The document provides an introduction to accounting, focusing on business transactions and the chart of accounts. Business transactions are defined as financial occurrences affecting an enterprise’s assets, liabilities, or equity, and must be recorded using specific accounts. The chart of accounts categorizes various account types, such as assets, liabilities, and expenses, to facilitate the recording of transactions.

1. Introduction to Accounting

2. Introduction to Accounting
Chapter 2 Identifying Business Transactions
Fundamentals of Accounting
2.01 Business Transactions or Events
2.02 Chart of Accounts
2.03 Basic Accounting Equation
2.04 The T-Account and Normal Balance of Accounts

3. Introduction to Accounting
2.01 Business Transactions or Events
Fundamentals of Accounting
• A business is a financial occurrence or situation that
affects the assets, liabilities or equity of an enterprise
directly (called as accounting elements). Examples of
business transactions:
1. Investment of the owner
2. Purchase of goods
3. Sale of goods
4. Payment of expenses

4. Introduction to Accounting
2.01 Business Transactions or Events
Fundamentals of Accounting
• Take note that only those transactions or events related to the
business should be accounted and recorded.
• Business events are the occasional occurrence in the life of the
business like loss due to fire, decline in market value, etc.
• Business transactions are exchanges of equal monetary values.
This definition implies the following concept of understanding.
1. For every value received, another value is given away in
exchange (this is the dual effect of transaction that give rise to
the DOUBLE ENTRY BOOKKEEPING or the VENETIAN
MODEL).
2. These values are measured in terms of pesos which are
presumed to be equal.

5. Introduction to Accounting
2.01 Business Transactions or Events
Fundamentals of Accounting
The Accounts and Accounts Titles
• To make the information understandable to make the stakeholders,
all business transactions must be recorded by using an “account or
account titles”
• The Account is device used to record the changes in (increase or
decrease) in the accounting elements.
• e.g. Assets accounts, liability accounts, equity accounts,
revenue/income account and expenses account.
• Account titles are special or particular name of an account. For
example, asset account, its account titles are cash, accounts
receivable, inventory, etc.
• Account and account titles are summarized in the Chart of Account

6. Introduction to Accounting
2.02 Chart of Accounts
Fundamentals of Accounting
Chart of Account is the collection of account names recognized by a
firm and made available for registering transactions.
• Account Classification
1. Asset account – these are resources controlled and owned by the
business.
Example:
a) Cash – title of the account describing money, whether in paper or
coins, or in replacements for money, such as check, postal money
orders and bank drafts and trustees.
b) Account receivable – title of account for the sums collected by
services provided to clients though credit or selling to customers
products on accounts.

7. Introduction to Accounting
2.02 Chart of Accounts
Fundamentals of Accounting
c) Inventory – assets held for sale in the regular course business and
the manufacturing process for such sales; or materials or supplies to
be utilized in the manufacturing or service proceedings.
d) Prepared Expenses – expenses not already incurred or have not
expired but paid in advance, examples are prepaid rental, and prepaid
interest etc.
e) Unused Supplies – the account title for stationary and other supply
costs acquired for use but left in hand and remain unused.
f) Land – account title for the site occupied by an organization for its
daily business operations
g) Building – construction that are completed and owned by the
company where the transaction and the activities took place.

8. Introduction to Accounting
2.02 Chart of Accounts
Fundamentals of Accounting
h) Furniture and Fixtures – includes chairs, table, counters,
display cases and the like.
i) Machinery and equipment – physical assets owned by the
company for use in the manufacture or provision of goods
and services.
j) Investment – include financial assets that reflect the right
of a corporation to collect revenue through its bonds, shares
and real estates, etc.