ABM1_Concepts and Principles.pptx

1. RULES of
DEBIT
and
CREDIT

2. Expanded Accounting Equation
ASSETS = LIABILITIES + Owner’s
Equity
+ Revenues
- Expenses
- Withdrawal

3. Mr. Ramsey Jerusalem Started a car wash business on January 1, 2022.
His initial investment were cash amounting to 50,000 and one piece of cleaning
Equipment worth 20,000. Compute for the correct total owner’s equity as of
January 1, 2022.
Account Title ASSETS = LIABILITIES + Owner’s
Equity
Cash 50,000
Cleaning
Equipment
20,000
Total 70,000

4. Mr. Ramsey Jerusalem Started a car wash business on January 1, 2022.
His initial investment were cash amounting to 50,000 and one piece of cleaning
Equipment worth 20,000. Compute for the correct total owner’s equity as of
January 1, 2022.
Account Title ASSETS = LIABILITIES + Owner’s
Equity
Jerusalem,
Capital
70,000 70,000

5. Assume that on January 15, 2022, Mr Jerusalem borrowed 40,000 cash from his
friend to increase the working capital. On January 16, 2022, he used 5,000 of the
money borrowed to buy cleaning supplies. Compute for the correct total assets as
of January 16, 2022.
Account Title ASSETS = LIABILITIES + Owner’s
Equity
Cash 85000
Cleaning
Equipment
20000
Cleaning
Supplies
5000
Loan Payable 40000
Jerusalem,
Capital
70000

6. Ms. Joy Alberca Started a food catering business on January 1, 2021. By
December 31, 2021 assets totaled 150,000 and total owner’s equity was 90,000.
Compute for the correct total liabilities as of December 31, 2021.
Account Title ASSETS = LIABILITIES + Owner’s
Equity
150,000 90,000
In addition, Joy Alberca reported total catering revenues of 80,000 and total
expenses of 45,000 for 2021. Compute the correct net income for the year ended
December 31, 2021.

7. Assume that Joy had initial investment of 60,000 cash and there were no other
transactions that tool place in 2021 that would affect owner’s equity aside from
owner’s cash withdrawal. Compute the cash withdrawal made by Joy in 2021.
ASSETS = LIABILITIES + Owner’s
Equity
Revenues
Expenses
Withdrawal

8. TRY THIS!
August 21, 2020 Mr. Argine M invested PHP500,
000 in a coffee shop business .August 30, 2020
purchased equipment for his business
amounting to PHP100, 000 by cash. September
6, 2020 started his operations and made a sales
for that day amounting to PHP20, 000. Compute
his total assets as of Sep. 6, 2020

9. Normal
balance
Increase
through
Decrease
through
ASSETS
LIABILITIES
OWNER’S EQUITY
 OWNER, Capital
 Owner, Drawing
Revenues
Expenses
Contra Assets
 Allowance for doubtful
account
 Accumulated Depreciation

11. Normal
balance
Increase
through
Decrease
through
ASSETS
LIABILITIES
OWNER’S EQUITY
 OWNER, Capital
 Owner, Drawing
Revenues
Expenses
Contra Assets
 Allowance for doubtful
account
 Accumulated Depreciation

12. Debit
CASH

13. Debit
Account
Payable

14. Credit
Allowance for
doubtful
account

15. Credit
Service
Income

16. Credit
Mortgage
Payable

17. Debit
Prepaid Rent

18. Debit
Purchase of
Equipment

19. Debit
Payment of
Salary

20. Credit
Initial
investment

21. Debit
Business
permit and
Licenses

22. Journal
&
Ledger
Here starts the
lesson!

23. REGLDE
It is known as the book of final
entry.
01
LEDGER

24. LONJARU
It is called the book of original
entry.
2
JOURNAL

25. TPGSINO
It is the process of transferring
information from the journal to the
ledger.
3
POSTING

26. ACHS SERITEPC
ORUAJLN
book of original entry where
all cash receipt
transactions
4
CASH RECEIPTS
JOURNAL

27. ZLOIAIJUNGRN
Known as the process of entering
or recording transaction data in
the journal.
5
JOURNALIZING

28. JOURNAL
 chronological record of the entity’s
transactions.
 referred to as the book of original entry
 the debit and credit effects on specific
accounts.

29. Ỽ the most basic/simplest
journal.
Ỽ has spaces for dates, account
titles and explanations,
references, and two amount
columns.
₰ used to record specific types of
high-volume information that would
otherwise be recorded in and
overwhelm the general ledger.
General Journal Special Journal

30.  significant contributions to the recording
process:
- It discloses in one place the complete effects
of a transaction.
- It provides a chronological record of
transactions.
- It helps to prevent or locate errors because
the debit and credit amounts for each entry
can be easily compared.
General Journal

31. ZLOIAIJUNGRN
Known as the process of entering
or recording transaction data in
the journal.
5
JOURNALIZING

32. ● The date of the transaction
which is entered in the Date
Column.
● The debit account title (that is,
the account to be debited) which
is entered first at the extreme left
margin of the column headed
“Account Titles and
Explanation,” and the amount of
the debit is recorded in the Debit
column.
● The credit account title (that is,
the account to be credited)
which is indented and entered
on the next line in the column
headed “Account Titles and
Explanation,” and the amount of
the credit is recorded in the
Credit column.
Journal

33. ● A brief explanation of the
transaction which appears on
the line below the credit account
title. A space is left between
journal entries. The blank space
separates individual journal
entries and makes the entire
journal easier to read.
● The column titled Ref. (which
stands for Reference which is
left blank when the journal entry
is made. This column is used
later when the journal entries are
transferred to the ledger
accounts.
Journal

34. A journal entry should contain
the Date, Account Titles and
Explanation, Posting Reference,
Debit, and Credit. Below is a
sample of a General Journal.

36. • August 21, 2020 Mr. Sipat
invested PHP500, 000 in a coffee
shop business.
• August 30, 2020 purchased
equipment for his business
amounting to PHP100, 000 by
cash.
• September 6, 2020 started his
operations and made a sales for
that day amounting to PHP20,
000.
Transactions Date ACCOUNT TITLES
AND EXPLANATION
P.R. DEBIT CREDIT

37. August 21, 2020 Mr. Sipat invested
PHP500, 000 in a coffee shop
business.
DATE ACCOUNT TITLES AND
EXPLANATION
P.R. DEBIT CREDIT
2020
Aug 21 Cash
Sipat Capital
Initial Investment
500,000
500,000

38. August 30, 2020 purchased equipment
for his business amounting to PHP100,
000 by cash.
DATE ACCOUNT TITLES AND
EXPLANATION
P.R. DEBIT CREDIT
2022
Aug 30 Equipment
Cash
Purchased Equipment for cash
100,000
100,000

39. September 6, 2020 started his
operations and made a revenue for
that day amounting to PHP20, 000.
DATE ACCOUNT TITLES AND
EXPLANATION
P.R. DEBIT CREDIT
2022
Sep 6 Cash
Service Revenue
Cash Revenue for shop operations
20,000
20,000

40. DATE ACCOUNT TITLES AND
EXPLANATION
P.R. DEBIT CREDIT
2022
Aug 21
Cash
Sipat Capital
Initial Investment
500,000
500,000
Aug 30 Equipment
Cash
Purchased Equipment for cash
Sep 6
Sales
Cash
Cash Sales for shop operations
100,000
100,000
20,000
20,000

41. An entry like these is
considered a Simple
Entry.
An entry that requires three
or more accounts is a
Compound Entry.

42. On December 25, 2020, Mr. J Sipat
purchased furniture costing PHP80, 000. He
pays PHP30, 000 cash and agrees to pay the
remaining PHP50,000 on account .
DATE ACCOUNT TITLES AND
EXPLANATION
P.R. DEBIT CREDIT
2020
Dec 25
Furniture and Fixture
Cash
Bought furniture by paying cash
and the balance on account
80,000
30,000
Accounts Payable
50,000

43. Special Journal

44. Special Journal
● used to record specific types of high-volume information
that would otherwise be recorded in and overwhelm the
general ledger.
Sales
Journal
(SJ)
Purchase
Journal
(PJ)
Cash
Receipts
Journal
(CRJ)
Cash
disburse
ment
Journal
(CDJ)

45. A. Sales Journal (SJ)
used to record all sales on credit (on
account).
used in recording several sales transactions on
account.
charge invoice or sales invoice to various
customers or clients.

46. SALES JOURNAL S1
Date Invoice
No.
Customer
Name
Ref Dr. Accounts Receivable
Cr. Sales
Title Page
Number
Date of
Transactions

48. b. Purchase Journal
used to record all purchases of
inventory/merchandise on credit (or on
account).
used to record recurring transactions of
purchases on account.
invoices from the supplier of the company

49. Purchase Journal
PURCHASE JOURNAL P1
Date Suppliers Name Ref Dr. Purchases
Cr. Accounts Payable
Date of
Transactions
Title Page
Number

51. C. Cash Receipts Journal
book of original entry where all cash receipt transactions
are recorded such as cash investment, loans, cash sales,
collections of customers’ accounts and cash refund.
used to record transaction involving receipt or
collection of cash.
Official Receipts or Cash receipts issued by the
business.

52. CASH RECEIPTS JOURNAL CR1
Date Official
Receipt
No.
Received
from
Ref Cash
Dr
Sales
Discount
Dr
Account
Receivab
le Dr(Cr)
Sales
Cr
Other
Account
s
Cr
Title Page
Number
Date of
Transactions

54. D. Cash disbursement Journal
used to record all transactions involving cash
payments.
It is the journal where all cash payments are
recorded.
check voucher or cash voucher, cash receipts or
official receipts from suppliers or vendors.

55. CASH DISBURSEMENT JOURNAL CD1
Date Check
Vouche
r No.
Paid to Ref Account
Payable
Dr
Purchase
s
Dr
Account
Accounts
Dr(Cr)
Purch
ase
Disco
unt
Cr
Cash
Cr
Title Page
Number
Date of
Transactions

57. Special Journal General Journal
Journal Journal
Show the accounts affected
and the related amounts in
money column Show the accounts affected and the
related amounts in money column
Promotes division of labor
Saves time in journalizing
Saves time in posting
transactions
Aids in decision-making

59. Ledger

60. Ledger
“book of final entry‟
Collective record of individual accounts used by a
business
referred to as the T-Account
Posting is the process of transferring information from
the journal to the ledger

61. Advantages
It provides detailed information about revenues
and expenses in one place
Provides detailed information about assets,
liabilities and OE
It assists management in monitoring business
performances through information in a ledger
A tool for auditors to track the flow of business
transactions

63. General Ledger

64. Subsidiary
Ledger

65. Subsidiary Ledger
An example of a subsidiary ledger is the individual record of
various payables to suppliers. The total amount of these
subsidiary ledgers should equal the balance in the Accounts
Payable general ledger.
group of like accounts that contains the independent data of a
specific general ledger.
created or maintained if individualized data is needed
for a specific general ledger account

67. Purpose of subsidiary
keeping Subsidiary Ledgers is for accuracy and
efficiency
It provides an internal control over record
keeping.

68. DATE ACCOUNT TITLES AND
EXPLANATION
P.R. DEBIT CREDIT
2022
Aug 21 Cash
Sipat Capital
Initial Investment
500,000
500,000
Aug 30 Equipment
Cash
Purchased Equipment for cash
Sep 6
Service Revenue
Cash
Cash Income for shop operations
100,000
100,000
20,000
20,000

69. Account Title: CASH
DATE EXPLANATION P.R. DEBIT CREDIT BALANCE
2020
Aug
21
Initial Investment 500,00
Aug
30
Purchased Equipment for
cash
100,000
Sep
6
Cash Sales for shop
operations
20,000

70. Account Title: Capital
DATE EXPLANATION P.R. DEBIT CREDIT BALANCE
2020
Aug
21
Initial Investment 500,00

71. Account Title: Equipment
DATE EXPLANATION P.R. DEBIT CREDIT BALANCE
2020
Aug
30
Purchased Equipment for
cash
100,000

72. Account Title: Service Revenue
DATE EXPLANATION P.R. DEBIT CREDIT BALANCE
2020
Aug
21
Cash Income for shop
operations
20,000

73. Journalize the following transactions of Tam-is Bakeshop
for the month of December 2020.
Use the provided format below.
December 3 Ms. Tam-is invested Php300, 000 in the
business.
Dec 5 Paid cash Php 15,000 for electricity bill for the
month.
Dec 15 Purchased kitchen equipment Php50, 000 on
account.
Dec 25 Paid baker‟s salary for the month, Php20, 000.
Dec. 30 purchased supplies worth 25,000. Paid the 13,000
cash and the remaining balance on account

75. TRUE OR FALES

76. TRUE
The ledger is
sometimes called
a T-Account

77. TRUE
Posting is the process
of transferring
information from the
journal to the
Ledger

78. TRUE
Their are at least
two accounts in a
journal entry

79. FALSE
In posting a transaction,
you need to have the
column for the date of
the transaction (Year,
Month, Day)

80. TRUE
The Journal is
sometimes call the
book of original
entry

81. FALSE
In posting a transaction,
you need to have the
column for the date of
the transaction (Year,
Month, Day)