Fundamentals of Accountancy,
Business and Management 1
Module 6
The Business Transactions and their Analysis to Include Definition
and
Nature of Business Transactions, Types of Source or Business
Documents, and the Rules of Debits and Credits
Department of Education Republic of the Philippines
Government Property
NOT FOR SALE
Senior High School
What I Need To Know
Module Content
This module in Fundamentals of Accountancy, Business and Management 1 for the 21st
century learners is designed to make learning more engaging and meaningful to ABM Senior High
School learners in the flexible and blended learning environments.
The module is aimed at citing specific examples in which accounting is used in making
business decisions. The motivation behind this effort are the examples of service businesses
wherein they provides intangible goods or services to customers. It usually generates profit by
charging for labor or other services rendered to customers.
Meaningful activities are given in the form of worksheets, assignments and online or virtual
activities which allow learners to work at their own pace. As you go along, you will know the
accounting cycle for service business.
Learning is fun! So enjoy your journey as you unfold the most interesting and worthwhile
activities in accounting.
These are the competencies included in this module:
analyze common business transactions using the rules of debit and credit (ABM_FABM11-
IIIg-j-27); and
solve simple problems and exercises in the analyses of business transaction
(ABM_FABM11- IIIg-j-28).
For the Learners
This is the introductory course in accounting, business and
management data analysis that will develop your appreciation of accounting
as language of business and an understanding of basic accounting
concepts and principles that will help you analyze business transactions.
“Is accounting important to you?” Accounting delivers financial
information to different users through financial statements. It gives business
owners the chance to analyze the overall efficiency and effectiveness of
their business operations.
What’s In
Activity 1. Review
Instructions: differentiate the following terms. Write your answer on the line provided.
1. Service business
________________________________________________________.
2. Merchandising business
______________________________________________________.
3. Manufacturing business
________________________________________________________.
What’s New
Activity 2. Write the analysis, rules and journal entry of the business transaction illustrated below.
The following are transactions for Anime World Gallery for the month of May. They will
be recorded using the double-entry system. To analyze each transaction the following
shall be used to show the effect on the accounts as follows: A (for Asset), L (for liability),
or OE (Owner’s Equity). The effect on owner’s equity is sub classified as follows: OE:R
(Revenue) and OE:E (expenses).
Example on May 2:
For Initial Investment
May 2 Gisel Ong loves to watch anime. She draws posters of colorful anime
characters. Sometimes she displays them in her oce. To her surprise ,
many anime fans buy her drawings and paintings and place special
Lesson The Business Transactions and their Analysis to
Include Definition and
Nature of Business Transactions, Types of Source or
Business
orders for Anime characters of their choice. Thus, Gisel decided to open
Anime World Gallery. Gisel invested P300,000 in this initial endeavor.
Analysis Assets increased. Owner’s equity increased.
Rules Debit increases in assets. Credit increases in owner’s equity.
Entry Increase in assets is recorded by a debit to cash. Increase in owner’s
equity is recorded by a credit to Ong, Capital.
Show entry (Journal entry):
Dr Cr
Cash (A) 300,000
Ong, Capital 300,000
Initial Investment
Your turn
Issuance of Note for Cash
May 3 Gisel Ong Issued a promissory note for a P100,000 loan from Allay
Bank. The note carries a 12% interest per annum. The interest and the
principal are payable a3er one year.
Analysis ___________________________________________________.
Rules ___________________________________________________.
Entry ___________________________________________________.
____________________________________________.
Show entry:
Dr Cr
____________________ ___________
____________________ ____________
____________________________________________________.
Acquisition of Oce Equipment for Cash
May 5 Ms. Ong acquired oce equipment to be used for the oce paying
P180,000 in cash.
Analysis ___________________________________________________.
Rules ___________________________________________________.
Entry ___________________________________________________.
____________________________________________.
Show entry:
Acquisition of Furniture Paying Down Payment and the Balance on Account.
Dr Cr
____________________ ___________
____________________ ____________
____________________________________________________.
