Ida R. Sanchez
January 26, 2016
Chart of Accounts for Service Business
Chart of Accounts
Current Assets (10000-19999)
1010 Accounts Receivable
1010 Allowance for Doubtful Accounts
1020 Notes Receivable
1030 Interest Re
ese are end-of-period journal entries prepared to empty the temporary accounts of their
balances and prepare them for the next accounting period.
e Income Summary account is a temporary proprietorship account used to close the
These are journal entries prepared at the start of the next accounting period to facilitate the recording in
the normal manner those transactions affected by adjusting entries.
There are the exact opposite of an adjusti
There are journals used to record transactions of similar nature which frequently occur.
Unlike the general journal which is always required as the book of original entry, the special journals are
optional in nature.
Preparation of Trial Balance
(e ird Step)
A listing of all the ledger accounts with open balances as of a particular date that proves the
equality of debits and credits.
Two columns are provided so that the total of all accounts with debit b
Accumulated Operational Funds
Accumulated Depository Funds
Other Sources of Funds (should match with
Section 6, if applicable)
Bonus to Cathy
Net profit before bonus
Net profit after bonus (P44,000/110%) =P40,000
Interest to Brenda
March 1 Unissued Share capital - ordinary 900,000.00
Unissued share capital - preference 1,000,000.00
Authorized share capital - ordinary 900,000.00
Authorized share capial - preference 1,000,000.00
Authorized to issue 20,000 7% preference shares with
NATURE AND FORM OF THE CONTRACT1/27/2012 3:33:00 AM
ARTICLE 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership and to deliver a
determinate thing, and the other to pay therefor a price certain in
Introduction / Classroom Policies / Groupings
I. INTRODUCTION TO ACCOUNTING
1.1 Case Overview Financial Statements
1.2 Definition, nature, and scope of Accounting
1.3 Brief History of Accounting
1.3.1 Double-entry bookkeeping
1.3.2 Harmonization of
Financial transactions affect the revenues and expenses of
more than one accounting period
ADJUSTING JOURNAL ENTRIES entries required at the
end of the period to update the accounts before financial
statements are prepared
Property, Plant, and Equipment
Cost of Land
These costs are debited to the Land account:
Purchase price less cash discount
Legal fees and other expenditures for establishing clean title
Fees for registration and transfer of title
Preparation of Statement of Cash Flows
Statement of Cash Flows
A financial statement that reports the cash receipts, cash payments, and net changes in cash resulting from
operating, investing, and financing activities during a period.
Uses of the Statemen
Post-Closing Trial Balance
Post-Closing Trial Balance
A schedule prepared at the end of the accounting period that proves the equality of total debits and
credits after the closing process.
It is often described as a balance sheet in trial balance form.
Accounting for Freight Transactions
Terms to Remember
Free on Board
Shipping Point (Sellers Place)
Destination Point (Buyers Place)
F.O.B. Shipping Point
1. The Freight-In account is debited by the byer. (Responsibility of t
Adjusting Entry - Depreciation
(Property, Plant, and Equipment)
It is the systematic and rational allocation of the depreciable cost of fixed asset over its
estimated useful life. It is the portion of the depreciable cost of the fixed asset t
It is an accounting device used to facilitate the preparation of adjusting entries, financial
statements, and closing entries.
e preparation of the worksheet is an optional step in the accounting cycle. e Accountant,
at his discretion, may pre
(e Second Step)
It is the process of transferring the recorded transactions from the journal to the ledger.
It is the systematic compilation of several accounts and used as a tool to classify the recorded
transactions for the purpose of get
Adjusting journal entries are prepared at the end of the accounting period to update the ledger not to
correct the ledger.
Adjusting entries are necessary every time financial statements are prepared.
Definition of Terms:
Bank Reconciliation. The process of putting into agreement the cash balance per depositors books with the
cash balance per bank statement. This process is done by the accountant of the firm. Periodic bank
Basic Accounting Framework
Basic Accounting Equation
Assets = Liabilities + Owners Equity
The basic accounting equation provides the underlying framework for recording and summarizing the
economic events of an entity.
Assets are the economic resources of
Doubtful Accounts (Bad Debts)
An expense account representing receivable accounts that, for some reasons, have become
doubtful of collection or worthless as of a given balance sheet date.
Allowance for Doubtful Accounts
Terms and Definitions
Imprest System. A system of internal control whereby cash receipts are deposited intact (whole amount of
cash collection) daily with the bank. Disbursements (payments) are made through issuance of checks,
except for sm
Three forms of business organization according to ownership
1. Sole proprietorship
Three forms of activities that can be performed by business organizations
It is a formal statement showing the performance of the entity. The performance of the entity is primarily measured
in terms of the level of income earned by the entity through the effective and efficient use of resources
The Merchandise Inventory account is adjusted (the more appropriate term is set up) at the end of the
accounting period only if the firm is using the periodic inventory system.
The pro-forma adjusting journal entry i
Introduction to Merchandising Transactions
Terms and Definitions
1. Merchandising Business
A firm that engages in the buying/selling of finished goods (i.e. grocery, clothing, similar items ready
for use or for consumption)
Items on hand