ACCOUNTING TUTORIAL (PART 1)

"BASIC" ACCOUNTING EQUATION"

A = L + OE
Assets = Liabilities + Owner's Equity
P100 = P60 + P40
"CHARACTERS" :)
a. BUSINESS = "Ikaw"
b. ASSET = Pag-aari "ng business"
c. LIABILITY = Utang "ng business" sa iba (Ex. Bank)
d. OWNER'S EQUITY = "Utang" "ng business" sa may-ari (owner)
#CommonMistake
Ang "Business" at ang "Owner" ay IISA..
*MALI po yan. Para maintindihan natin ang Accounting Equation (A=L+OE), ang una dapat nating
isipin ay magkaiba ang "BUSINESS" at ang "OWNER"
#HALIMBAWA
BUSINESS(Ikaw) = Buy & Sell ng damit
~kung ikaw si BUSINESS, kailangan mo ng "pera" pambili ng damit.
#QUESTION
Saan manggagaling ang pera?
Answer:
a. Mangungutang sa iba (Ex. Bank) P60
b. "Mangungutang" sa may-ari or owner P40
P60 + P40 = P100
Ang pera na ngayon ni "Business" ay P100
Business:
A = P100 (Pera/Asset)
L = P60 (Utang sa Bank)
OE = P40 ("Utang" sa Owner)
In simple words, ang Pera ng Business na P100 (ASSET):
~ay galing sa utang sa Bank P60 (LIABILITY), at galing sa "utang" sa Owner P40 (OWNER'S
EQUITY)
A = L + OE
P100 = P60 + P40
#REMINDER
~In Form, parang ISA lang ang "Business" at "Owner"
~Pero in Substance, IKAW lang si " BUSINESS" (at "parang" pinautang ka lang ng sarili mo)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"DEBIT AND CREDIT"
1. Bumili ka ng Laptop at nagbayad ka ng P50000
DEBIT: Laptop 50000
CREDIT: Cash 50000
Nagkaroon ka ng Laptop, kaya DEBIT
Nawalan ka naman ng Cash, kaya CREDIT
NOTE: (ASSET)
Pag "nagkakaroon" ka ng Asset(or bagay) = DEBIT
Pag "nawawalan" ka ng Asset (or bagay) = CREDIT
..............................................
2. Bumili ka ng Laptop pero utang, P50,000
DEBIT: Laptop 50000
CREDIT: Accounts Payable 50000
Nagkaroon ka ng Laptop, kaya DEBIT
Nagkaroon ka ng utang(Accounts Payable), kaya CREDIT
NOTE: (LIABILITY or UTANG)
Pag "nagkakaroon" ka ng utang = CREDIT
Pag "nawawalan" ka ng utang = DEBIT
#IMPORTANT
Baliktad ang ASSET at LIABILITY
(ASSET)
DEBIT: pag "nagkakaroon" ka ng Asset(or bagay)
CREDIT: pag "nawawalan" ka ng Asset (or bagay)
(LIABILITY)
CREDIT: pag "nagkakaroon" ka ng utang
DEBIT: pag "nawawalan" ka ng utang
..............................................
3. Binayaran mo na ang utang..
DEBIT: Accounts Payable 50000
CREDIT: Cash 50000
Nawala na ang utang (Accounts Payable), kaya DEBIT.
Nawalan ka din ng Cash, kaya CREDIT.
*Yehey, wala nang utang. :)
..............................................
4. Ginamit mo yung Laptop sa business mong Accounting Tutorial. Kumita ka ng P20,000 pero
"pautang".
DEBIT Accounts Receivable 20,000
CREDIT Service Income 20,000
Nagkaroon ka ng "pautang"(Asset siya kasi makokolekta mo siya), kaya DEBIT
Nagkaroon ka din ng kita o income, kaya CREDIT.
NOTE: (INCOME or KITA)
Pag "nagkakaroon" ka ng income = CREDIT
..............................................
5. Nakolekta mo na yung pautang mo sa tinuruan mong estudyante P20,000.
DEBIT Cash 20000
CREDIT Accounts Receivable 20000
Nagkaroon ka ng Cash, kaya DEBIT
Nawalan ka ng pautang(Accounts Recevable), kaya CREDIT
...............................................
6. Nagbayad ka ng P10,000 sa inuupahan mong lugar para sa tutorial.
DEBIT Expense 10000
CREDIT Cash 10000
Nagkaroon ka ng gastos(expense), kaya DEBIT
Nawalan ka din ng cash, kaya CREDIT.
NOTE: (EXPENSE or GASTOS)
Pag "nagkakaroon" ka ng gastusin = DEBIT
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Point of view of the BUSINESS:
Increase in Asset
Nagkakaroon ng asset ang business kasi pwedeng
-nanggaling sa inutang niya (ito ang pautang or investment ng creditors)
-nanggaling sa owner (ito ang initial or additional investment ng owner)
-galing sa serbisyo/benta
Decrease in Asset
Nawawalan naman ng asset ang business kasi pwedeng
-nagbayad siya ng utang
-ibinalik na yung capital sa owner (withdrawal by the owner)
-may mga gastusin o expenses
Equity/Capital = Investment + Revenue - Expenses - Drawings(Withdrawal)
Increase in Equity
-Tumataas ang Equity pag mas malaki ang kita(revenue) kaysa sa gastos(expenses). Ang tawag dito
ay "Net Income".
-Pwede rin tumaas ang Equity pag nadadagdagan ang capital(pera o gamit) ng business.
Decrease in Equity
-Bumababa ang Equity pag mas malaki ang gastos(expenses) kaysa sa revenue or kita. Ang tawag
dito ay "Net Loss".
-Pwede rin bumaba ang Equity pag ibinalik na ang capital(pera o gamit) sa may-ari. (Withdrawal by
the owner)
Normal Balances:
DEBIT (DEAL)
D-ividends (Drawings)
E-xpenses
A-sset
L-osses
CREDIT (GIRLS)
G-ains
I-ncome
R-evenues
L-iabilities
S-tockholder's (or Owner's) Equity

ACCOUNTING TUTORIAL (Part 2)

"ASSETS"
PAALALA: "Mahaba"
~BAWAL basahin ng mga taong ayaw magka-IDEA sa Accounting :)

It takes time to Learn and Understand.

The key is "REPETITION. (basahin lamang po ng maraming beses) :)

You need Patience, Perseverance.. Sipag, Tiyaga (at Dasal na rin) 😇

Tip:
"Don't MEMORIZE, INTERNALIZE" 😇

~~~~~~~~~~~~~~~~~~~~
Topic: "ASSETS"
~~~~~~~~~~~~~~~~~~~~
#REVIEW
Assets = Liabilities + Owner's Equity
CHARACTERS" :)

a. BUSINESS = "Ikaw"
b. ASSET = Pag-aari "ng business"
c. LIABILITY = Utang "ng business" sa iba (Ex. Bank)
d. OWNER'S EQUITY = "Utang" "ng business" sa may-ari (owner)
Tinawag po nating "Utang" or "Obligation" ang Owner's Equity/Capital dahil ang point of view natin ay si "Business"
Dahil na kay BUSINESS ang mga ininvest/contributions/puhunan ni Owner, parang may "Utang" si BUSINESS dahil
may "obligation" siyang ibalik ang mga yan sa may-ari/owner.
Again, our POINT of VIEW is the "Business" (not the owner po)
**
Magkaiba/hiwalay ang "Business" at "Owner" ("Entity" Concept)
1. Business = as if an "Artificial being" (our POINT OF VIEW)
2. Owner = Human being
~~~~~~~~~~~~~~~~~~~~~~~
#START
~~~~~~~~~~~~~~~~~~~~~~~
ASSETS:
A. Current Assets:
-Cash
-Trading Securities (Marketable Securities) (Fair value through Profit or Loss) (Short-term Investment)
-Accounts Receivable
-Allowance for Doubtful Accounts (Allowance for Bad debts)
-Notes Receivable
-Merchandise Inventory*
-Accrued "_____" Income
-Prepaid Expenses
a. (Supplies/Office Supplies/Store Supplies*)
b. (Prepaid Rent, Prepaid Salaries, etc.) - ang keyword ay "PREPAID"
-Advances "TO" Employess (Advances to Suppliers*)
-Other "current" assets
B. Noncurrent Assets
-Land
-Building
-Machinery and Equipment
-Furniture & Fixtures
-Accumulated Depreciation
-Intangible Assets
-Other "noncurrent" assets
....................
Ang ASSET ay nahahati sa dalawang classifications.
1. "Current" Assets
2. "Noncurrent" Assets
CURRENT = SHORT-TERM (generally, "1 year or less").
NONCURRENT = LONG-TERM (generally, "more than 1 year")
*Siyempre, pag sinabing "general", may exception. Ibig sabihin, pwedeng hindi masunod yung guide na "1 YEAR"
(dahil may tinatawag tayong "Normal operating cycle")
~~~~~~~~~~~~~~~~~~~~~~~~~~
Q: ANO BA ANG MGA HALIMBAWA NG "CURRENT ASSETS"?
ANS:
Current Assets:
-Cash
-Trading Securities (Marketable Securities) (Fair value through Profit or Loss) (Short-term Investment)
-Accounts Receivable
-Allowance for Doubtful Accounts (Allowance for Bad debts)
-Notes Receivable
-Merchandise Inventory*
-Accrued "_____" Income
-Prepaid Expenses
a. (Supplies/Office Supplies/Store Supplies*)
b. (Prepaid Rent, Prepaid Salaries, etc.) - ang keyword ay "PREPAID"
-Advances "TO" Employess (Advances to Suppliers*)
-Other "current" assets***
**
1. "CASH"
A = L + OE
100 =60 + 40
Si Business(Ikaw) ay may perang P100 ngayon.
(P60, utang sa bank)
(P40, utang sa owner)
Ano ang tawag sa P100?
Yan po ay CASH.
CASH = P100
*"CURRENT asset" siya, kasi pwede mo gastusin "anytime" (1 year or less)
**
2. "ACCOUNTS RECEIVABLE"
ASSUME: Ang "line of busines" mo ay "pagpapautang"
Ngayon, si Business ay nilapitan ng isang kaibigan. Ang sabi niya sayo ay.. "Business, pwedeng "PAUTANG"?
Dahil may P100 Cash ka, ang sabi mo ay " Sige, pauutangin kita.
At yun ang nangyari. Inabot mo ang P100 sa kanya at walang natira sa iyo.
Tanong: Magkano na ang asset mo? Zero o P100 pa rin?
Sagot: P100 pa rin.
Oo, nawala yung P100 kaya parang walang asset. Pero nagkaroon ka naman ng "PAUTANG". Ang pautang ay
hindi nahahawakan pero asset mo pa rin siya.
Ang tawag sa PAUTANG na yan ay "ACCOUNTS RECEIVABLE". Receivable kasi may "mare-receive" kang bayad
o pera.
**
3. "ALLOWANCE FOR DOUBFUL ACCOUNTS"
May experience ka dati na laging "kalahati" lang kung magbayad itong kaibigan mo (Mabait ka lang talaga kaya lagi
mo siyang pinapautang).
TAKE NOTE: Hindi pa siya nagbabayad sa inutang niyang P100.
Pero iaanticipate mo na yung hindi niya mababayaran. Ang tawag dito ay "Allowance for Doubtful Accounts".
Iaanticipate or ire-record mo nang "Allowance for Doubtful Accounts" yung kalahati na P50 (P100/2=P50)
Simple Math lang ang accounting di ba? pa divide-divide ka lang. :)

SUMMARY:
Pautang (Accounts Receivable-AR) P100
Anticipated na di babayaran (Allowance for Doubtful Accounts-ADA) P50
P100(AR)-P50(ADA)
= P50 (ito na lang ang sa tingin mong makokolekta mo sa future). In Accounting, "NRV or Net Realizable Value" ang
tawag dito.
Ang ACCOUNTS RECEIVABLE (or Pautang) ay pwede ring manggaling sa "services rendered", na hindi mo pa
nakokolekta yung bayad ng client or customer mo.
**
5. "TRADING SECURITIES" (Marketable Securities) (Fair value through Profit or Loss) (Short-term Investment)
Si Business(IKAW) ay may P100 ngayon
Ang P100 ay ININVEST.
Pag sinabing ininvest, parang "PAUTANG" din yan. Ipapahawak mo muna sa iba yung pera mo para kumita or
madagdagan (Take note: pwede rin na mabawasan)
Pwede ka mag-invest(or magpautang) sa dalawang ito.
~DEBT Securities (dito, pwede madagdagan ang pera mo ng tinatawag na "INTEREST")
~EQUITY Securities (dito, pwede madagdagan ang pera mo ng tinatawag na "DIVIDEND" and "PRICE
APPRECIATION)
Example:
Nag-invest ka ng P100. So nawalan ka ng P100.
After ng ilang buwan, binawi mo na yung pera at naging P120.
Paki compute. Magkano po ang sobra?
P120-P100=P20
Ang tawag po sa sobrang P20 ay INTEREST(pag debt security), or DIVIDEND/PRICE APPRECIATION(pag equity
security)
*Simple Illustration lang po ito:)

(Wag muna sa komplikado)

Kailan siya naging TRADING SECURITIES?
Yun ay nung time na nag-invest ka.
Nag-invest ka at nawalan ka ng pera. Pero nagkaroon ka naman ng "short-term investment" (parang pautang din)
na ang tawag ay TRADING SECURITIES.
**
6. "MERCHANDISE INVENTORY"
Si Business (IKAW), ay may P100.
Pinambili mo ng "DAMIT (assuming ang business mo ay "BUY & SELL" or "Merchandising") para ibenta sa mas
mahal na halaga.
BUY: Damit P100
SELL: P120
P120-P100=P20.
Kumita ka ng P20.
Ano ang tawag dun sa DAMIT na binibenta mo?
*Answer: MERCHANDISE INVENTORY
**
7. "PREPAID EXPENSE"
Si Business (IKAW), ay may P100.
Pumunta ka sa 7eleven at pinambili mo ng LOAD.
Globe or SMART? (ikaw na po mamili )
:)

Nung mga oras na inabot mo yung bayad sa cashier, nawalan ka ng P100 Cash. Pero nagkaroon naman ng P100
load ang celllphone mo.
Ano yung tawag sa P100 load.
*Answer: Prepaid Expense
PREPAID EXPENSE:
~PAID but not yet incurred.
"Bayad na" pero "di pa nagagamit"
Paano kung nagtext ako at nabawasan ng Piso?
~Ang PREPAID EXPENSE mo ay P99 na lang (P100-P1)
In short, ang PREPAID EXPENSE ang yung amount ng load na "HINDI MO PA NAGAGAMIT".
~Ganun din pag bumili ka ng ballpen, pencil, or yung mga nabibiling "SUPPLIES" sa NATIONAL BOOKSTORE,
"Prepaid Expense" din ang tawag dun.
**
8. "ADVANCES TO EMPLOYEES"
P100, pinautang sa empleyado. Ang pambayad ay ibabawas na lamang sa kanyang sweldo.
Ang tawag: ADVANCES TO EMPLOYEES
**
9. "NOTES RECEIVABLE"
P100, pinautang pero may kasulatan (PROMISSORY NOTE)-at kumikita ng "INTEREST.
Ang tawag: Notes Receivable
**
10. "ACCRUED INCOME"
Nagpapaupa ka(ikaw ang may-ari) ng isang room for rent.
Ang paupa mo ay P100 per month.
Walang ka pang natatanggap na pera kahit magkano(Advance man or Deposit)
Lumipas ang isang buwan. May kinita ka nang P100 para sa isang buwang upa.
Pero hindi mo pa natatanggap yung pera.
Kumita ka na, Pero hindi pa natatanggap yung pera.
Ang tawag: ACCRUED INCOME
(Earned but not yet received)
Kumita na, hindi pa natatanggap yung pera
*Ito po ay isang uri din ng RECEIVABLE (Parang ACCOUNTS RECEIVABLE) dahil may "mare-receive" kang pera.
~~~~~~~~~~~~~~~~~~~~~~~~
#NEXT TOPIC
Ang next topic ay NONCURRENT ASSETS.
Q: ANO BA ANG EXAMPLES NG NONCURRENT ASSETS
ANS:
PROPERTY, PLANT AND EQUIPMENT or PPE (or FIXED ASSET)
-Land
-Building
-Machinery and Equipment
-Furniture & Fixtures
-Accumulated Depreciation(Building)
-Accumulated Depreciation(Machinery & Equipment
-Accumulated Depreciation(Furniture & Fixtures)
(Take note: walang Accumulated Depreciation-Land)
OTHERS:
-Intangible Assets
-Other "noncurrent" assets
**
Ang Noncurrent Asset ay Long-term.
**NONCURRENT = LONG-TERM (generally, "more than 1 year")
Kaya siya "Long-term" kasi
-matagal ang buhay niya and/or
-matagal mo siya pwedeng magamit or mapakinabangan
**
1. "LAND"
Ito ang "FAVORITE asset" ko kasi ang ganda ng meaning niya.
L-A-N-D
L-ove (of GOD)
A-lways "Appreciate" And
N-ever
D-epreciate :)

You: Yan ba talaga ang meaning ng Land?

Me: Sa ACCOUNTING, siyempre hindi. :)

Pinapaalala lang namin sayo na wag mong kalimutan si God. Alam mo ba na alam Niya ang lahat ng sakripisyo
mo?
Naniniwala kami na lahat ng magaganda at di magagandang nangyayari sa buhay mo ay nakadisenyo. Disenyo na
kailangan mong pagdaanan para "makumpleto" ka. 😇

Example:
Alam mo yung "PUZZLE" di ba?
Nilalaro ko ito nung bata ako. Pinagdidikit-dikit ko yung mga piraso para mabuo ang magandang larawan.
Ganun din si God sayo. Ang mga piraso ay yung magaganda at di magagandang nangyayari sa buhay mo. Na
kailangan mong maranasan, para sa dulo ay maging "magandang larawan" ka. Maging SUCCESSFUL ka. :)

#TEKA-TEKA, mabalik nga tayo sa Accounting :) :) :)

APPRECIATE? DEPRECIATE? Ano yun?

APPRECIATE:
~Ito ba yung pag may ginawa kang mabuti sa kaibigan mo, tapos na-APPRECIATE niya?
Ay hindi po. :)

Appreciate(Appreciation) means "increase in value".

Example:
Bumili ka ng Land(Lupain) sa probinsya niyo for P100.
After 10 years, ang value ay naging P500.
Tumaas yung value.
From P100, naging P500. Tumaas, nag-APPRECIATE.
Kaya ang LAND ay isang klase ng PPE nag-aAPPRECIATE.
**
Q: ANO naman yung mga PPE na nagde-DEPRECIATE?
(DEPRECIATE= means lumiliit ang value habang tumatagal)
ANS:
2. Building (alam niyo na ito)
3. Machinery and Equipment (Ex. Computer, Aircon, etc)
4. Furniture & Fixtures (Ex. Table, Chair, Wall decorations, etc)
Ano naman ang "ACCUMULATED DEPRECIATION"?
Example na lang natin yung BUILDING ng school niyo. Kunwari, 10 years ang buhay niya.
BUILDING:
Cost: P100
Life: 10 years
P100 / 10 years = P10* (Depreciation or pagliit ng value)
End of:
Year 1 100-10*=90 (remaining value)
Year 2 90-10*=80
Year 3 80-10*=70
Year 4 70-10*=60
Year 5 60-10*=50
Year 6 50-10*=40
Year 7 40-10*=30
Year 8 30-10*=20
Year 9 20-10*=10
Year 10 10-10*=0 (remaining value)
I hope, nasundan niyo.
Kung napansin mo, naubos or naging zero ang value sa Year 10.
Kaya ang tawag na sa BUILDING ay "FULLY DEPRECIATED". Or simply, wala nang value.
Question:
Nasaan yung "Accumulated Depreciation".
Answer:
Ito yung naipon or "na-aacumulate" na pagbaba ng value
*Hindi namin ipapaliwang ang susunod(kasi ang gusto namin ay kayo ang mag-ANALYZE)
End of
YEAR 1 Accumulated Depreciation = 10
(P100-90)
YEAR 2 Accumulated Depreciation = 20
(100-80) or (10+10)
YEAR 3 Accumulated Depreciation = 30
(100-70) or (10+10+10)
YEAR 4 Accumulated Depreciation = 40
(100-60) or (10+10+10+10)
YEAR 5 Accumulated Depreciation = 50
YEAR 6 Accumulated Depreciation = 60
YEAR 7 Accumulated Depreciation = 70
YEAR 8 Accumulated Depreciation = 80
YEAR 9 Accumulated Depreciation = 90
YEAR 10 Accumulated Depreciation = 100
~~~~~~~~~~~~~~~~~~~~~~
"INTANGIBLE ASSETS"
Examples:
1. Patent (inventions)
2.Copyright (Books, musical composition)
3.Trademark(Logo, Brand name)
4. Franchise (Jollibee, Mcdo, Starbucks, 7eleven, etc)
5. Others

ACCOUNTING TUTORIAL (PART 3)

"LIABILITIES" AND "OWNER'S EQUITY"
~~~~~~~~~~~~~~~~~~~~
Q: Pag wala ka nang maintindihan at di ka na nag eenjoy sa ACCOUNTING TOPICS, di na ba para sayo ang
Accountancy?
**
A: Let me give you an ANALOGY.
For example, may "Boyfriend or Girlfriend" ka. Madalas kayong mag-away kasi hindi na kayo magkaintindihan.
Pag ganun ba, hindi na kayo pwedeng magkatuluyan?
-syempre, pwede pa rin po. Kailangan mo lang pag-aralan ang ugali niya, at dapat marunong kang "mag-
SACRIFICE", "mag-ADJUST" at "mag-BALANCE." ❤️

Ganun din po sa Accounting topics. Dapat po ay may gagawin ka para maintindihan mo siya. ☺

**
YOU: Sir.. di po ako maka-relate. SINGLE pa po eh
ME: Edi JOWAin mo muna si ACCOUNTING 😇 😇 😇

~~~~~~~~~~~~~~~~~~~~
#START
Simulan natin sa "OWNER'S EQUITY"
- INITIAL INVESTMENT by the owner
- ADDITIONAL INVESTMENT by the owner
- REVENUE / INCOME of the business
- EXPENSES of the business
- DRAWINGS / WITHDRAWAL by the owner
Isa-isahin natin yan mamaya. 😇

~~~~~~~~~~~~~~~~~~~~
"BASIC" ACCOUNTING EQUATION
A = L + OE
Assets = Liabilities + Owner's Equity
P100 = P60 + P40
**
"Ibahin" natin ang EQUATION
A - L = OE
Assets - Liabilities = Owner's Equity
P100 - P60 = P40
Nasundan ba?
**
Ang ibig sabihin nito ay:
Sa ASSETS na P100,
"priority" na mabayaran muna ang LIABILITIES sa Creditors na P60.
Kaya ang matitira na lang para sa OWNER ay P40.
**
Kung hahatiin or ibi-break down natin yung natira sa owner na P40, ito po ay ang mga sumusunod (1 to 5):
(PERO this time, let us change our POINT OF VIEW)
(Isipin mo naman ngayon na IKAW ang "OWNER")
(Gagawin lang natin 'to para mas madali mong maunawaan)
Kung ikaw si OWNER, tanungin mo lang ang sarili mo:
"Kung ihihinto ko na ang Business ko, ano kaya ang mababawi ko galing sa business ko?
1. "INITIAL INVESTMENT" by the owner.
Nang magtayo ka ng negosyo, yan ang kauna-unahang binigay mong puhunan. Pwedeng pera, pwedeng gamit,
etc. Investments or contributions mo ito "before operations"
2. "ADDITIONAL INVESTMENT" by the owner.
Dagdag-puhunan. Binigay mo ito "during operations".
Maaaring sa unang taon ay sobrang dami agad ng customers mo kaya naman nagdagdag ka ng puhunan. Yung
dagdag-puhunan na yan ay ginawa mo "during operations" ng business mo.
*
3. "REVENUE" or "INCOME
"Kita" ng business mo
4. "EXPENSES"
"Gastusin" ng business mo
Sa 3 & 4, ang dapat na goal ay mas malaking REVENUE kaysa EXPENSE.
Example:
a) Revenue - Expense = Net INCOME
20 - 15 = 5
b) Revenue - Expense = (Net LOSS)
15 - 20 = -(5)
(between the two, better ang Net INCOME)
Simple MATH lang ang Accounting di ba? 😇

*
5. "DRAWINGS / WITHDRAWAL" of the owner
Parang sa ATM card. Pag nagwithdraw ka, may kinuha ka
DRAWINGS or Temporary withdrawal - ito ang tawag pag ang kinuha mo ay yung KITA ng business mo (Net
INCOME)
PERMANENT WITHDRAWAL - ito ang tawag pag ang kinuha mo ay ang INVESTMENT mo (yung 1 & 2)
~~~~~~~~~~~~~~~~~~~~
EXAMPLE:
Initial investment P50
Additional investment P30
Revenue 20
Expenses 15
Drawings 45
*
Q: How much ang NET INCOME
A: Revenue - Expenses = Net Income
20 - 15 = 5
Answer is 5
*
Q: How much ang OWNER'S EQUITY?
A: Beginning Capital(Initial investment) + Additional investment + Net income - Drawings = Ending Capital (Owner's
equity)
50 + 30 + 5 - 45 = P40
Answer is P40.
*YUNG P40, yan na lang ang portion ng asset na pwedeng MABAWI ng owner.
**
Supposedly, ang "mababawi" niya dapat ay yung INITIAL AND ADDITIONAL INVESTMENT niya (50+30) at yung
NET INCOME ng business (5).
50 + 30 + 5 = 85.
Kaya lang, may "actual" DRAWINGS siyang P45.
Kaya ang natira na lang is 40 (85-45).
*GRABE na 'to.. Plus(+) Minus(-) lang pala ang Accounting 😇

BASIC!!! Kayang-kaya mo!

**
If ever mag-decide ang owner na ihinto na ang business ngayon, P40* na lang ang mababawi niya.
*Pero pwede pang mabago ang amount na yan pag, "na-convert into cash" ang mga ASSETS bago ibalik sa owner.
Yan ay dahil sa tinatawag na FAIR VALUE and NET REALIZABLE VALUE ng assets (in simple words, "Today's
value").
HALIMBAWA:
*Let's go back to the POINT OF VIEW of the "BUSINESS"
A = L + OE
Panindang damit = Liabilities + Owner's equity
100 = 60 + 40.
Yung halaga ng panindang damit ay P100.
Q: Pwede bang ipambayad yung DAMIT(P100).. sa LIABILITIES (P60) at sa OWNER (P40)?
Pwede po.. "Gugupitin na lang.." WOW magic.... 😇

Siyempre, alam ko hindi yan ang isasagot mo.

Ang gagawin mo ay, ibebenta yung damit para maging PERA or CASH. At yung cash na yun ang ibabayad sa
LIABILITIES at sa OWNER.
Cost ng Damit: P100
A. Nabenta for P100 CASH.
Ibabayad sa Liabilities = P60
Ibabayad sa Owner: P40*
B. Nabenta for P110 CASH
Ibabayad sa Liabilities = 60
Ibabayad sa Owner = 50*
C. Nabenta for P80 CASH
Ibabayad sa Liabilities = 60
Ibabayad sa Owner = 20*
*Priority munang mabayaran ang LIABILITIES, bago ang Owner.
~~~~~~~~~~~~~~~~~~~~
NOTE THESE FORMULAS:
1. Revenue and Income - Expenses = Net Income or (Net Loss)
2. Beginning Capital + Additional Investment - Permanent Withdrawal + Net Income - Drawings = Ending Capital
3. Beginning Capital + Additional Investment - Permanent Withdrawal - Net Loss - Drawings = Ending Capital
4. Beginning Capital + Additional Investment - Permanent Withdrawal + Revenue and Income - Expenses -
Drawings = Ending Capital
*Capital = Owner's Equity
~~~~~~~~~~~~~~~~~~~~~~~~~~~
REVENUE or Income "vs" EXPENSE
A. INCOME = Earnings or Kita'
STORY 1:
Ang Business ay "Salon". May isang empleyado na ang pangalan ay "Alma".
Nang mag-open ang Salon, may pumasok na isang customer at nagpa-haircut.
Pagtapos ay nakakolekta ang "Business" ng P100 dahil sa HAIRCUT.
QUESTION:
Ano ang tawag sa P100?
ANSWER:
*INCOME = P100 (INCOME = Earnings or Kita')
B. EXPENSE = Cost or Gastos
STORY 2:
Dahil nagtatrabaho si "Alma" sa Business, kailangan siyang swelduhan. Ang "binayad" kay Alma ay P70.
QUESTION:
Ano ang tawag sa P70?
ANSWER:
*EXPENSE = P70 (EXPENSE = Cost or Gastos)
#SUMMARY
INCOME: P100
(EXPENSE): P70
= NET INCOME: P30
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
#NextTOPIC
LIABILITIES
**
Classification of LIABILITIES
~Current Liabilities
babayaran within 1 year (1 year o less)
~Noncurrent Liabilities
babayaran beyond 1 year (more than 1 year)
--------------------------
#CurrentLiabilities
A. Accounts Payable
ACCOUNTS = Utang
PAYABLE = Babayaran pa (hindi pa bayad)
ACCOUNTS PAYABLE = "Utang" na "hindi pa bayad"
Utang ng business sa mga tinatawag na "Trade" creditors.
**
B. Notes Payable (SHORT-term)
NOTES = Utang "na may kasulatan" (Promissory Note)
PAYABLE = Babayaran pa (hindi pa bayad)
TANDAAN:
In paying NOTES PAYABLE, may "dagdag-bayad" na "INTEREST" (Interest Expense)
**
C. Accrued "_______" Expense
ACCRUED: Hindi pa Bayad
EXPENSE: Gastusin
ACCRUED EXPENSE = "Hindi pa bayad" na "Gastusin"
EXAMPLE:
-MERALCO Bill
(Hindi ka pa bayad... sa gastusin(electricity) na nagamit or na-consume ng business mo)
**
D. Unearned "_____" Income (Advances from Customers)
UNEARNED INCOME
~nakatanggap ng CASH (Pera)
~pero hind pa INCOME (Kita')
STORY(new)
Pumasok si customer sa Salon mo para "MAGBAYAD" ng P100.
(Pero "BUKAS" pa siya magpapagupit)
BUSINESS (Ikaw)
~nakatanggap ng CASH (Pera)
~pero hind pa INCOME kasi "BUKAS" pa magpapagupit.
TANDAAN:
May pagkakaiba ang UNEARNED INCOME(General term) at ADVANCES FROM CUSTOMERS(specific for
customers)
#NoncurrentLiabilities
E. Notes Payable (LONG-term)
Pareho sa (B.), pero BABAYARAN NG "HIGIT" SA ISANG TAON.

F. Bonds Payable (LONG-term)

Pangmatagalang kontrata ng pagkakautang. Mga lima hanggang sampung taon bago bayaran.
**
G. Mortgage Payable
MORTGAGE: Utang na may SANLA
PAYABLE: Babayaran pa (hindi pa bayad)
STORY:
Bumili ka ng LAND pero di pa bayad (Utang-Mortgage Payable)
*pero yung Land ay nakaSANLA (Collateral)
Anong meaning ng nakaSANLA(Collateral)?
A: Pag hindi nakabayad sa utang na Mortgage Payable, yung LAND(Collateral) ay ibebenta. Yung pera galing sa
benta ay gagamitin para mabayaran na yung Utang na Mortgage Payable.
*Kung halimbawang nag-LOAN naman sa bangko, pwede ring gawing Collateral ang other real properties ng
business.
ACCOUNTING TUTORIAL (Part 4)
"BASIC ACCOUNTING"
"FORMS" OF BUSINESS ORGANIZATION
1. SINGLE/SOLE PROPRIETORSHIP is a business owned by only ONE INDIVIDUAL.
2.PARTNERSHIP is an association of "TWO or MORE" persons who bind themselves to contribute money, property
or industry(services) to a common fund, with the intention of dividing the profits among themselves.
3. CORPORATION is an artifical being(not natural, like human being) created by operation of LAW, having the
rights of SUCCESSION, and the POWERS AND ATTRIBUTES expressly authorized by law or incident to its
existence.
4. COOPERATIVE is a legal entity owned and democratically controlled by its members. Members often have a
close association with the enterprise as producers or consumers of its products or services, or as its employees.
~~~~~~~~~~~~~~~~~~~~~~~~~~
"TYPES" OF BUSINESS
4.SERVICE BUSINESS. This business renders services to customers or clients for a fee.
(Sale of SERVICES)
5. MERCHANDISING/TRADING BUSINESS. This business buy goods or commodities and sell them at a profit.
(Sale of GOODS) (Buy=>Sell)
6. MANUFACTURING BUSINESS. This business makes "finished goods" from "raw materials" or unassembled
parts. It "produces" the goods that it sells.
(Sale of GOODS) (Buy=>"Produce"=>Sell)
~~~~~~~~~~~~~~~~~~~~~~~~~~
"ELEMENTS" of FS (Financial Statements)
7. INCOME/REVENUE is the gross INFLOW of economic benefits during the period in the form of INFLOWS or
enhancements on assets or decrease in liabilities that result in increase in equity, other than those relating to
contributions from the owner or owners.
8. EXPENSE is defined as the gross OUTFLOW of economic benefits during the period in the course of ordinary
activities when these OUTFLOWS result in DECREASE in equity other than those relating to distribution to owners.
~In simple terms, these are COSTS incurred to produce income/revenue.
9. ASSETS are defined as RESOURCES controlled by the enterprise as a result of past transactions and events
and from which future economic benefits are expected to flow to the enterprise.
~In simple terms, these are PROPERTIES owned by the business.
10. LIABILITIES are defined as present OBLIGATIONS of an enterprise arising from past transactions or events, the
settlement of which is expected to result in an outflow from the enterprise of resources embodying economic
benefits.
~In simple terms, these are the financial obligations or DEBTS of the business.It is also described as CLAIM of the
CREDITORS on the Assets of the enterprise.
11. OWNER'S EQUITY/CAPITAL represents the CLAIM of the OWNER on the Assets of the business. It is the
RESIDUAL INTEREST in the Assets of the business after deducting all its liabilities.
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Important: CAPITAL ACOUNT (or EQUITY ACCOUNT) consists of the following:
a. "Owner's Capital"
b. "Owner's Drawing"
~~~~~~~~~~~~~~~~~~~~~~~~~~
EXAMPLES of "ASSET" Accounts
1. CASH is any medium of exchange that a bank will accept at face value. It includes coins and currencies, checks,
money orders and bank drafts.
Current asset.
2. TRADING SECURITIES are debt and equity securities that are purchased with the intent of selling them in the
"near term" or very soon.
Current asset.
3. ACCOUNTS RECEIVABLES are claims against debtors or customers arising from services rendered on account
and sale of merchandise on account.
Current asset.
4. ALLOWANCE FOR DOUBTFUL ACCOUNT relates to the company's receivables which might not be collected.
Current asset. (Contra-Asset)
#NOTE: "CONTRA-ASSET" account is the opposite of "ADJUNCT" account
In layman's term,
CONTRA = deducted
ADJUNCT = added (Example: Freight In)
5. NOTES RECEIVABLE are claims supported by promissory note.
Current asset, if short-term. (Also a Current Asset if the problem is SILENT)
Noncurrent asset, if long-term.
6. MERCHANDISE INVENTORY are goods on hand and are available for sale.
Current asset.
7. ACCRUED INCOME. Earned but not yet received/collected.
Current asset.
8. ADVANCES TO EMPLOYEES. Cash received by employees to be deducted from their salaries in the future.
Current Asset.
9. PREPAID EXPENSES are expenses PAID IN ADVANCE by the business ("Paid but not yet incurred").
Current asset.
10. OFFICE/STORE SUPPLIES are being used by the business like papers, pens, pencils, folders, staplers, etc.
Current asset.
11. LAND is an asset that is not subject to depreciation. It appreciates (value increases) as time goes by.
Noncurrent asset.
12. BUILDING can be acquired by PURCHASE or by means of CONSTRUCTION. Construction costs may include
materials, labor, overhead, permit or license, Architect fee, Excavation cost, etc.
Noncurrent asset.
13. MACHINERY & EQUIPMENT includes computers, air-conditioning units, electric fans, freezers, refrigerators,
truck, etc.
Noncurrent asset.
14. FURNITURE AND FIXTURES includes tables, chairs, filing cabinets, etc.
Noncurrent asset.
15. ACCUMULATED DEPRECIATION. "Total" depreciated cost of a depreciable asset.
Noncurrent asset. (Contra-asset)
16. INTANGIBLE ASSET is an identifiable non-monetary asset "without physical substance" or have no physical
appearance but are expected to provide future economic benefits to the company.
Noncurrent asset.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"LIABILITIES"
1. ACCOUNTS PAYABLE are amounts due to creditors for ASSETS ACQUIRED on account.
(Current Liab)
2. NOTES PAYABLE(short-term) are amounts due to creditors "within" one year, evidenced by WRITTEN
PROMISE to pay.
(Current Liab)
3. ACCRUED EXPENSES are amounts owed to others for UNPAID EXPENSES.
(Current Liab)
4. UNEARNED INCOME is revenue collected by the business in advance. (Received/ collected IN ADVANCE, but
not yet earned).
(Current Liab)
5. CURRENT PORTION OF LONG-TERM DEBT are portions of mortgage, notes, bonds and other long-term
indebtedness which are to be paid "WITHIN ONE YEAR" from the Balance Sheet date (or end of Reporting Period).
(Current Liab)
6. NOTES PAYABLE (long-term) are amounts due to creditors "beyond" one year, evidenced by WRITTEN
PROMISE to pay.
(Noncurrent Liab)
7. BONDS PAYABLE is a liability owed by a company to obtain substantial sums of money from lenders to finance
the acquisition of equipment and other needed assets.
(Noncurrent Liab)
8. MORTGAGE PAYABLE. Long-term debt of the business for which the business entity has PLEDGED certain
assets as SECURITY to the creditor. In the event that the debt payments are not made, the creditor can foreclose or
cause the mortgaged asset TO BE SOLD to enable the entity to settle the claim.
(Noncurrent Liab)
~~~~~~~~~~~~~~~~~~~~~~~~~~
"OWNER'S EQUITY"
9. CAPITAL. This account is used to record the "ORIGINAL and ADDITIONAL INVESTMENTS" of the owner of the
business entity. It is increased by the amount of PROFIT earned during the year or is decreased by a LOSS.
#NOTE: This account is also used to record the "PERMANENT withdrawal" of the owner.
(PERMANENT withdrawal means withdrawal of INVESTED capital)
10. DRAWINGS/TEMPORARY WITHDRAWALS. Charged to this account are cash or other assets withdrawn by
the owner 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 end of the accounting period to close income and
expenses. This account shows the profit or loss for the period before closing to the capital account.
~~~~~~~~~~~~~~~~~~~~~~~~~~
True or False
12. The excess of INCOME over EXPENSES is called "NET INCOME". True
13. The excess of EXPENSES over INCOME is called "NET LOSS". True
14. INCOME "increases" Owner's Equity. True
15. EXPENSE "decreases" Owner's Equity. True
16. ADDITIONAL INVESTMENT "increases" Owner's. True
17. OWNER's DRAWING "decreases" Owner's Equity. True
~~~~~~~~~~~~~~~~~~~~~~~~~~
DEBIT OR CREDIT
Guide:
A = L + OE
Look at the equal sign ( = )
If LEFT: Debit
If RIGHT: Credit
(Normal Balance)
18. INCREASE in ASSET..... DEBIT
19. INCREASE in LIAB..... CREDIT
20. INCREASE in OE..... CREDIT*
Apply "FRIENDS" and "ENEMIES" of OE
Who are the "Friends" of OE?
-Income, Revenue, Gain (CREDIT)*
Who are the "Enemies"
-Expense, Drawings (DEBIT)
21. INCREASE in INCOME..... CREDIT
22. INCREASE in EXPENSE..... DEBIT
23. INCREASE in OWNER'S DRAWING..... DEBIT
NOTE:
(INCREASE in ASSET..... DEBIT)
(INCREASE in "CONTRA-ASSET.".... "CREDIT")
*
(Normal Balance) - DEAL & GIRLS 😇

DEBIT (DEAL)
D-ividends (Drawings)
E-xpenses
A-sset
L-osses
CREDIT (GIRLS)
G-ains
I-ncome
R-evenues
L-iabilities
S-tockholder's (or Owner's) Equity
*
(Normal Balance) - ADE & LOR 😇

DEBIT (ADE)
A - sset
D -rawings
E - xpense
CREDIT (LOR)
L - iabilities
O - wner's equity
R - evenue
~~~~~~~~~~~~~~~~~~~~~~~~
*For DECREASES, just do the "OPPOSITE"
24. DECREASE in ASSET..... CREDIT
25. DECREASE in LIAB..... DEBIT
26. DECREASE in OE..... DEBIT
27. DEREASE in INCOME..... DEBIT
28. DECREASE in EXPENSE..... CREDIT
29. DECREASE in OWNER'S DRAWING..... CREDIT
DECREASE in CONTRA-ASSET..... DEBIT
30. What is the "NORMAL BALANCE" of Cash, Trading Securities, Accounts Receivables, Notes Receivables,
Accrued Income, Supplies, Prepaid Expense, Land, Building, Machinery & Equipment, Furniture & Fixtures.....
DEBIT
31. What is the "NORMAL BALANCE" of Accounts Payable, Notes Payable, Accrued Expense, Unearned Income,
Bonds Payable, Mortgage Payable..... CREDIT
32. What is the "NORMAL BALANCE" of Owner's Capital, Revenue or Income..... CREDIT
33. What is the "NORMAL BALANCE" of Owner's Drawing, Expense..... DEBIT
34. What is the "NORMAL BALANCE" of Allowance for Doubtful Accounts, Accumulated Depreciation..... CREDIT*
*CREDIT, because they are contra-assets
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Definitions, Classifications and Examples of Accounts
I.
-REAL accounts (or PERMANENT accounts)
The real accounts are
-Assets
-Liabilities and
-Owner’s Equity/Capital
Real accounts are reported in the Statement of Financial Position(or "BALANCE SHEET"). They are not "closed" at
the end of accounting period.
---------------------------------------------------------------
-NOMINAL accounts (or TEMPORARY accounts)
The nominal accounts are
-Income/revenues
-Expenses and
-Owner’s Drawing
Nominal Accounts are those that comprise the elements of the Statement of Financial Performance (or INCOME
STATEMENT) – the revenue and expenses accounts.
These accounts are called temporary because they are "closed", or put into zero balance, at the end of the
accounting period.
*Please note that Owner’s Drawing is NOT an income statement account, but must also be closed, or put into zero
balance, at the end of the accounting period.
---------------------------------------------------------------
SUMMARY:
REAL accounts (or PERMANENT accounts)
-Assets
-Liabilities
-Owner’s Equity
NOMINAL accounts (or TEMPORARY accounts)
-Income/revenues
-Expenses and
-Owner’s Drawing
---------------------------------------------------------------
II.
The REVENUE Accounts
Revenue represents the earnings of the business from sales of goods or service rendered.
Revenue accounts have normal CREDIT balance.
Below are some common revenue accounts:
 Sales – an account used to summarize sale of goods of a trade or merchandising business. This includes cash
sales and sales on account.
 Service Income – the earning derived from service rendered by a servicing business to its customers. This
includes cash and on account service.
 Professional Fees – the earning derived from services rendered by a professional or professional servicing firm
which could be in cash or in collectibles to its clients.
 Interest Income – the earning representing the time value of money derived from promissory notes received by the
business, whether in cash or collectibles in the future.
 Rent Income – the income earned from allowing others to use property or facility of the business.
 Gain on Sales of other Assets – the income derived from the sales of assets used in the business operation. There
is a gain on sale if the proceeds exceed the book value or cost of disposed asset. Examples are gain on equipment,
gain on sale investments, gain on sale of land, etc.
 Others
---------------------------------------------------------------
The EXPENSES Account
Expenses are cost incurred in conducting the business activities. Expense accounts have normal DEBIT balances.
Some common expense accounts are as follows:
 Cost of Sales – the value of merchandise sold
 Supplies Expense – the amount of supplies consumed or used by the business during the period. Examples: used
in papers, inks, ballpoint pens, etc.
 Salaries and Wages Expenses – the amount paid to service rendered by the employees in the operation of the
business
 Insurance Expense – the amount of insurance policy incurred during the current period. Examples: premiums on
building insurance, life insurance, plant insurance, etc.
 Taxes and Licenses Expenses – the cost of local as well as national taxes that are incurred and required to be
paid in connection with the conduct of the business.
Example: Cost to acquire mayor’s permit, registration cost of the building, percentage tax on sales, etc.
 Others
"Estimated Expense"
 Doubtful Account Expenses – the estimated amount of losses the uncollectible accounts arising from credit sales
of the current period. This is also called the debt expense or uncollectible account expense.
 Depreciation Expense – represents the current periodic cost for using depreciable plant assets. In accordance with
the systemic cost of depreciable asset should be allocated as expense over its useful life.
 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
"BALANCING"
ACCOUNTING TUTORIAL - Part 6
(May "EXPLANATION" sa CAPTION ng bawat photo) 😇

~~~~~~~~~~~~~~~~~~~~
GUIDE:
For beginners, tingin muna sa GUIDE.
Kung maaari ay isulat mo ito sa papel, at tingnan habang sinasagot ang bawat items.
Malilito ka sa simula, pero ulit-uliting lang hanggang sa masanay ka na. 😇

Ito yung guide (paki sulat mo na):

*ASSET
Nagkaroon (+), DEBIT
Nawalan (-), CREDIT
*LIABILITIES
Nagkaroon (+), CREDIT
Nawalan (-), DEBIT
*OWNER'S EQUITY
Nagkaroon (+) ng OE:
=Investment/Capital.... CREDIT
=Revenue or Income.... CREDIT
Nawalan (-) ng OE:
= Expenses:
"Bawas"(-) sa OE, pero "Dagdag"(+) sa Expense.... DEBIT
= Drawings:
"Bawas"(-) sa OE, pero "Dagdag"(+) sa Drawings.... DEBIT
**
Additional info: Pag sinabing "nagkaroon ng OE", ang meaning nito ay..... "NAGKAROON NG OBLIGATION ang
BUSINESS" na ibalik sa may-ari ang,
- mga "Investments" ng Owner
- at "Kinita" ng Business)
ACCOUNTING TUTORIAL - PART 7
1. CPA Board Exams
2. Career Fields in Accounting
3. Different Accounting Areas
4. Different Regulatory Bodies
~~~~~~~~~~
1. CPA Board Exams
Q: SINO ang allowed mag-take ng Philippine CPA Board Exam?
A:
- Yung mga graduate sa course na BACHELOR OF SCIENCE IN ACCOUNTANCY
- Yung may GOOD MORAL CHARACTER
- Yung hindi napatunayang guilty ng "MORAL TURPITUDE" (like Adultery or Concubinage - pakikiapid)
- Filipino citizen.
**
Q: Tuwing KAILAN ginaganap ang CPA Board Exam?
A: Dalawang beses sa isang taon. May and October.
**
Q: Ilan at Ano ang mga SUBJECTS sa CPA board exam ?
A: 6 subjects
- RFBT (Regulatory Framework for Business Transactions)
- TAX (Taxation)
- MAS (Management Advisory Services)
- AUDITING (Auditing theory and Auditing problems)
- FAR (Financial Accounting and Reporting)
- AFAR (Advanced Financial Accounting and Reporting)
Q: Paano makapasa sa CPA board exam?
A: General weighted average of 75% and above
(with no grades below 65% in any subject)
**
Q: Anong mangyayari pag ang Gen. Ave. ay above 75%, ngunit may grade na below 65% sa ibang subject(s)
A:
- CONDITIONAL if 75% and above ang at least 4 subjects (at ang uulitin na lang ay yung subjects na may grade below 75%)
-FAILED if 3 subjects and below lamang ang 75% and above.
*Masasabing CONDITIONAL ang status ng isang examinee kapag 75% and above ang grade niya sa at least 4 subjects (kahit
na ZERO pa ang grade sa natitirang 2 subjects).
*Ang CONDITIONAL examinee ay kailangang mag-exam ulit para kunin ang di naipasang subject(s) within 2 years mula sa
exam kung saan siya na-conditional.
~~~~~~~~~~~~~~~~~~~~
2. Career Fields in Accounting
A. Public Accounting
B. Commerce and Industry / Private Accounting
C. Academe (Education)
D. Government Accounting
~~~~~~~~~~~~~~~~~~~~
3. Different Accounting Areas
A. Basic Accounting / Bookkeeping
B. Financial Accounting
C. Managerial Accounting
D. Auditing
E. Cost Accounting
F. Government Accounting
~~~~~~~~~~~~~~~~~~~~
4. Different Regulatory Bodies
A. PRC (professional Regulation Commission)
B. PRBOA (Professional Regulatory Board of Accountancy)
C. PICPA (Philippine Institute of Certified Public Accountants)
D. FRSC (Financial Reporting Standards Council)
E. IASB (International Accounting Standards Board)

ACCOUNTING TUTORIAL - Part 8

"ADJUSTING ENTRIES"
Q: What are the six (6) "Adjusting Entries" of a SERVICE business?
A:
1. Accrued expense
2. Accrued income (including "Accrued Service Income")
3. Prepaid expense
4. Unearned income (including "Unearned Service Income")
5. Depreciation expense
6. Doubtful accounts expense / Bad debt expense
~~~~~~~~~~~~~~~~~~~~
PAALALA: "Basahin"
(Kahit wag munang unawain) 😇 😇 😇

Halos lahat yata ng nag-BASIC ACCOUNTING, ay sa topic na ito nahirapan.

PERO I WANT TO "CHALLENGE" YOU. Aralin mo na ito. Para pag tinuro na ni Teacher ay may baon ka nang
kaalaman at di ka na masyadong mahirapan.
**
Ngayon ay gagawa muna tayo ng "SUMMARY" ng lahat ng Adjusting Entries.
Sa mga susunod na tutorial (simula bukas) ay saka natin iisa-isahin ang bawat ADJUSTMENTS (1-6)
Okay lang ba sayo yun???
"YES" di ba?.. Wala ka namang magagawa eh. 😇 😇 😇

~~~~~~~~~~~~~~~~~~~~
#GAME
Let me discuss the six (6) adjusting entries thru a STORY. 😇

**
Bumili ka ng "OFFICE BUILDING" worth P500.
Ang building na ito ay may dalawang rooms.
Room 1: Gagamitin sa "main business" mong tutorial.
Room 2: Vacant (bakante siya)
**
Next mong ginawa ay bumili ka ng isang CELLPHONE na worth P500 din.
**
Next ay pumunta ka sa 7 eleven para bumili ng PREPAID LOAD CARD worth P100.
**
Summary:
- OFFICE BUILDING P500
- CELLPHONE P500
- PREPAID LOAD CARD P100
Total: P1,100
Lahat ng ito ay ininvest mo sa itatayo mong "ACCOUNTING TUTORIAL business". 😇

(Date: January 1, 2018)

~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~
#START na ng business 😇

First: Ni-register mo muna yung PREPAID LOAD CARD sa iyong CELLPHONE.

Gagamitin mo ito para makahanap ng mga tuturuang STUDENTS (Text, Call and Surf)
**
TUTORIAL FEE: P120 per year
- STUDENT A: nag-advance payment siya ng P360 (good for 3 years). Dito ay nakatanggap tayo ng P360 cash
- STUDENT B: hindi muna nagbayad
- STUDENT C: hindi muna nagbayad
**
Maya-maya ay nilapitan ka ng isang kaibigan. Naghahanap daw siya ng mauupahan. Kaya ang ginawa mo,
pinagamit mo muna yung bakanteng ROOM 2 bilang room for rent.
Ang usapan, P60 kada taon ang upa. At makokolekta mo lang ang bayad at the END OF 2ND YEAR (60 + 60)
(Date: January 1, 2018)
~~~~~
SUMMARY (Jan. 1, 2018)
"ACCOUNTING TUTORIAL BUSINESS"
*"ASSETS":
- Office Building P500
- Cellphone P500
- Prepaid Expense (Load) P100
- Cash (advance from STUDENT A) P360
Note: ang "prepaid expense", gaya ng LOAD, ay "nabayaran na" "pero di pa nagagamit"
Total assets: (500 + 500 + 100 + 360)
= P1460
*"LIABILITY":
- Unearned income (advance from STUDENT A) P360
Note: ang "unearned income" ay isang liability. Utang siya kasi may natanggap kang P360 cash, ngunit hindi mo pa
natuturuan si Student A (wala pang service)
Kaya ang liability/utang (unearned income) mo kay Student A, ay ang pagtuturo or "service".
*"OWNER'S EQUITY":
- Capital (Investments) P1100
**
A = L + OE
1460 = 360 + 1100
BALANCE! Amazing!!!! 😇 😇 😇

~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~
"ITO NA ANG ADJUSTING ENTRIES"
Q: Ano naman ang mga pwede mong KITA makalipas ang isang (1) taon? (Date: December 31, 2018)
A:
1. "SERVICE INCOME"
Student A P120 (bayad na)®
Student B P120 (di pa rin bayad)
Student C P120 (di pa rin bayad)
**
STUDENT A: - "UNEARNED INCOME"
®Yung P360 worth of service (to be rendered in 3 years) ay tatanggalan na natin ng P120.
Ito ay dahil may "rendered services" na ngayong taon (1 year).
Kaya sa Dec 31, 2018, P240 na lang ang hindi pa natin nabibigay kay Student A na serbisyo.
(P240 na lang ang "unearned income")
Nakakasunod pa ba?
At the same time, kumita ka na rin ang tutorial business ng para sa unang taon, P120.
EFFECT:
mababawasan ang UTANG na service
madadagdagan ang INCOME
DEBIT: Unearned Service Income 120
CREDIT: Service Income 120
**
STUDENT B & C (ACCRUED SERVICE INCOME)
Ito ay ACCRUED INCOME(in general). Hindi mo pa nakokolekta ang cash, pero INCOME na siya dahil nagturo ka
na ng isang taon.
Pero mas tama na tawagin itong ACCRUED SERVICE INCOME dahil galing ito sa "main business" mo (tutorial)
EFFECT:
-magkakaroon ka ng PAUTANG (Accounts Receivable)
-magkakaroon ka ng INCOME (Service Income)
DEBIT: Accounts Receivable 240
CREDIT: Service Income 240
(B + C) (120 + 120)
~~~~~
2. "RENT INCOME" P60 (di pa rin bayad)
Ito ay isang halimbawa ng ACCRUED INCOME na hindi nanggaling sa "main business" mong tutorial.
May rent income ka nang P60 ngayong YEAR 2018.
Ito ay galing sa ROOM FOR RENT kung saan nakatira na ang kaibigan mo ng isang taon. Kaya lang ay di mo pa
nakokolekta ang bayad as of Dec. 31, 2018 dahil ang usapan ay sa end of 2nd year pa ang bayaran (Dec 31, 2019)
Year 2018 = P60 Rent Income (ACCRUED INCOME kasi di pa nakokolekta as of Dec. 31, 2018)
EFFECT:
-magkakaroon ka ng PAUTANG
-magkakaroon ka ng INCOME
DEBIT: Rent Receivable 60
CREDIT: Rent Income 60
Sa ibang mga libro, ganito ang ginagawa:
DEBIT: Accrued Rent Income 60
CREDIT: Rent Income 60
Note: Ang "Accrued Rent Income" ay isang RECEIVABLE account (Asset po siya)
~~~~~~~~~~~~~~~~~~~~
Q: Ano naman ang mga pwede mong mga EXPENSES or GASTUSIN makalipas ang isang (1) taon? (Date:
December 31, 2018)
A:
1. DEPRECIATION EXPENSE - Office building
(pagliit ng halaga or "pagkaluma" dahil nagamit mo na ang "Office Building" ng isang taon)
EFFECT:
-magkakaroon ka ng EXPENSE
-mawawalan(ng value) ang OFFICE BUILDING
DEBIT: Depreciation expense
CREDIT: Accumulated depreciation
Note: Accumulated depreciation is a CONTRA-ASSET account. Kaya ang effect nito ay "bawas" sa Office Building.
**
2. DEPRECIATION EXPENSE - Cellphone
(pagliit ng halaga or "pagkaluma" dahil nagamit mo na ang "Cellphone" ng isang taon)
DEBIT: Depreciation expense
CREDIT: Accumulated depreciation
**
3. LOAD EXPENSE
(yung gastusin mo sa text, call and surf)
~Ito ay Adjustment for PREPAID EXPENSE
Pag nagtext ka, yan ay NAPAGASTOS ka. Kasi nabawasan yung LOAD mo.
EFFECT:
-magkakaroon ka ng EXPENSE
-mawawalan/mababawasan ka ng PREPAID BALANCE
DEBIT: Load expense
CREDIT: Prepaid expense
**
4. UTILITIES EXPENSE (Meralco)
(yung gastusin mo sa "Electricity")
~Ito ay Adjustment for ACCRUED EXPENSE.
Ipagpalagay na di mo pa bayad ang electricity bill.
Na-consume na ang electricity sa office mo, pero di ba nababayaran.
EFFECT:
-magkakaroon ka ng EXPENSE (consumed electricity)
-magkakaroon ka ng UTANG
DEBIT: Utilities expense
CREDIT: Utilities payable
Sa ibang mga libro, ganito ang ginagawa:
DEBIT: Utilities expense
CREDIT: Accrued Utilities expense
Note: Ang "Accrued Utilities Expense" ay isang PAYABLE account (Liability po siya)
**
5. DOUBTFUL ACCOUNTS EXPENSE
(para sa student na hindi pa bayad, at maaaring "hindi na talaga magbabayad")
Candidate dito sina STUDENT B & C.
Ipagpalagay natin na si Student C ay lubos na naghihirap financially. Malaking posibilidad na hindi siya
makakabayad sa parating na due date.
EFFECT:
-magkakaroon ka ng EXPENSE
-mawawalan/mababawasan ang PAUTANG
DEBIT: Doubtful account expense
CREDIT: Allowance for doubtful accounts
Note: Allowance for doubtful accounts is a CONTRA-ASSET account. Kaya ang effect nito ay "bawas" sa Accounts
receivable.
😇 😇 😇

ACCOUNTING TUTORIAL - PART 9

"ADJUSTING ENTRIES" - continuation

~~~~~~~~~~~~~~~~~~~~
ACCRUALS

1. Accrued Expense

ADJUSTING ENTRY: 😊

Debit: _____ expense

Credit: _____ payable

(Amount: used)

2. Accrued Income

ADJUSTING ENTRY: 😊

Debit: _____ receivable

Credit: _____ income

(Amount: earned)

~~~~~~~~~~~~~~~~~~~~

DEFERRALS
3. Prepaid Expense

A. ASSET Method

Original Entry:

Debit: Prepaid _____

Credit: Cash

(Amount: total)

ADJUSTING ENTRY: 😊

Debit: _____ expense

Credit: Prepaid _____

(Amount: used portion)

**

B. EXPENSE Method

Original Entry:

Debit: _____ expense

Credit: Cash

(Amount: total)

ADJUSTING ENTRY: 😊

Debit: Prepaid _____

Credit: _____ expense

(Amount: unused portion)

~~~~~~~~~~

4. Unearned Income (or Deferred Income)

a. LIABILITY Method

Original Entry:

Debit: Cash

Credit: Unearned _____

(Amount: total)

ADJUSTING ENTRY: 😊
Debit: Unearned _____

Credit: _____ income

(Amount: earned portion)

**

b. INCOME Method

Original Entry:

Debit: Cash

Credit: _____ income

(Amount: total)

ADJUSTING ENTRY: 😊

Debit: _____ income

Credit: Unearned _____

(Amount: unearned portion)

~~~~~~~~~~~~~~~~~~~~

5. Depreciation
ADJUSTING ENTRY: 😊

Debit: Depreciation expense - _____

Credit: Accumulated depreciation - _____

FORMULA: (straight line method)

Cost - Salvage Value / Useful life = Depreciation Expense per year

**

6. Doubtful Accounts (or Bad debts)

ADJUSTING ENTRY: 😊

Debit: Doubtful accounts expense

Credit: Allowance for doubtful accounts

FORMULA:

(Accounts Receivable x % uncollectible ) = Allowance for doubtful accounts or ADA

ADA +(-) "some adjustment" = Doubtful accounts expense

("some adjustment" means: write-off, beginning balance of ADA, etc)

~~~~~~~~~~~~~~~~~~~~

*SAMPLE PROBLEMS for ADJUSTING ENTRIES will be posted tomorrow. - "with solution".
😊ACCOUNTING TUTORIAL - PART 9
"ADJUSTING ENTRIES" - continuation
~~~~~~~~~~~~~~~~~~~~
ACCRUALS
1. Accrued Expense
ADJUSTING ENTRY: 😇

Debit: _____ expense

Credit: _____ payable
(Amount: used)
*
2. Accrued Income
ADJUSTING ENTRY: 😇

Debit: _____ receivable

Credit: _____ income
(Amount: earned)
~~~~~~~~~~~~~~~~~~~~
DEFERRALS
3. Prepaid Expense
A. ASSET Method
Original Entry:
Debit: Prepaid _____
Credit: Cash
(Amount: total)
ADJUSTING ENTRY: 😇

Debit: _____ expense

Credit: Prepaid _____
(Amount: used portion)
**
B. EXPENSE Method
Original Entry:
Debit: _____ expense
Credit: Cash
(Amount: total)
ADJUSTING ENTRY: 😇

Debit: Prepaid _____

Credit: _____ expense
(Amount: unused portion)
~~~~~~~~~~
4. Unearned Income (or Deferred Income)
a. LIABILITY Method
Original Entry:
Debit: Cash
Credit: Unearned _____
(Amount: total)
ADJUSTING ENTRY: 😇

Debit: Unearned _____

Credit: _____ income
(Amount: earned portion)
**
b. INCOME Method
Original Entry:
Debit: Cash
Credit: _____ income
(Amount: total)
ADJUSTING ENTRY: 😇

Debit: _____ income

Credit: Unearned _____
(Amount: unearned portion)
~~~~~~~~~~~~~~~~~~~~
5. Depreciation
ADJUSTING ENTRY: 😇

Debit: Depreciation expense - _____

Credit: Accumulated depreciation - _____
FORMULA: (straight line method)
Cost - Salvage Value / Useful life = Depreciation Expense per year
**
6. Doubtful Accounts (or Bad debts)
ADJUSTING ENTRY: 😇

Debit: Doubtful accounts expense

Credit: Allowance for doubtful accounts
FORMULA:
(Accounts Receivable x % uncollectible ) = Allowance for doubtful accounts or ADA
ADA +(-) "some adjustment" = Doubtful accounts expense
("some adjustment" means: write-off, beginning balance of ADA, etc)
~~~~~~~~~~~~~~~~~~~~
*SAMPLE PROBLEMS for ADJUSTING ENTRIES will be posted tomorrow. - "with solution". 😇

ACCOUNTING TUTORIAL - PART 9

"ADJUSTING ENTRIES" - continuation
~~~~~~~~~~~~~~~~~~~~
ACCRUALS
1. Accrued Expense
ADJUSTING ENTRY: 😇
Debit: _____ expense
Credit: _____ payable
(Amount: used)
*
2. Accrued Income
ADJUSTING ENTRY: 😇

Debit: _____ receivable

Credit: _____ income
(Amount: earned)
~~~~~~~~~~~~~~~~~~~~
DEFERRALS
3. Prepaid Expense
A. ASSET Method
Original Entry:
Debit: Prepaid _____
Credit: Cash
(Amount: total)
ADJUSTING ENTRY: 😇

Debit: _____ expense

Credit: Prepaid _____
(Amount: used portion)
**
B. EXPENSE Method
Original Entry:
Debit: _____ expense
Credit: Cash
(Amount: total)
ADJUSTING ENTRY: 😇

Debit: Prepaid _____

Credit: _____ expense
(Amount: unused portion)
~~~~~~~~~~
4. Unearned Income (or Deferred Income)
a. LIABILITY Method
Original Entry:
Debit: Cash
Credit: Unearned _____
(Amount: total)
ADJUSTING ENTRY: 😇

Debit: Unearned _____

Credit: _____ income
(Amount: earned portion)
**
b. INCOME Method
Original Entry:
Debit: Cash
Credit: _____ income
(Amount: total)
ADJUSTING ENTRY: 😇

Debit: _____ income

Credit: Unearned _____
(Amount: unearned portion)
~~~~~~~~~~~~~~~~~~~~
5. Depreciation
ADJUSTING ENTRY: 😇

Debit: Depreciation expense - _____

Credit: Accumulated depreciation - _____
FORMULA: (straight line method)
Cost - Salvage Value / Useful life = Depreciation Expense per year
**
6. Doubtful Accounts (or Bad debts)
ADJUSTING ENTRY: 😇

Debit: Doubtful accounts expense

Credit: Allowance for doubtful accounts
FORMULA:
(Accounts Receivable x % uncollectible ) = Allowance for doubtful accounts or ADA
ADA +(-) "some adjustment" = Doubtful accounts expense
("some adjustment" means: write-off, beginning balance of ADA, etc)
~~~~~~~~~~~~~~~~~~~~
*SAMPLE PROBLEMS for ADJUSTING ENTRIES will be posted tomorrow. - "with solution". 😇