Week 1 Accounting

Task.
Check Your Understanding

Direction: Analyze and answer the following questions below.
1. Why is accounting considered as the language of business?
Accounting considered as the language of business because accounting is
used to communicate financial information, Financial Accounting is often
called the language of business; it is the language that managers use to
communicate used to accumulate data about a firm's financial affairs, the
firm's financial and economic information to external parties such as
shareholders and creditors.
2. Why recording of transaction is important?

Recording of transaction is important for their content and as evidence of
communication, decisions, actions, and history. Good record keeping is vital
in regards to meeting the financial commitments of the business and providing
information on which decisions for the future of the business can be based.
3. What is the primary motive of individuals of having a business?

Expound.
The primary motive of individuals of having a business is being profitable is an
inherent motive of an entrepreneur. Most business owners wants to earn
profits. Few professions generate the wealth that a successful business can
generate.
4. Who is the user of financial statement and why are they considered
about it?
The user of financial statement is the management of the company is the first
and foremost user of the financial statements. Although they are the ones who
prepare the financial statements, the board and the management need to
refer to them while considering the progress and growth of the company.
Financial accounting information also helps users measure a company's
profitability and performance.
5. What is the basic accounting equation? Why do we need to follow it?

The basic accounting equation is balance sheet equation, the accounting
equation formula is Assets = Liabilities + Equity. This equation should be
supported by the information on a company's balance sheet.
6. Briefly discuss the rules debit and credit and explain why it is relevant.
The rules Debits and credits are the opposing sides of an accounting journal
entry. The “rule of debits” says that all accounts that normally contain a debit
balance will increase in amount when debited and reduce when credited. And
the accounts that normally have a debit balance deal with assets and
expenses. Debit – Left side or the “value
received” Credit – Right side or the “value
parted with”
Task. Unknown Accounting Elements

Direction: Determine the unknown amount to complete the basic accounting
equation.
ASSETS = LIABILITIES + EQUITY

1. P350,000 = P195,000 + P 155,000
2. P600,000 = P250,000 + P350,000
3. P680,000 = P230,000 + P450,000
4. P970,000 = P650,000 + P320,000
5. P275,000 = P85,000 + P190,000
Task 2. Transactions Affecting Changes in Accounting Values

Direction: Determine the account balances being asked.
At the beginning of the year, DG enterprises had total assets of P700,000 and total
liabilities of P500,000. Answer the following questions
1. It total assets increased by P150,000 during the year and total liabilities decreased
by P80,000, what is the amount of owner’s equity at the end of the year
2. During the year, total liabilities increased by P100,000 and owner’s equity
decreased by P70,000, what is the amount of total assests at the end of the year?
3. If total assets increased by P90,000 and owner’s equity increased by P110,000
during the year, what is the amount of owner’s equity at the end of the year?
ASSET= LIABILITIES+ OWNERS
EQUITY
asset:
700,000+150,000=850,000
liabilities: P850,000 P420,000 P430,000
500,000-80,000=420,000
Liabilities:
420,000+100,000=520,000 P880,000 P520,000 P360,00
Ownwer’s equity:
430,00-70,000=360,000
Asset:
880,000+90,000=970,000 P970,000 P500,000 P470,000
Owners’ equity:
360,000+110,000=470,000
Task 3. Journalizing Service Concern Transactions

Direction: Prepare journal entries on the space provided on each transaction in
the general journal.
Dr. Jonathan Alegre opened a medical clinic in Kapalong, Davao del Norte to serve
his constituents in the area. With the use of a two-column General Journal, record
the completed transactions during the first month of its operation using the given
chart of accounts
Chart of Accounts
Assets Owner’s Equity

Cash on Hand J. Alegre, Capital
Accounts Receivable J. Alegre, Drawing
Unused Medical Supplies Income
Furniture and Fixtures Medical Fees Income
Medical Equipment Expenses
Liabilities Salaries Expense
Accounts Payable Taxes and Licenses
Notes Payable Utilities Expense
Transactions:
Sept. 1 Dr. Alegre invested cash amounting to P950,000 and a clinic

furniture worth P250,000
2 Bought medical equipment on account from Manila Medical

Equipment Supply Company amounting to P750,000, paying
P200,000 and issued a note for the balance
4 Bought medical supplies for cash, P100,000
5 The doctor withdrew for his personal use, P15,000
7 Medical fees income eared for the week:

On cash P50,000
On Account P60,000
9 Dr. Alegre made and additional cash investment of P350,000
11 Full payment of the note issued to Manila Equipment Supply

Company, P550,000
14 Medical fees income for two weeks:

Cash P40,000
On account P70,000
15 Collected in full the patient’s accounts of Sept. 7, P60,000
18 Bought medical supplies on account from AMESCO, P30,000
28 Medical fees income for two weeks

Cash P40,000
On account P70,000
30 Paid the following expenses:

Taxes and Licenses, P20,000; Salaries of Attendants,
P45,000 and Utilities Expense, P40,000
GENERAL JOURNAL
DATE Account Title and Explanation Debit Credit
Cash on hand 950,000
Sept. Furniture and Fixtures 250,000
1, 200,000
1 J. Alegre, capital
Invested cash and Furniture
Medical equipment 750,000
2 Notes payable 550,000
Bought medical equipment
Unused medical supplies 100,000

4 Cash on hand 100,000
Bought medical supplies
J. Alegre, drawing 15,000
Withdraw for personal use
Cash on hand 50,000
Account receivable 60,000
110,000
7 Medical fees income
Income for the week
J Alegre capital
9 350,000
Additional investment
Notes payable 550,000

Payments of the note issued
40,000
Cash on hand
14 70,000 110,000
Accounts receivable
Medical fees income
Income for two weeks
Cash on hand 60,000

Accounts receivable
15 60,000
Collected in full patients
account
Unused medical supplies 30,000
Bought Medical Supplies
Cash on hand 40,000
Account receivable 70,000
28 110,000
Medical fees income
Income for two weeks
Taxes and licenses 20,000
Salaries expenses 45,000
30 Utilities expenses 40,000
105,000
Cash on hand
Paid the expenses
(See appendix for example)

Week 1 Accounting

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Task.

Check Your Understanding

2. Why recording of transaction is important?

3. What is the primary motive of individuals of having a business?

5. What is the basic accounting equation? Why do we need to follow it?

Task. Unknown Accounting Elements

ASSETS = LIABILITIES + EQUITY

Task 2. Transactions Affecting Changes in Accounting Values

Task 3. Journalizing Service Concern Transactions

Assets Owner’s Equity

Sept. 1 Dr. Alegre invested cash amounting to P950,000 and a clinic

2 Bought medical equipment on account from Manila Medical

4 Bought medical supplies for cash, P100,000

5 The doctor withdrew for his personal use, P15,000

7 Medical fees income eared for the week:

9 Dr. Alegre made and additional cash investment of P350,000

11 Full payment of the note issued to Manila Equipment Supply

14 Medical fees income for two weeks:

15 Collected in full the patient’s accounts of Sept. 7, P60,000

18 Bought medical supplies on account from AMESCO, P30,000

28 Medical fees income for two weeks

30 Paid the following expenses:

Unused medical supplies 100,000

Notes payable 550,000

Cash on hand 60,000

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