Fundamentals of Accountancy

Learning Area Grade Level 11

W7 Quarter
Business and Management 1
3rd Quarter Date

I. LESSON TITLE Accounting Cycle - Transactions

II. MOST ESSENTIAL LEARNING
The learners describe the nature of transactions in a service business
COMPETENCIES (MELCs)
(ABM_FABM11-IVa-d-29)

III. CONTENT/CORE CONTENT Business Transaction and Their Analysis As applied to the Accounting Cycle of a
Service Business
Ref: Teachers Guide FABM, pages 97-118/ FABM1 Textbook, pages 70-124/
Quexhub PERC Learning Portal
Suggested
IV. LEARNING PHASES Learning Activities
Timeframe
A. Introduction 20 mins DAY 1
Panimula Good day! Welcome to another exciting week of learning.
By the end of our topic, you should be able to:
1. describe the nature of transactions in a service business,
2. perform transaction analysis of a service business, and
3. display timeliness, courtesy, consistency, and accuracy in service
business transactions.
Before we begin with our new lesson, can you tell what has been retained
from your accounting cycle lesson? Can you briefly discuss each step?
B. Development 145 mins Let us begin your Pre-test. Read and understand the following questions. Write
Pagpapaunlad the letter of the correct answer in your accounting journal.
PRE-TEST
1. Which of the following does not correctly define a business transaction?
A. an exchange between at least two parties
B. an exchange involving money, goods, or services
C. an activity involving changes on the assets, liabilities, and owner’s
equity
D. an act of providing something to oneself
2. What is a service business?
A. It benefits customers.
B. It is a commercial enterprise that provides work performed by an
individual or team.
C. It produces non-physical outputs in the form of service.
D. Options A, B, and C
3. Which of the following is an example of a service business?
A. Banking B. Cleaning C. Consulting D. Options A, B, and C
4. What type of business transaction is applicable in the service business of
full body massage?
A. Complex transaction B. Simple transaction
C. Ongoing transaction D. Options A, B, and C
5. What is exchange in a transaction involving service business?
A. Money and property B Money and franchise
C. Money and goods D. Money and service

That was great!

Let us now proceed with our topic.
A business transaction is an exchange between two parties such as a
company to its customers. There is an exchange of money, goods, or services
and in service business transactions; money and services are being
exchanged. It is also an activity involving changes in the assets, liabilities, and
owner’s equity. A service business is a commercial enterprise that provides
work performed by an individual or team. It produces non-physical outputs in
the form of service. Here, there is an exchange of service and cash. It aims to
provide the fullest service to its customers. Examples are Banking, Consulting,
and Cleaning. Here, money and service are being exchanged. It is also
associated with “tangibles” such as the following: (1) Aesthetics of the place;
(2) Quality of the seating; (3) Cleanness of the place. It should know first
customers’ expectations so that they will know the right service they can
provide to the customers.

Classification of Service Business Transactions

External or exchange transactions where there is an exchange of value with
external parties. Examples: (1) Providing an overnight room to backpackers;
(2) Offering a healthy meal to cyclists; (3) Letting runners use the tracking field
for training. Cash transactions wherein cash is received or paid immediately
after the transaction. Examples are eating at a buffet restaurant, watching a
movie in the cinema, and relaxing in an hour of massage. Credit transaction
wherein cash is received or paid on the agreed future date after the
transaction. An example is enrolling for another month of gym wherein cash
is paid on a scheduled date in a month.

Type of Service Business Transactions

Simple transactions involve a simple exchange between cash and service
such as massage service. Complex transaction involves a series of
transactions such as a number of papers to be signed and provided before
the loan is provided. Ongoing transactions involve multiple types of
transactions such as booking for a hotel, booking for an airline, and booking
for tour packages among others before a vacation package is provided to
families. In service business transactions, customers want value that pertains
to the performance, characteristics, features, attributes, and any other
aspect of services for which customers are willing to give up resources (usually
money).

The ways to effectively provide value to the customers are the following: (1)
Providing service that they need; (2) Providing service when they need it; (3)
Providing service where they need it. Service quality is one of the important
matters to be considered in service business transactions and the following
are the service quality dimensions: (1) Timeliness; (2) Courtesy; (3)
Consistency; and (4) Accuracy. Customer satisfaction should also be
considered. It measures how the services meet or surpass a customer’s
expectations. It refers to how satisfied or not the customers upon receiving
the service they need. It also provides pointers to the management on how
to effectively manage and improve service businesses.

Photo courtesy of QuexBook Smart Mobile Learning

Here are the top six reasons why customer satisfaction is so important:
1. It is a leading indicator of consumer repurchases intentions and loyalty.
2. It is a point of differentiation.
3. It reduces customer churn.
4. It increases customer lifetime value.
5. It reduces negative word of mouth.
6. It is cheaper to retain customers than acquire new ones.
 Customer advocates are customers who are satisfied with the services and
who can leverage to become evangelists of the company who can bring in
more customers to the service business.

On the other hand, analyzing business transactions from source documents

requires familiarity with business documents. Common business documents
are official receipts (usually for a service business), sale invoice usually for
merchandising business), statements of accounts or billing statements (an
example is electricity bill), deposit slips and withdrawal slips (for banks), payroll
sheets (for salaries and wages), debit memoranda, credit memoranda,
among others. You may search the internet, ask your parents, or visit a
business if possible for some examples of these documents.

Nevertheless, transaction analysis only involves three simple steps. These are
the following:
1. Classify whether the transaction is a business or a non-business
transaction. If the transaction is a non-business, then there is no need to
proceed to step 2.
2. Identify the major account/s and the account title/s affected and the
movements with respect to its/ their normal balance/s.
3. Determine the amount/s to be credited or debited.

I hope you learned a lot about service business. Now, choose one or two of
your classmates, friends, or family members to help you analyze each service
business transaction. Write your analysis in your accounting journal. Letter A is
already given.
ACTIVITY 1 – Transaction Analysis!
A. February 14, 2018 – Juan dela Cruz invested PHP200,000 into his
Minesgate Computer Repair business.
Following the three simple steps, our analysis shall be:
1. It is a business transaction since it affects the accounting equation.
2. The major accounts affected are assets and owner’s equity. More
specifically, the account titles affected are Cash (increase through
a debit) and dela Cruz, capital (increase through credit).
3. The amount to be debited is P200,000 for Cash (accounts with
normal debit balances are increased through a debit) and the
amount to be credited is P200,000 for dela Cruz, Capital (accounts
with normal credit balances are increased through a credit).
B. February 15, 2018 - Juan dela Cruz purchased one computer unit from
Octagon Computer Store to be used for his business. He issued a check
number 001 amounting to PHP25,000.
C. February 16, 2018 - Juan dela Cruz hired Perla Silangan, an experienced
secretary.
D. February 17, 2018 – Repaired the computer of Jose and collected
PHP10,000.
E. February 18, 2018 – Repaired the computer of Maria. However, Maria
will pay PHP15,000 only on March 18, 2018.
F. February 19, 2018 – Juan dela Cruz purchased office supplies from J&R
Merchandise amounting to PHP5,000 on the account. Juan dela Cruz
will pay this on March 30, 2018.
G. February 25, 2018 – Paid the salary of Perla Silangan amounting to
PHP4,000.
That was fun!
6. Engagement 15 mins DAY 2
Pakikipagpalihan Today, let us continue the excitement with yesterday’s lesson. Get your
transaction analysis yesterday and do the following activity below. Copy and
answer it in your accounting journal.
ACTIVITY 2 –Effects on Transactions
 Proverbs 21:8 - The way of man [is] froward and strange: but [as for] the pure,
his work [is] right.

To summarize the aforementioned transactions, yesterday had the following

effects on the major accounts and account titles. Complete the table below.
Number 1 is already given.

Owner’s Equity
Transaction Assets Liabilities
(+C+R+E+W)
Increase of Increase of P200,000
A No effect
P200,000 (Cash) (dela Cruz, Capital)
B
C
D
E
F
G
7. Assimilation 40 mins ACTIVITY 3 –Debit or Credit
Paglalapat In your accounting journal, create a table for a summary of normal balances,
the increases (through), and the decreases (through) of Assets, Liabilities,
Owner’s Equity, Revenues, Expenses, and Valuation (Contra-asset) accounts.
Write Debit or Credit.
V. ASSESSMENT 15 mins Before we end our topic, let us have your post-test. Please copy and answer
(Learning Activity Sheets for the following questions in your accounting journal.
Enrichment, Remediation or
Assessment to be given on Weeks
3 and 6) POST-TEST
1. Which of the following is one of the service quality dimensions that are
significant in transactions involving service business?
A. Courtesy B. Timeliness C. Consistency D. Options A, B, and C
2. What is accuracy as one of the service quality dimensions that are
significant in transactions involving service business?
A. Accessibility to customers B. Performed correctly each time

C. Fully serviced, as required D. Options A, B, and C

3. What is customer satisfaction?
A. Provides pointers for managing and improvement of service
businesses
B. Measures how services meet or surpass a customer’s expectations
C. An important matter considered in service business transactions
D. Options A, B, and C
4. What are customer advocates in a service business transaction?
A. Persons who can bring out customers from the company
B. Persons who can watch customers go
C. Persons who can leverage to become evangelists of the company
D. Options A, B, and C
5. Which of the following is an example of the “tangibles” associated with
a service business transaction?
A. Aesthetics of the place B. Cleanness of the place
C. Quality of the seating D. Options A, B, and C
VI. REFLECTION 5 mins ● Communicate the explanation of your personal assessment as
indicated in the Learner’s Assessment Card.
● In your accounting journal write your personal insights about the
lesson using the prompts below.
I understand that ___________________.
I realize that ________________________.
I need to learn more about __________.
Prepared by: Jennifer B. Fernandez, SDO Imus City Checked by: Dr. Josephine P. Canlas, Adora G. del Mundo,
Cherie L. Logatoc