1 _________________ 3 __________________

___________________ ___________________
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THE ACCOUNTING Basic Concepts

CYCLE ___________________ Owner’s Equity
___________________
___________________ ___________________

Basic Concepts
• Capital

___________________ ___________________
o Account • Withdrawals

 Revenues
Chart of Accounts

___________________ ___________________
o
Sample Chart of Accounts • Sales Revenue
Balance Sheet Accounts: • Service Revenue

___________________ ___________________
Account Title Account No.

Assets:
Cash …………………………………………….. 11  Expenses

___________________ ___________________
Accounts Receivable ………………………….. 12
Land …………………………………………….. 18
Building ………………………………………….
Office Equipment ……………………………….
19
13 • Rent Expense
• Salary or Wage Expense

___________________ ___________________
Liabilities:
Accounts Payable …………………………….. 21
Notes Payable …………………………………. 22 • Utilities Expense
Owner's Equity • Supplies Expense

___________________ ___________________
Vergel Bustamante, capital ………………….. 31
Vergel Bustamante, withdrawal ……………… 32 • Advertising Expense
Income Statement Accounts:
• Interest Expense
Property Tax Expense

___________________ ___________________
Revenues
Sales Revenue 41
•
Service Reveue 42

Expenses
Rent Expense 51

___________________ ___________________
Salary Expense 52
Utilities Expense 53

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Basic Concepts T-Accounts

o Ledger ___________________ ___________________

 Assets

• Cash
___________________ ___________________
•

•
Notes Receivable
Accounts Receivable ___________________ ___________________
•

•
Merchandise Inventory
Prepaid Expenses
Land
___________________ Sample Problem:
___________________
___________________ ___________________
•

• Building o On Sept. 1, he deposited P1,800,000 in a

• Other Asset Categories & Accounts bank account.

___________________ o Purchased land amounting to P1,410,000 on

Sept. 3.
___________________
___________________ ___________________
 Liabilities

o On Sept. 5, hired a building contractor.

• Notes Payable

___________________ ___________________
Gave initial cash payment of P150,000.
• Accounts Payable Balance amounting to P210,000 will be
• Other Liability Categories & Accounts given after 90 days.

___________________ o Sold a small portion of land for P110,000 to

another company on Sept. 10. Payment will ___________________
___________________ ___________________
be after 3 months.

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T-Accounts T-Accounts

o Purchased on credit office supplies on Sept.

14 amounting to P54,000. ___________________ All Accounts
___________________
___________________ ___________________
Ledger Combined Make
o On Sept. 20, received P15,000 as partial up the Ledger
payment for small portion of land sold.

o Paid P30,000 on office supplies taken from

supplier on Sept. 14.
___________________ ___________________
Solution: ___________________ Cash
Individual
Asset
Accounts
___________________
___________________ ___________________
___________________ Individual
___________________
___________________ ___________________
Accounts
Liability
Payable
Accounts

9/10
Accounts Receivable
110,000
___________________ ___________________
9/30 Balance 95,000
9/20 15,000
___________________ Capital
Individual
Owner’s Equity
Accounts
___________________
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T-Accounts

___________________ ___________________
Land T-Accounts
9/3 1,410,000
9/10 110,000

___________________ ___________________
9/30 Balance 1,300,000

Accounting
___________________ ___________________
Building
9/5
9/30 Balance
360,000
360,000
Equation: Assets = Liabilities + Owner's Equity
Office Equipment ___________________ Rules of Debit Credit Debit Credit Debit Credit ___________________
___________________ Debit and for for
___________________
9/14 54,000 for for for for
9/30 Balance 54,000
Credit: Increase Decrease Decrease Increase Decrease Increase
Accounts Payable ___________________ ___________________
___________________ ___________________
9/5 210,000
9/14 54,000
9/30 30,000
9/30 Balance 234,000

Vergel Bustamante, Capital

___________________ ___________________
9/1
9/30 Balance
1,800,000
1,800,000 ___________________ ___________________
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Journal Ledger

___________________ ___________________
Journal
General Journal Page 1
General Journal Page 1
Date Account Titles and Explanation LP Debit Credit

___________________ ___________________
Date Account Titles and Explanation LP Debit Credit

2006 2006
Sept. 1 Cash 11 1,800,000
Sept. 1 Cash 1,800,000

___________________ ___________________
Vergel Bustamante, capital 31 1,800,000
Vergel Bustamante, capital 1,800,000 Invested cash in the business.

Invested cash in the business.

3 Land 18 1,410,000

___________________ ___________________
Cash 11 1,410,000
Puchased land for office site.
3 Land 1,410,000
Cash 1,410,000 Ledger

___________________ ___________________
Puchased land for office site.
Cash Account No. 11
Date Explanation Ref Debit Credit Balance

___________________ ___________________
5 Building 360,000
2006
Cash 150,000 Sept. 1 1 1,800,000 1,800,000
Accounts Payable 210,000 3 1 1,410,000 390,000

___________________ ___________________
5 1 150,000 240,000
Hired a contractor to build
20 1 15,000 255,000
building. Paid part cash, 30 1 30,000 225,000
balanxce payable within 90 days.

___________________ Vergel Bustamante, Capital Account No. 31

___________________
___________________ ___________________
10 Accounts Receivable 110,000 Date Explanation Ref Debit Credit Balance
Land 110,000 2006
Sold the unused part of land to Sept. 1 1 1,800,000 1,800,000

___________________ ___________________
Earthlink Drugstore.

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Journal Ledger

Continuation... ___________________ Date Explanation

Cash
Ref Debit Credit
Account No. 11
Balance ___________________
___________________ ___________________
2006
Sept. 1 1 1,800,000 1,800,000

14 Office Equipment 54,000 3 1 1,410,000 390,000

___________________ ___________________
5 1 150,000 240,000
Accounts Payable 54,000
20 1 15,000 255,000
Purchased equipment on credit
from Lyon General Equipment. 30 1 30,000 225,000

20 Cash 15,000 ___________________ ___________________

___________________ ___________________
Accounts Receivable 15,000 Accounts Receivable Account No. 12

Collected part of receivable from Date Explanation Ref Debit Credit Balance
Earthlink Drugstore. 2006

30 Accounts Payable
Cash
30,000
30,000
___________________ Sept. 10
20
1
1
110,000
15,000
110,000
95,000 ___________________
Made partial payment of his
liability to Lyon General ___________________ Land Account No. 18
___________________
___________________ ___________________
Equipment .
Date Explanation Ref Debit Credit Balance
2006

___________________ ___________________
Sept. 3 1 1,410,000 1,410,000
10 1 110,000 1,300,000

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Ledger
Accounting Cycle

Date Explanation
Building
Ref Debit Credit
Account No. 19
Balance
___________________ ___________________
2006
Sept. 5 1 360,000 360,000
___________________ Transaction
Authorized ___________________
___________________ Prepare ___________________
___________________ ___________________
Financial Transaction
Office Equipment Account No. 13
Statements Takes Place
Date Explanation Ref Debit Credit Balance

___________________ ___________________
2006
Sept. 14 1 54,000 54,000
Prepare a

___________________ ___________________
Business
Trial Document
Accounts Payable Account No. 21
Balance
Date Explanation Ref Debit Credit Balance Preparation
2006
Sept. 5
14
1
1
210,000
54,000
210,000
264,000
___________________ ___________________
30 1 30,000 234,000
___________________ Entry
Posted
to ledger
Entry
Recorded
In Journal
___________________
___________________ ___________________
Vergel Bustamante, Capital Account No. 31
Date Explanation Ref Debit Credit Balance
2006

___________________ ___________________
Sept. 1 1 1,800,000 1,800,000

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Trial Balance

___________________
VB Real Estate Company ___________________
___________________
Trial Balance
September 30, 2006

Cash …………………………………………………. P 225,000 ___________________

___________________
Accounts Receivable ………………………………. 95,000
Land …………………………………………………. 1,300,000
Building ……………………………………………… 360,000
Office Equipment …………………………………..
Accounts Payable ………………………………….
54,000
P 234,000
___________________
Vergel Bustamante, capital ………………………. 1,800,000 ___________________
P 2,034,000 P 2,034,000
___________________
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