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    Accounting Equation Example

    Uploaded by

    MD Dee
    Paolo Reyes started a delivery service on July 1, 2013, investing PHP800,000 in cash and PHP200,000 in cars. Throughout July, Reyes purchased various assets for the business, borrowed PHP100,000 from the bank, and received revenue from customers. Reyes also paid expenses such as equipment, supplies, utilities, and salaries, as well as a loan payment. By the end of the month, the document outlines the business's cash flows and transactions to determine its profit for July.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Accounting Equation Example

    Uploaded by

    MD Dee
    7K views14 pages
    Paolo Reyes started a delivery service on July 1, 2013, investing PHP800,000 in cash and PHP200,000 in cars. Throughout July, Reyes purchased various assets for the business, borrowed PHP100,000 from the bank, and received revenue from customers. Reyes also paid expenses such as equipment, supplies, utilities, and salaries, as well as a loan payment. By the end of the month, the document outlines the business's cash flows and transactions to determine its profit for July.

    Original Description:

    Basic Accounting

    Original Title

    Accounting Equation Example (1)

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    Paolo Reyes started a delivery service on July 1, 2013, investing PHP800,000 in cash and PHP200,000 in cars. Throughout July, Reyes purchased various assets for the business, borrowed PHP100,000 from the bank, and received revenue from customers. Reyes also paid expenses such as equipment, supplies, utilities, and salaries, as well as a loan payment. By the end of the month, the document outlines the business's cash flows and transactions to determine its profit for July.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    7K views14 pages

    Accounting Equation Example

    Uploaded by

    MD Dee
    Paolo Reyes started a delivery service on July 1, 2013, investing PHP800,000 in cash and PHP200,000 in cars. Throughout July, Reyes purchased various assets for the business, borrowed PHP100,000 from the bank, and received revenue from customers. Reyes also paid expenses such as equipment, supplies, utilities, and salaries, as well as a loan payment. By the end of the month, the document outlines the business's cash flows and transactions to determine its profit for July.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    Assets invested by the owner

    July 1 - Paolo Reyes started a delivery service on July 1, 2013. The following transactions occurred
    during the month of July. He invested PHP800,000 cash and Cars amounting to PHP200,000

    Borrowings from the bank

    July 2 – Reyes borrowed PHP100,000 cash from PNB for use in his business.
    Asset purchased for cash

    July 7 – Bought tables and chairs from Orocan and paid PHP45,000 cash

    Assets purchased on account

    July 15 – Various equipment were purchased on account from Fortune for PHP55,000
    Cash withdrawal by the owner

    July 18 – Reyes made a cash withdrawal of PHP5,000 for personal use

    Payment of liability

    July 20 – The account due to Fortune was paid in cash


    Determining profit through operation

    • Accrual basis of accounting vs Cash basis of accounting – accrual basis


    recognizes revenue when earned and recognizes expenses when incurred

    • Under the expense recognition principle, expenses can be recognized either


    as:

    (1) matching;
    (2) systematic allocation, or;
    (3) direct association.

    • Profit measures the performance of the company. If the revenue exceeds


    expenses, then it is a net profit; otherwise, it is a net loss.
    Received cash for revenue earned

    July 21 – A customer hired the services of Reyes. Cash of PHP15,000 was received from the customers.

    Paid cash for expenses incurred

    July 22 – Cash was paid for the following : gas and oil, PHP500 and car repairs, PHP1,000.
    Revenue rendered on account

    July 24 – Another customer hired the services of Reyes and promised to pay PHP16,000 on July 31.

    Paid for expenses incurred

    July 25 – Paid PHP500 for telephone bill.


    Revenue earned with a downpayment, balance on account

    July 27 – Another customer hired the services of Reyes. A bill was issued to them for PHP20,000, 50% of
    which was collected

    Customer’s account collected in cash

    July 30 – The customer on July 24 paid 50% of his account in cash.


    Paid cash for expenses incurred

    July 31 – Paid PHP10,000 for rental of office space, and salaries of PHP9,000
    ACTIVITY TIME
    1. The owner invested cash of PHP150,000 or the business earned PHP150,000 cash from providing
    services.

    2. Purchased equipment at PHP20,000 for cash.

    3. The owner withdrew cash of PHP112,500 or the business incurred PHP112,500 expenses and paid in
    cash.

    4. The company purchased supplies on account, PHP4,000.

    5. The owner withdrew cash of PHP15,000 or the business incurred PHP15,000 expenses and paid in cash.

    6. Paid liabilities worth PHP53,000.

    7. The owner withdrew supplies worth PHP8,000 or the business used supplies worth PHP8,000.

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