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bookkeeping practice."
GLIMPSE OF THE PAST
1. Historical records show that the beginnings of record -Thus, it can be said that LUCA PACIOLI systematized record
keeping or storing information dates back some 76000 years keeping through the DOUBLE-ENTRY BOOKKEEPING
ago in the Blombos caves of Africa SYSTEM.
3. Accounting in Ancient Egypt, China, Greece and Rome. 1. SINGLE/SOLE PROPRIETORSHIP is a business owned by
only ONE INDIVIDUAL.
4. Medieval Europe (13th Century)
- The introduction of double-entry bookkeeping. 2.PARTNERSHIP is an association of "TWO or MORE"
DEBIT is Latin for "he owes" persons who bind themselves to contribute money, property or
CREDIT is Latin for "he trusts" industry(services) to a common fund, with the intention of
dividing the profits among themselves.
*The MESSARI (Italian: Treasurer's) accounts of the city of
Genoa (1340) - is the oldest discovered record of a complete 3. CORPORATION is an artifical being(not natural, like human
double-entry system. being) created by opearation of LAW, having the rights of
This contain DEBITS and CREDITS in bilateral form. SUCCESSION, and the POWERS AND ATTRIBUTES
expressly authorized by law or incident to its existence.
5. LUCA PACIOLI and DOUBLE-ENTRY BOOKKEEPING
SYSTEM ~~~~~~~~~~~~~~~~~~~~~~~~~~
b. The JOURNAL was the merchant's private account book. 6. MANUFACTURING BUSINESS. This business makes
Entries consisted of a narrative debit, credit, and explanation in "finished goods" from "raw materials" or unassembled parts. It
one continuous paragraph. "produces" the goods that it sells.
(Sale of GOODS) (Buy=>"Produce"=>Sell)
c. The LEDGER - The money and date columns were almost
identical to those in modern ledgers, with entries consisting of ~~~~~~~~~~~~~~~~~~~~~~~~~~
brief paragraphs.
(DEBITS on the left side of a double page, and CREDITS on "ELEMENTS" of FS (Financial Statements)
the right)
7. INCOME/REVENUE is the gross INFLOW of economic
-TRIAL BALANCE is the end of Pacioli's accounting cycle. benefits during the period in the form of INFLOWS or
(Implications: Significance of a statement of assumptions or enhancements on assets or decrease in liabilities that result in
premises) increase in equity, other than those relating to contributions
from the owner or owners.
-DEBIT amounts from the old ledger are listed on the left side
of the balance sheet and CREDITS on the right. 8. EXPENSE is defined as the gross OUTFLOW of economic
benefits during the period in the course of ordinary activities
If the two total totals are equal, the old ledger is considered when these OUTFLOWS result in DECREASE in equity other
balanced. than those relating to distribution to owners.
~In simple terms, these are COSTS incurred to produce
If not (in balance), says Pacioli, "THAT WOULD INDICATE A income/revenue.
MISTAKE IN YOUR LEDGER, WHICH MISTAKE YOU WILL
HAVE TO LOOK FOR DILIGENTLY WITH THE INDUSTRY
AND INTELLIGENCE GOD GAVE YOU."
1. CASH is any medium of exchange that a bank will accept at Noncurrent asset.
face value. It includes coins and currencies, checks, money
orders and bank drafts. 12. BUILDING can be acquired by PURCHASE or by means of
CONSTRUCTION. Construction costs may include materials,
Current asset. labor, overhead, permit or license, Architect fee, Excavation
cost, etc.
2. TRADING SECURITIES are debt and equity securities that
are purchased with the intent of selling them in the "near term" Noncurrent asset.
or very soon.
13. MACHINERY & EQUIPMENT includes computers, air-
Current asset. conditioning units, electric fans, freezers, refrigerators, truck,
etc.
3. ACCOUNTS RECEIVABLES are claims against debtors or
customers arising from services rendered on account and sale Noncurrent asset.
of merchandise on account.
14. FURNITURE AND FIXTURES includes tables, chairs, filing
Current asset. cabinets, etc.
1. ACCOUNTS PAYABLE are amounts due to creditors for 12. The excess of INCOME over EXPENSES is called "NET
ASSETS ACQUIRED on account. (Current Liab) INCOME". True
2. NOTES PAYABLE(short-term) are amounts due to creditors 13. The excess of EXPENSES over INCOME is called "NET
"within" one year, evidenced by WRITTEN PROMISE to pay. LOSS". True
(Current Liab)
14. INCOME "increases" Owner's Equity. True
3. ACCRUED EXPENSES are amounts owed to others for
UNPAID EXPENSES. (Current Liab) 15. EXPENSE "decreases" Owner's Equity. True
4. UNEARNED INCOME is revenue collected by the business 16. ADDITIONAL INVESTMENT "increases" Owner's. True
in advance. (Received/ collected IN ADVANCE, but not yet
earned). (Current Liab) 17. OWNER's DRAWING "decreases" Owner's Equity. True
#NOTE: This account is also used to record the "PERMANENT 32. What is the "NORMAL BALANCE" of Owner's Capital,
withdrawal" of the owner. Revenue or Income..... CREDIT
(PERMANENT withdrawal means withdrawal of INVESTED
33. What is the "NORMAL BALANCE" of Owner's Drawing,
capital)
Expense..... DEBIT
10. DRAWINGS/TEMPORARY WITHDRAWALS. Charged to
34. What is the "NORMAL BALANCE" of Allowance for
this account are cash or other assets withdrawn by the owner
Doubtful Accounts, Accumulated Depreciation..... CREDIT
from the business for personal use (represented by the owner's
share in profit) ~~~~~~~~~~~~~~~~~~~~~~~~~~~
11. INCOME SUMMARY. It is a temporary account used at the Definitions, Classifications and Examples of Accounts
end of the accounting period to close income and
expenses.'This account shows the profit or loss for the period I.
before closing to the capital account. (Future topic)
-REAL accounts (or PERMANENT accounts) Sales an account used to summarize sale of goods of a
trade or merchandising business. This includes cash sales and
The real accounts are sales on account.
Assets
Liabilities and Service Income the earning derived from service rendered
Owners Equity. by a servicing business to its customers. This includes cash
and on account service.
Real accounts are reported in the Statement of Financial
Position(or "BALANCE SHEET"). They are not "closed" at the Professional Fees the earning derived from services
end of accounting period. rendered by a professional or professional servicing firm which
could be in cash or in collectibles to its clients.
"Balance Sheet" (future topic)
"Closing Entries" (future topic) Interest Income the earning representing the time value of
money derived from promissory notes received by the
---------------------------------------------------------------
business, whether in cash or collectibles in future.
-NOMINAL accounts (or TEMPORARY accounts)
Rent Income the income earned from allowing others to
use property or facility of the business.
The nominal accounts are
Income/revenues
Gain on Sales of other Assets the income derived from the
Expenses and
sales of assets used in the business operation. There is a gain
Owners Drawing. on sale if the proceeds exceed the book value or cost of
disposed asset. Examples are gain on equipment, gain on sale
Nominal Accounts are those that comprise the elements of the investments, gain on sale of land, etc.
Statement of Comprehensive Income(or INCOME
STATEMENT + OCI) the revenue and expenses accounts. Others
Revenue represents the earnings of the business from sales of "Estimated Expense"
goods or service rendered.
Doubtful Account Expenses the estimated amount of losses
Revenue accounts have normal CREDIT balance. Below are the uncollectible accounts arising from credit sales of the
some common revenue accounts.
current period. This is also called the debt expense or "CHARACTERS" :)
uncollectible account expense. a. BUSINESS = "Ikaw"
b. ASSET = Pag-aari "ng business"
Depreciation Expense represents the current periodic cost c. LIABILITY = Utang "ng business" sa iba (Ex. Bank)
for using depreciable plant assets. In accordance with the d. OWNER'S EQUITY = "Utang" "ng business" sa may-ari
systemic cost of depreciable asset should be allocated as (owner)
expense over its useful life.
.....................................
Others
EXAMPLE:
---------------------------------------------------------------
BUSINESS => "SM"
SUMMARY:
Revenue OWNER => "Henry Sy" (nag-invest ng P40M)
-Sales (Assume: Sole Proprietor siya, nag-iisang Owner)
-Service Income
-Professional Fees CREDITOR: "Bank" (nagpautang ng P60M para
-Interest Income makapagpatayo ng Building at makapag-operate ang SM)
-Rent Income
....................................
-Gain on Sales of other Assets
-Others
Naisipan ni Henry Sy na magtayo ng business at ang pangalan
ay SM. Ang ginawa niya ay nag-invest siya ng P40Million.
Expenses
Kulang pa ito kaya nangutang din ang Business sa Bank ng
-Cost of Sales
P60Million.
-Supplies Expense
-Salaries and Wages Expenses
..................................
-Insurance Expense
-Taxes and Licenses Expenses OWNER's EQUITY (or CAPITAL) - P40M
-Doubtful Account Expenses
-Depreciation Expense UNAWAIN
-Others SM = may sariling pagkatao (Artificial Being)
Henry Sy = may sarili ding pagkatao (Human Being)
BASIC ACCOUNTING EQUATION"
A = L + OE DAPAT HIWALAY SILA
..................................... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~
ANSWER:
*INCOME = P100 (INCOME = Earnings or Kita')
B. Notes Payable (SHORT-term) G. Mortgage Payable
NOTES = Utang "na may kasulatan" (Promissory Note) MORTGAGE: Utang na may SANLA
PAYABLE = Babayaran pa (hindi pa bayad) PAYABLE: Babayaran pa (hindi pa bayad)
TANDAAN: STORY:
Pag binayaran ang utang na NOTES PAYABLE, may "dagdag- Bumili ka ng LAND. Utang(Mortgage Payable)
bayad" na "INTEREST" (Interest Expense) *nakaSANLA ang Land
-Land ASSETS:
-Building Cash, Accounts Receivable, Prepaid Rent, Prepaid Insurance,
-Machinery and Equipment Office Supplies.
Office Building, Office Equipment, Furniture and Fixture.
C. Accrued "_______" Expense
ACCRUED: Hindi pa Bayad LIABILITIES:
EXPENSE: Gastusin Accounts Payable, Mortgage Payable
F. Bonds Payable (LONG-term) 3. Bought a small office CONDOMINIUM for 500000, giving
(Future Topic) 250000 CASH and signing a MORTGAGE payable in 10 years
(pero TANDAAN na NONCURRENT LIAB siya) :) for the balance.
DEBIT: Office Building 500000 .........................................
CREDIT: Cash 250000
CREDIT: Mortgage Payable 250000 (500000-250000) 12. COLLECTED one half of the AMOUNT DUE FROM
CLIENT on #6 (see #6)
.........................................
DEBIT: Cash 10000
4. HIRED a secretary with monthly salary of 8500. CREDIT: Accounts Receivable 10000 (20000 x 1/2)
......................................... 13. PAID "ONE YEAR RENT" for a special machine to be used
in business operations, 30000.
5. Bought office TABLES AND CHAIRS on CREDIT from
Mansion, Inc., 40000 DEBIT: Prepaid Rent 30000
CREDIT: Cash 30000
DEBIT: Furniture and Fixture 40000
CREDIT: Accounts Payable 40000 .........................................
8. PAID fifty percent of the amount OWED to Mansion, Inc. DEBIT BALANCE = Debits > Credits
(See #5) CREDIT BALANCE = Debits < Credits
DEBIT: Accounts Payable 20000 (40000 x 50%) Cash (All debits, minus all credits)
CREDIT: Cash 20000 = 477350 Debit Balance
11. RECEIVED 5000 as payment for the SERVICES rendered Furniture and Fixture
to one of their clients. =40000 Debit balance
ASSET: 850000(Cash) + 30000(Office Equipment) 7. Purchases computer INK, COUPON BOND PAPER and
LIABILITIES: 0 BALLPENS to be used in the office; terms: CASH basis, 4500.
CAPITAL: 880000(De Asis, Capital)
ASSET: 4500(Office Supplies) - 4500(Cash)
A=L+C LIABILITIES: 0
880000 = 0 + 880000 CAPITAL: 0
......................................... A=L+C
0=0+0
2. PAID barangay and municipal TAXES, 3500.
.........................................
ASSET: -3500(Cash)
LIABILITIES: 0 8. PAID fifty percent of the amount OWED to Mansion, Inc.
CAPITAL: -3500(Taxes and Licenses Expense) (See #5)
A=L+C .........................................
-51000 = 0 + (-51000)
15. PAID one half of the SALARY of the secretary (see #4)
.........................................
ASSET: -4250(Cash)
10. PAID 400 for the REPAIR of one of the computers LIABILITIES: 0
CAPITAL: -4250(Salaries Expense)
ASSET: -400(Cash)
LIABILITIES: 0 A=L+C
CAPITAL: -400(Repairs and Maintenance Expense) 0=0+0
A=L+C ~~~~~~~~~~~~~~~~~~~~~~~~~~
-400= 0 + (-400)
#NOTE
......................................... Increase in CAPITAL
-Revenue/Income/Gains
11. RECEIVED 5000 as payment for the SERVICES rendered
to one of their clients. Decrease in CAPITAL
-Expenses/Losses/Drawings/Withdrawals
ASSET: 5000(Cash)
LIABILITIES: 0 ~~~~~~~~~~~~~~~~~~~~~~~~~~
CAPITAL: 5000(Service Income)
ASSETS:
A=L+C Cash, Accounts Receivable, Prepaid Rent, Prepaid Insurance,
5000= 0 + 5000 Office Supplies.
Office Building, Office Equipment, Furniture and Fixture.
.........................................
LIABILITIES:
12. COLLECTED one half of the AMOUNT DUE FROM Accounts Payable, Mortgage Payable
CLIENT on #6 (see #6)
CAPITAL (Owner's Equity):
ASSET: 10000(Cash) - 10000(Accounts Receivable) De Asis Capital, De Asis Drawing
LIABILITIES: 0
CAPITAL: 0 REVENUES:
Service Income
A=L+C
0=0+0 EXPENSES:
Salaries and Wages Expense, Repairs and Maintenance
......................................... Expense, Taxes and Licenses Expense
13. PAID "ONE YEAR RENT" for a special machine to be used FABM 2
in business operations, 30000.
"STATEMENT OF CASHFLOWS"
ASSET: 30000(Prepaid Rent) - 30000(Cash)
LIABILITIES: 0 ~~~~~~~~~~~~~~~~~~~~~~
CAPITAL: 0
A.
A=L+C 1. Operating Activities
0=0+0 2. Investing Activities
3. Financing Activities
.........................................
~~~~~~~~~~~~~~~~~~~~~~
14. PAID "ONE YEAR INSURANCE" of the office
condominium, 25000. B.
Current Assets
Noncurrent Assets
Current Liabilities 2. Interest paid = OPERATING
Noncurrent Liabilities 3. Dividends received = OPERATING
Equity 4. Dividends paid = FINANCING
Income ALTERNATIVE:
Expenses 1. Interest received = INVESTING
2. Interest paid = FINANCING
~~~~~~~~~~~~~~~~~~~~~~ 3. Dividends received = INVESTING
4. Dividends paid = OPERATING
C.
OPERATING ACTIVITIES ~~~~~~~~~~~~~~~~~~~~~~
*Current assets (except loans "to")
*Current liabilities (except loans "from") POSITIVE Cashflow (Receipts > Payments)
*Income = net cashflow "PROVIDED BY"....
*Expenses
NEGATIVE Cashflow (Receipts < Payments)
INVESTING ACTIVITIES = net cashflow "USED IN"....
*Noncurrent assets
*Loans "to" (Receivable) - whether current or noncurrent ~~~~~~~~~~~~~~~~~~~~~~
FINANCING ACTIVITIES DEBIT: Assets (Ex. Cash, Supplies, Land, Building, Machinery,
*Direct Method Equipment, Furniture & Fixtures, etc)
CREDIT: Assets (Ex. Cash, Supplies, Land, Building, 12. Payment of Mortgage Payable
Machinery, Equipment, Furniture & Fixtures, etc)
DEBIT: Mortgage Payable
5. TEMPORARY withdrawal of "assets" by the owner.
CREDIT: Cash
DEBIT: Owner's Drawing (Ex. Valix, Drawing)
~~~~~~~~~~~~~~~~~~~~~~
CREDIT: Assets (Ex. Cash, Supplies, Land, Building,
Machinery, Equipment, Furniture & Fixtures, etc) 13. Expenses paid.
7. Purchase of "assets" "on account". CREDIT: _____ Payable (Ex. Salaries Payable, Rent Payable,
Utilities Payable, etc)
DEBIT: Assets (Ex. Supplies, Land, Building, Machinery,
Equipment, Furniture & Fixtures, etc) 15. Payment of #12
CREDIT: Accounts payable DEBIT: _____ Payable (Ex. Salaries Payable, Rent Payable,
Utilities Payable, etc)
8. Purchase of "assets" by "issuing a note".
CREDIT: Cash
DEBIT: Assets (Ex. Supplies, Land, Building, Machinery,
Equipment, Furniture & Fixtures, etc) ~~~~~~~~~~~~~~~~~~~~~~
DEBIT: Assets (Ex. Land, Building, Machinery, Equipment, CREDIT: Service Income (or Service Revenue)
Furniture & Fixtures, etc)
..................................
CREDIT: Mortgage payable
17. Rendered services "on account".
...................................
DEBIT: Accounts Receivable
10. Payment of Accounts Payable.
CREDIT: Service Income (or Service Revenue)
DEBIT: Accounts Payable
18. Rendered services by receiving a promissory note.
CREDIT: Cash
DEBIT: Notes Receivable
8. Payment of Notes Payable (nonintetest bearing)
CREDIT: Service Income (or Service Revenue)
DEBIT: Notes Payable
..................................
CREDIT: Cash
19. Collection of Accounts Receivable.
11. Payment of Notes Payable (intetest bearing)
DEBIT: Cash
DEBIT: Notes Payable
CREDIT: Accounts Receivable
DEBIT: Interest Expense
20. Collection of Notes Receivable (noninterest bearing)
DEBIT: Cash DEBIT: Accounts Payable
~~~~~~~~~~~~~~~~~~~~~~~~ .........................................
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"BUYER"
SELLER
1. Purchase of "merchandise" by paying "cash".
1. Sale of "merchandise" for "cash".
(Term: COD: Cash on delivery)
(Term: COD:Cash on delivery)
DEBIT: PURCHASES
DEBIT: Cash
CREDIT: Cash
CREDIT: SALES
.........................................
.........................................
2. Returned merchandise (#1)
2. Returned merchandise (#1 above)
DEBIT: Cash
DEBIT: SALES RETURNS and ALLOWANCES
CREDIT: PURCHASE RETURNS and ALLOWANCES
CREDIT: Cash
.........................................
.........................................
3. Purchase of "merchandise" "on account" (on credit)
3. Sale of "merchandise" "on account" (on credit)
Term: 2/10, n/30 (2% cash discount if paid within 10 days.
Credit term: 30 days) Term: 2/10, n/30 (2% cash discount if collected within 10 days.
Credit term: 30 days)
DEBIT: PURCHASES
DEBIT: Accounts Receivable
CREDIT: Accounts Payable
CREDIT: SALES
.........................................
.........................................
4. Returned merchandise (#3)
4. Returned merchandise (#3 above)
DEBIT: SALES RETURNS and ALLOWANCES *"Na kay BUSINESS ang mga
ininvest/contributions/capital/puhunan ni Owner.
CREDIT: Accounts Receivable ~parang "Utang" ni BUSINESS yung puhunan dahil may
"obligation" siyang ibalik yan sa may-ari/owner.
.........................................
Again, our POINT of VIEW is the "Business" (not the owner po)
5. Partial collection
~~~~~~~~~~~~~~~~~~~~~~~
DEBIT: Cash
#START
CREDIT: Accounts Receivable
~~~~~~~~~~~~~~~~~~~~~~~
.........................................
ASSETS:
6. Full Collection (Collected on the 30th day)
A. Current Assets:
DEBIT: Cash -Cash
-Trading Securities (Marketable Securities) (Fair value through
CREDIT: Accounts Receivable
Profit or Loss) (Short-term Investment)
"OR" -Accounts Receivable
-Allowance for Doubtful Accounts (Allowance for Bad debts)
4. Full Payment (Paid within 10 days) -Notes Receivable
-Merchandise Inventory***
DEBIT: Cash -Accrued "_____" Income
-Prepaid Expenses
DEBIT: Sales Discount a. (Supplies/Office Supplies/Store Supplies)
b. (Prepaid Rent, Prepaid Salaries, etc.)-ang keyword ay
CREDIT: Accounts Receivable "PREPAID"
-Advances "TO" Employess (Advances to Suppliers***)
-Other "current" assets***
PAALALA: "Mahaba"
B. Noncurrent Assets
(BAWAL basahin ng mga taong ayaw magka-IDEA sa
-Land
Accounting) :) -Building
-Machinery and Equipment
PAALALA: Learning Accounting takes time. Kailangan ng -Furniture & Fixtures
Patience, Sipag, Tiyaga (at Dasal na rin) :) -Accumulated Depreciation
-Intangible Assets***
~~~~~~~~~~~~~~~~~~~~
-Other "noncurrent" assets ***
Topic: "ASSETS"
~~~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~
Ang ASSET ay nahahati sa dalawang classifications.
1. "Current" Assets
#REVIEW
2. "Noncurrent" Assets
Assets = Liabilities + Owner's Equity
CURRENT = SHORT-TERM (generally, "1 year or less").
CHARACTERS" :)
a. BUSINESS = "Ikaw" Again, "1 year or less". :)
b. ASSET = Pag-aari "ng business"
c. LIABILITY = Utang "ng business" sa iba (Ex. Bank) **NONCURRENT = LONG-TERM (generally, "more than 1
d. OWNER'S EQUITY = "Utang" "ng business" sa may-ari year")
(owner) Again, "more than 1 year" :)
Magkaiba/hiwalay ang "Business" at "Owner" ("Entity" *Siyempre, pag sinabing "general", may exception. Ibig
Concept) sabihin, pwedeng hindi masunod yung guide na "1 YEAR" (sa
1. Business = Artificial being (our POINT OF VIEW) future natin pag-uusapan)
2. Owner = Human being
#ANO BA ANG MGA HALIMBAWA NG "CURRENT ASSETS"?
Tinawag po naming "Utang" ang Owner's Equity/Capital dahil
SAGOT:
ang" point of view natin ay si "Business" (not the owner)
Current Assets: May experience ka dati na laging "kalahati" lang kung
-Cash magbayad itong kaibigan mo (Mabait ka lang talaga kaya lagi
-Trading Securities (Marketable Securities) (Fair value through mo siyang pinapautang).
Profit or Loss) (Short-term Investment) TAKE NOTE: Hindi pa siya nagbabayad sa inutang niyang
-Accounts Receivable P100. Pero iaanticipate mo na yung hindi niya mababayaran.
-Allowance for Doubtful Accounts (Allowance for Bad debts) Ang tawag dito ay "Allowance for Doubtful Accounts".
-Notes Receivable Iaanticipate or ire-record mo nang "Allowance for Doubtful
-Merchandise Inventory*** Accounts" yung kalahati na P50 (P100/2=P50)
-Accrued "_____" Income
-Prepaid Expenses *Simple Math lang ang accounting di ba? pa divide-divide ka
a. (Supplies/Office Supplies/Store Supplies) lang. :)
b. (Prepaid Rent, Prepaid Salaries, etc.)-ang keyword ay
"PREPAID" SUMMARY:
-Advances "TO" Employess (Advances to Suppliers***) Pautang (Accounts Receivable-AR) P100
-Other "current" assets*** Anticipated na di babayaran (Allowance for Doubtful Accounts-
ADA) P50
.....................................
P100(AR)-P50(ADA)
"CASH" = P50 (ito na lang ang sa tingin mong makokolekta mo sa
future). In Accouting, "NRV or Net Realizable Value" ang tawag
A-L+OE dito.
100=60+40
~~~~~~~~~~~~~~~~~~~~~~
Si Business(Ikaw) ay may P100 ngayon
(P60, utang sa bank) Sa puntong ito, dapat ay naunawaan" na natin ang
(P40, utang sa owner) -CASH
-ACCOUNTS RECEIVABLE
Ano ang tawag sa P100? -ALLOWANCE FOR DOUBTFUL ACCOUNTS
Yan po ay CASH.
CASH = P100 ~~~~~~~~~~~~~~~~~~~~~~
*"CURRENT asset" siya, kasi pwede mo gastusin "anytime" (1
year or less) ADDITIONAL INFO:
*Paano kung ang "line of business" mo ay "Sale of SERVICES"
~~~~~~~~~~~~~~~~~~~~~~~~~ (Ex. Salon) or "Sale of GOODS" (Ex. Buy & Sell ng Damit)?
After ng ilang buwan, binawi mo na yung pera at naging P120. ~Ganun din pag bumili ka ng ballpen, pencil, or yung mga
nabibiling "SUPPLIES" sa NATIONAL BOOKSTORE, "Prepaid
Paki compute. Magkano po ang sobra? Expense" din ang tawag dun.
P120-P100=P20
~~~~~~~~~~~~~~~~~~~~~~
Ang tawag po sa sobrang P20 ay INTEREST(pag debt
security) or DIVIDEND(pag equity security) "ADVANCES TO EMPLOYEES"
*Simple Illustration lang po ito :)
P100, pinautang sa empleyado
(Wag muna sa komplikado)
Ang tawag: ADVANCES TO EMPLOYEES
Kailan siya naging TRADING SECURITIES?
~~~~~~~~~~~~~~~~~~~~~~~
Yun ay nung time na nag-invest ka.
Nag-invest ka at nawalan ka ng pera. Pero nagkaroon ka "NOTES RECEIVABLE"
PAUTANG. Yung pautang ang TRADING SECURITIES.
P100, pinautang pero may kasulatan (PROMISSORY NOTE)-
Sounds familiar? YES! at kumikita ng "INTEREST.
Para siyang "ACCOUNTS RECEIVABLES" na pautang. Ang tawag: Notes Receivable
Ang pinagkaiba lang po nila, ang TRADING SECURITES ay ~~~~~~~~~~~~~~~~~~~~~~~~
kumikita ng INTEREST / DIVIDENDS.
"ACCRUED INCOME"
~~~~~~~~~~~~~~~~~~~~~~~~~~
Nagpapaupa(Rent) ka ng kwarto(Ikaw yung may-ari).
"MERCHANDISE INVENTORY" Ang paupa mo ay P100 per month.
Si Business (IKAW), ay may P100. Walang ka pang natatanggap na pera kahit magkano(Advance
Pinambili mo ng "DAMIT (assuming ang business mo ay "BUY man or Deposit)
& SELL") para ibenta sa mas mahal na halaga.
Lumipas ang isang buwan. May kinita ka nang P100 para sa
BUY: Damit P100 isang buwang upa.
SELL: P120 Pero hindi mo pa natatanggap yung pera.
Kumita ka na, Pero hindi pa natatanggap yung pera.
P120-P100=P20.
Kumita ka ng P20. Ang tawag: ACCRUED INCOME
(Earned but not yet received)
Ano ang tawag dun sa DAMIT na binibenta mo?
Kumita na, hindi pa natatanggap yung pera
*Answer: MERCHANDISE INVENTORY
*Ito po ay isang uri din ng RECEIVABLE (Parang ACCOUNTS
~~~~~~~~~~~~~~~~~~~~~~~
RECEIVABLE) dahil may "mare-receive" kang pera.
"PREAPAID EXPENSE"
~~~~~~~~~~~~~~~~~~~~~~
Si Business (IKAW), ay may P100.
#NEXT TOPIC
Pumunta ka sa 7eleven at pinambili mo ng LOAD.
Ang next topic ay NONCURRENT ASSETS.
Globe or SMART? (ikaw na po mamili :) )
Ano ba ang examples ng Noncurrent Assets
Nung mga oras na inabot mo yung bayad sa cashier, nawalan
ka ng P100 Cash. Pero nagkaroon naman ng P100 load ang Answer:
celllphone mo. PROPERTY, PLANT AND EQUIPMENT or PPE (or FIXED
ASSET)
Ano yung tawag sa P100 load.
-Land
*Answer: Prepaid Expense
-Building
PREPAID EXPENSE: -Machinery and Equipment
~PAID but not yet incurred. -Furniture & Fixtures
"Bayad na" pero "di pa nagagamit" -Accumulated Depreciation(Building)
-Accumulated Depreciation(Machinery & Equipment Example:
-Accumulated Depreciation(Furniture & Fixtures) Bumili ka ng Land(Lupain) sa probinsya niyo for P100.
After 10 years, ang value ay naging P500.
(Take note: walang Accumulated Depreciation-Land) Tumaas yung value.
From P100, naging P500. Tumaas, nag-APPRECIATE.
OTHERS:
-Intangible Assets*** Kaya ang LAND ay isang klase ng PPE nag-aAPPRECIATE.
-Other "noncurrent" assets ***
#2
Ang sabi natin sa previous tutorial, ang Noncurrent Asset ay #ANO naman yung mga PPE na nagde-DEPRECIATE?
Long-term.
(DEPRECIATE= means lumiliit ang value habang tumatagal)
**NONCURRENT = LONG-TERM (generally, "more than 1
year") Answer:
-Building (alam niyo na ito)
Kaya siya "Long-term" kasi -Machinery and Equipment (alam niyo na ito)
-matagal ang buhay niya and/or -Furniture & Fixtures (Ex. Table, Chair, Cabinet, etc)
-matagal mo siya pwedeng magamit or mapakinabangan
Ano naman ang "ACCUMULATED DEPRECIATION"?
#1 LAND Example na lang natin yung BUILDING ng school niyo.
Ito ang "FAVORITE asset" ko kasi ang ganda ng meaning niya. Kunwari, 10 years ang buhay niya.
L-A-N-D BUILDING:
Cost: P100
L-ove (of GOD) Life: 10 years
A-lways "Appreciate" And
N-ever P100 / 10 years = P10* (Depreciation or pagliit ng value)
D-epreciate :)
End of:
You: Yan ba talaga ang meaning ng Land? Year 1 100-10*=90 (remaining value)
Year 2 90-10*=80
Me: Sa ACCOUNTING, siyempre hindi. :) Year 3 80-10*=70
Pinapaalala lang namin sayo na wag mong kalimutan si God. Year 4 70-10*=60
Alam mo ba na alam ni God lahat ng sakripisyo at paghihirap Year 5 60-10*=50
mo? Year 6 50-10*=40
Year 7 40-10*=30
Kami ay naniniwala na lahat ng nangyayari sayo, good or bad, Year 8 30-10*=20
ay nakadisenyo. Disenyo na kailangan mong pagdaanan para Year 9 20-10*=10
"makumpleto" ka. Year 10 10-10*=0 (remaining value)
Answer:
#TEKA-TEKA, mabalik nga tayo sa Accounting :) :) :)
Ito yung naipon or "na-aacumulate" na pagbaba ng value
APPRECIATE? DEPRECIATE? Ano yun?
*Hindi namin ipapaliwang ang susunod(kasi ang gusto namin
ay kayo ang mag-ANALYZE)
APPRECIATE:
~Ito ba yung pag may ginawa kang mabuti sa kaibigan mo,
End of
tapos na-APPRECIATE niya?
YEAR 1 Accumulated Depreciation = 10
Ay hindi po. :)
(P100-90)
Appreciate(Appreciation) means "increase in value".
YEAR 2 Accumulated Depreciation = 20
(100-80) or (10+10)
YEAR 3 Accumulated Depreciation = 30 Business:
(100-70) or (10+10+10) A = P100 (Pera/Asset)
L = P60 (Utang sa Bank)
YEAR 4 Accumulated Depreciation = 40 OE = P40 (Utang sa Owner)
(100-60) or (10+10+10+10)
In simple words, ang Pera(P100) ng Business (ASSET):
YEAR 5 Accumulated Depreciation = 50
YEAR 6 Accumulated Depreciation = 60 ~ay galing sa utang sa Bank P60 (LIABILITY), at galing sa
YEAR 7 Accumulated Depreciation = 70 utang sa Owner P40 (OWNER'S EQUITY)
YEAR 8 Accumulated Depreciation = 80
YEAR 9 Accumulated Depreciation = 90 A = L + OE
YEAR 10 Accumulated Depreciation = 100 P100 = P60 + P40
~~~~~~~~~~~~~~~~~~~~~~~ #REMINDER
~In Form, parang IISA lang ang "Business" at "Owner"
"INTANGIBLE ASSETS" ~Pero in Substance, IKAW lang si " BUSINESS" (at "parang"
pinautang ka lang ng sarili mo)
Examples:
1. Patent (inventions) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
2.Copyright (Books, musical composition)
3.Trademark(Logo) "DEBIT AND CREDIT"
4. Franchise (Jollibee, Mcdo, Starbucks, 7eleven, etc)
5. Others 1. Bumili ka ng Laptop at nagbayad ka ng P50000
AE: ................................
Debit: _____ expense
Credit: _____ payable 5. Depreciation
DEFERRALS AE:
Debit: Doubtful accounts expense
3. Prepaid Expense Credit: Allowance for doubtful accounts
AE: "ACCRUALS"
Debit: _____ expense
Credit: Prepaid _____ ~~~~~~~~~~~~~~~~~~~~~~~
(used portion)
ACCRUALS vs DEFERRALS
b. EXPENSE Method
-ACCRUALS ("no" cash involved)
Original Entry: -DEFERRALS ("with" cash involved)
Debit: _____ expense
Credit: Cash ~~~~~~~~~~~~~~~~~~~~~~~
AE: GUIDE:
Debit: Prepaid _____
Credit: _____ expense ~~~~~~~~~~~~~~~~~~~~~~~
(unused portion)
ACCRUALS
................................ 1. ACCRUED EXPENSE
- "Incurred", but "not yet paid"
4. Unearned Income (or Deferred Income)
Incurred
a. LIABILITY Method Not yet paid
....................................................... As of March 1:
Prepaid expense: 36,000 (load balance)
EXAMPLE: (GLOBE Prepaid Loadcard) Expense: 0
Paki compute. Magkano po ang sobra? Paano kung nagtext ako at nabawasan ng Piso?
P120-P100=P20 (Hula ko yung iba, nag CALCU pa. Ok. Para ~Ang PREPAID EXPENSE mo ay P99 na lang (P100-P1)
SURE. :) ) In short, ang PREPAID EXPENSE ang yung amount ng load
na "HINDI MO PA NAGAGAMIT".
Ang tawag po sa sobrang P20 ay INTEREST(pag debt
security) or DIVIDEND(pag equity security) **PAANO KUNG LOAD CARD yung binili mo at hindi mo pa
*Simple Illustration lang po ito :) naloload sa cellphone?
(Wag muna sa komplikado) Answer: Prepaid expense pa rin yung LOAD CARD mo.
Kaya nga ang tawag din ay PREPAID LOAD CARD. :)
NOTE:
*Ito yung tinatawag na "TRADING SECURITIES" (DEBT ~Ganun din pag bumili ka ng ballpen, pencil, or yung mga
Securities & EQUITY Securities) nabibiling "SUPPLIES" sa NATIONAL BOOKSTORE, "Prepaid
Expense" din ang tawag dun.
Kailan siya naging TRADING SECURITIES?
Yun ay nung time na nag-invest ka. #Scenario 5
Nag-invest ka at nawalan ka ng pera. Pero naging PAUTANG. P100, pinautang sa empleyado
Yung pautang ang TRADING SECURITIES. Ang tawag: ADVANCES TO EMPLOYEES
#NoncurrentLiabilities ~~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~~ *"INCOME & OE" are friends (kaya pareho silang CREDIT)
:)
III. *"EXPENSE & OE" are enemies (kaya magkaiba) :(
#ASSUME (Independent)
Binalik ni Business yung P10 Cash kay "owner" OWNER's DRAWING & OE are enemies (kaya magkaiba) :(
SUMMARY:
Income: Credit (friend of OE) :)
REAL accounts (or PERMANENT accounts)
Expense: Debit (enemy) :( -Assets
Owner's Drawing: Debit (enemy) :( -Liabilities
-Owners Equity
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
NOMINAL accounts (or TEMPORARY accounts)
Definitions, Classifications and Examples of Accounts -Income/revenues
-Expenses and
I.
-Owners Drawing
-REAL accounts (or PERMANENT accounts)
---------------------------------------------------------------
The real accounts are
Assets II.
Liabilities and
Owners Equity. The REVENUE Accounts
Real accounts are reported in the Statement of Financial Revenue represents the earnings of the business from sales of
Position(or "BALANCE SHEET"). They are not "closed" at the goods or service rendered.
end of accounting period.
Revenue accounts have normal CREDIT balance. Below are
"Balance Sheet" (future topic) some common revenue accounts.
"Closing Entries" (future topic)
Sales an account used to summarize sale of goods of a
Accounting Tutorial 02 trade or merchandising business. This includes cash sales and
(ACCOUNT TITLE) sales on account.
https://m.facebook.com/TheAccountant.Tutorial/photos/a.7112
58305656378.1073741825.264268673688679/127207840624 Service Income the earning derived from service rendered
1029/?type=3&source=48 by a servicing business to its customers. This includes cash
and on account service.
---------------------------------------------------------------
Professional Fees the earning derived from services
-NOMINAL accounts (or TEMPORARY accounts) rendered by a professional or professional servicing firm which
could be in cash or in collectibles to its clients.
The nominal accounts are
Income/revenues
Interest Income the earning representing the time value of
Expenses and
money derived from promissory notes received by the
business, whether in cash or collectibles in future.
Owners Drawing.
Nominal Accounts are those that comprise the elements of the Rent Income the income earned from allowing others to
Statement of Comprehensive Income(or INCOME use property or facility of the business.
STATEMENT + OCI) the revenue and expenses accounts.
Gain on Sales of other Assets the income derived from the
These accounts are called temporary because they are sales of assets used in the business operation. There is a gain
"closed" or put to zero balance at the end of the accounting on sale if the proceeds exceed the book value or cost of
period. Owners Drawing (not an income statement account) is disposed asset. Examples are gain on equipment, gain on sale
also closed or put to zero balance. investments, gain on sale of land, etc.
Others
"Estimated Expense"
Others
---------------------------------------------------------------
SUMMARY:
Revenue
-Sales
-Service Income
-Professional Fees
-Interest Income
-Rent Income
-Gain on Sales of other Assets
-Others
Expenses
-Cost of Sales
-Supplies Expense
-Salaries and Wages Expenses
-Insurance Expense
-Taxes and Licenses Expenses
-Doubtful Account Expenses
-Depreciation Expense
-Others