 5,000-
5 Advertisement expense 900-
Cash 900-
9 Cash 7,000-
Service revenue 7,000-
12 K. Palacio Drawings 6,000-
Cash 6,000-
15 Account receivable 5,000-
Service revenue 5,000-
17 Salaries expense 4,000-
Cash 4,000-
20 Account payable 5,000-
Cash 5,000-
23 Cash 2,500-
Account receivable 2,500-
25 Cash 12,000-
Note Payable 12,000-
29 Equipment 25,000-
Account payable 25,000-
30 Miscellaneous expense 500-
Cash 500-
Remember!
Debit Credit Debit Credit
- expenses - income 1. equipment 1. cash
- assets - gains 2. rent expense 2. cash
- amounts owed - lender 3. cash 3. service revenue
- losses - giver 4. supplies 4. account payable
- borrower 5. cash 5. capital
- receiver 6. supplies 6. cash
7. advertising expense 7. accounts payable
8. drawings 8. cash
9. salary expense 9. cash
10. utility expense 10. cash
11. account receivable 11. service revenue
12. account payable 12. cash
13. cash 13. account receivable
3. CLASSIFYING
- grouping of similar transactions and events into specific account titles
- journalized transactions and events are classified in ledgers
- also known as posting
- T-account
Example 3: Classify the journalized tansactions and events in example 2.
CASH
Debit Credit
June 1 80,000 June 2 8,500
9 7,000 5 900
23 2,500 12 6,000
25 12,000 17 4,000
101,500 20 5,000
76,600 30 500
24,900
ACCOUNTS RECEIVABLE
