Scribd
Upload
284 views35 pages

The Accounting Equation

The document describes Paolo starting a delivery service on July 1, 2013 and the transactions that occurred throughout the month. It discusses Paolo investing cash and purchasing assets, taking out a loan, earning revenue from customers, and paying expenses. The accounting equation of assets = liabilities + owner's equity is used to illustrate the impact of each transaction on the company's finances. The purpose is to track the performance of the business through the month and determine any profit or loss using the accrual basis of accounting.

Uploaded by

mark turbanada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
284 views35 pages

The Accounting Equation

The document describes Paolo starting a delivery service on July 1, 2013 and the transactions that occurred throughout the month. It discusses Paolo investing cash and purchasing assets, taking out a loan, earning revenue from customers, and paying expenses. The accounting equation of assets = liabilities + owner's equity is used to illustrate the impact of each transaction on the company's finances. The purpose is to track the performance of the business through the month and determine any profit or loss using the accrual basis of accounting.

Uploaded by

mark turbanada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 35

THE ACCOUNTING

EQUATION
(FUNDAMENTALS OF ABM 1

MARK Q. TURBANADA
ASSETS= LIABILITIES +
OWNER’S EQUITY
ASSETS INVESTED BY THE OWNER

JULY 1- PAOLO STARTED A DELIVERY SERVICE ON


JULY 1, 2013. THE FOLLOWING TRANSACTIONS
OCCURRED DURING THE MONTH OF JULY. HE
INVESTED PHP800,000 CASH AND CARS
AMOUNTING TO PHP200,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH 800,000 1,000,000

CAR 200,000
BORROWINGS FROM BANKS

JULY
2 – REYES BORROWED PHP100,000
CASH FROM PNB FOR USE IN HIS BUSINESS
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH 100,000 100,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH 900,000 100,000 1,000,000

CAR 200,000
ASSET PURCHASED FOR CASH

JULY
7 – BOUGHT TABLES AND CHAIRS
FROM OROCAN AND PAID PHP45,000
CASH
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP45,000)

FURNITURES PHP45,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP855,000 PHP100,000 PHP1,000,000

CAR PHP200,000

FURNITURE PHP45,000
ASSET PURCHASED ON ACCOUNT

JULY15 – VARIOUS EQUIPMENT WERE


PURCHASED ON ACCOUNT FROM FURTUNE
FOR PHP55,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
EQUIPMENT PHP55,000

ACCOUNTS PHP55,000
PAYABLE
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP855,000 PHP100,000 PHP1,000,000

CAR PHP200,000 PHP55,000

FURNITURE PHP45,000

EQUIPMENT PHP55,000
CASH WITHDRAWAL BY THE OWNER

JULY
18 – REYES MADE A CASH
WITHDRAWAL OF PHP5,000 FOR PERSONAL
USE
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP5,000)

DRAWING (PHP5,000)
PARTICULAR ASSET LIABILITIES EQUITY
/ ACCOUNT
TITLE
CASH PHP850,000 PHP100,000 PHP1,000,00
0
CAR PHP200,000 PHP55,000 (PHP5,000)

FURNITURE PHP45,000

EQUIPMENT PHP55,000
PAYMENT OF LIABILITY

JULY
20 – THE ACCOUNT DUE TO FORTUNE
WAS PAID IN CASH
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP55,000)

LIABILITY (PHP55,000)
PARTICULAR ASSET LIABILITIES EQUITY
/ ACCOUNT
TITLE
CASH PHP795,000 PHP100,000 PHP1,000,000

CAR PHP200,000 (PHP5,000)

FURNITURE PHP45,000

EQUIPMENT PHP55,000
DETERMINING PROFIT THROUGH
OPERATION
ACCRUAL BASIS OF ACCOUNTING VS. CASH BASIS
OF ACCOUNTING
ACCRUAL BASIS RECOGNIZES REVENUE WHEN
EARNED AND RECOGNIZES EXPENSES WHEN
INCURRED
PROFIT MEASURES THE PERFORMANCE OF THE
COMPANY. IF THE REVENUE EXCEEDS EXPENSES,
THEN IT IS A NET PROFIT; OTHERWISE IT IS A NET
LOSS
RECEIVED CASH FOR REVENUE EARNED

JULY21 – A CUSTOMER HIRED THE


SERVICES OF REYES. CASH WAS RECEIVED
FROM THE CUSTOMERS.
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP15,000

SERVICE PHP15,000
REVENUE
PAID CASH FOR EXPENSES INCURRED

JULY
22 – CASH WAS PAID FOR THE
FOLLOWING: GAS AND OIL, PHP500 AND
CAR REPAIRS, PHP1000.
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP1,500)

GAS AND (PHP5,000)


OIL
REPAIR EXP. (PHP1,000)
REVENUE RENDERED ON ACCOUNT

JULY24 – ANOTHER CUSTOMER HIRED THE


SERVICES OF REYES AND PROMISED TO PAY
PHP16,000 ON JULY 31.
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
ACCOUNTS PHP16,000
RECEIVABLE
SERVICE PHP16,000
REVENUE
PAID EXPENSES INCURRED

JULY 25 – PAID PHP500 FOR TELEPHONE


BILL
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP500)

TELEPHONE (PHP500)
EXP.
REVENUE EARNED WITH A
DOWNPAYMENT, BAL. ON ACCOUNT

JULY27 – ANOTHER CUSTOMER HIRED THE


SERVICES OF REYES. A BILL WAS ISSUED TO
THEM FOR PHP20,000, 50% OF WHICH WAS
COLLECTED
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP10,000

ACCT. PHP10,000
RECEIVABLE
SERVICE PHP20,000
REVENUE
CUSTOMER’S ACCOUNT COLLECTED IN
CASH

JULY
30 – THE CUSTOMER ON JULY 24 PAID
50% OF HIS ACCOUNT IN CASH
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH PHP8,000

ACCT. (PHP8,000)
RECEIVABLE
PAID CASH FOR EXPENSES INCURRED

JULY31 – PAID PHP10,000 FOR RENTAL OF


OFFICE SPACE, AND SALARIES OF PHP9,000
PARTICULA ASSET LIABILITIES EQUITY
R/
ACCOUNT
TITLE
CASH (PHP19,000)

RENT EXP. (PHP10,000)

SALARIES (PHP9,000)
EXP.
THANK YOU !!!!!

You might also like