Fundamentals of

Accountancy, Business
and Management 1
CLASS LECTURE
 PRAYER
“Let us place ourselves in the presence of
God…”
FAB THE RULES OF DEBIT
M 1 AND CREDIT
double-entry system which means that the
dual effects of a business transaction is
recorded. A debit side entry must have
corresponding credit side entry.

DEBIT= CREDIT
FAB THE RULES OF DEBIT
M 1 AND CREDIT
An account is debited when an amount is entered
on the left side of the account and credited when
the amount is entered on the right side. The
abbreviation for debit is Dr.(Debere) and Cr.
(Credere) For credit.

Dr. (Debere)= Cr. (Credere)

FAB THE RULES OF DEBIT
M 1 AND CREDIT
An account is debited when an amount is entered
on the left side of the account and credited when
the amount is entered on the right side. The
abbreviation for debit is Dr.(Debere) and Cr.
(Credere) For credit.

Dr. (Debere)= Cr. (Credere)

FAB THE RULES OF DEBIT
M 1 AND CREDIT
ASSETS + Expenses LIABILITIES + EQUITY + Income

DEBIT CREDIT
Left Right
FAB The Normal balance of an
M 1 Account
Account Debit Credit
Assets 
Liabilities 
Equity 
Income/Revenue 
Expenses 
FAB The Normal balance of an
M 1 Account
Account Debit Credit
ASSETS Increase Decrease
LIABILITIES Decrease Increase
EQUITY Decrease Increase
INCOME/REVENUE Decrease Increase
EXPENSES Increase Decrease
FAB The Normal balance of an
M 1 Account
Account Debit Credit
ASSETS Increase Decrease
LIABILITIES Decrease Increase
EQUITY Decrease Increase
INCOME/REVENUE Decrease Increase
EXPENSES Increase Decrease
FAB The Normal balance of an
M 1 Account
Accounts Type of Normal Debit Credit
Account Balance
1 Cash Asset Debit Increase Decrease
2. Account Payable Liability Credit Decrease Increase
3. Capital Equity Credit Decrease Increase
4. Service Fee Income Credit Decrease Increase
5. Utilities Expense Expense Debit Increase Decrease
FAB The Normal balance of an
M 1 Account
Accounts Type of Account Normal Debit Credit
Balance
Allowance for Bad Debts Contra (Asset)-Account Credit Decrease Increase
Accumulated Depreciation Contra (Asset)-Account Credit Decrease Increase
Sales Return Contra (Sales)-Account Debit Increase Decrease
Sales Discounts Contra (Sales)-Account Debit Increase Decrease
Purchase Return Contra (Purchases)-Account Credit Decrease Increase
Purchase Discounts Contra (Purchases)-Account Credit Decrease Increase
FAB RECAPUTATION
M1
FAB THE ACCOUNTING
M 1 CYCLE 1. Analysis of Transactions
2. Recording of transactions in the journal
Accounting Cycle 3. Posting of journal entries to the ledger
is a sequence of 4. Preparation of trial balance
operations used to 5. Preparation of the worksheet
account business 6. Journalizing and Posting of adjusting entries
transactions during a
7. Preparation of the Financial Statements
specific period.
8. Journalizing and Posting of Closing entries
9. Preparation of Post-Closing Trial balance
10. Journalizing and Posting of reversing entries
FAB THE ACCOUNTING
M 1 CYCLE
FAB Operating Cycle of Servicing
M 1 business
FAB THE GENERAL JOURNAL
M1
The Journal is the book of original entry.
The General Journal is the most basic
journal. Typically, a general journal has
spaces for dates, account titles and
explanations, references, and two
amount columns.
FAB THE GENERAL JOURNAL
M1
The journal makes several significant contributions to
the recording process:
• It discloses in one place the complete effects of a
transaction.
• It provides a chronological record of transactions.
• It helps to prevent or locate errors because the
debit and credit amounts for each entry can be
easily compared
FAB THE GENERAL JOURNAL
M1
GENERAL JOURNAL
Date Account Title and Post. Debit Credit
Explanation Ref.
FAB THE GENERAL JOURNAL
M 1
Sample Simple Journal Entry
GENERAL JOURNAL
Date Account Title and Explanation Post. Debit Credit
2019 Ref.
May 5 Cash 110 P 100,000
Caab, Capital 310 P 100,000
To record investment
FAB THE GENERAL JOURNAL
M 1
Sample Compound Journal Entry
GENERAL JOURNAL
Date Account Title and Explanation Post. Debit Credit
2019 Ref.
May 5 Cash 110 P 100,000
Land 150 P 550,000
Caab, Capital 310 P 650,000
To record investment
FAB JOURNAL ENTRY
M Jan.
1 02 Invested P 300,000 cash to start a
business.
GENERAL JOURNAL
Date Account Title and Explanation Post. Debit Credit
2019 Ref.
Jan 2 Cash 110 P 300,000
ABM, Capital 310 P 300,000
To record investment

Increase in Asset = Increase in Equity

FAB JOURNAL ENTRY
M Jan.
1 06 Purchased Car Wash supplies, P 20,000
GENERAL JOURNAL
Date Account Title and Explanation Post. Debit Credit
2019 Ref.

Jan 6 Unused Supplies 140 P 20,000

Cash 110 P 20,000
To record purchased supplies

Increase in Asset = Decrease in another asset

FAB JOURNAL ENTRY
M Jan.
1 15 Acquired Chairs and Tables on account.
P 25,000.
GENERAL JOURNAL
Date Account Title and Explanation Post. Debit Credit
2019 Ref.
Jan 15 Furniture and Fixtures 190 P 25,000
Accounts Payable 210 P 25,000
To record acquired Table and
Chairs.

Increase in Asset = Increase in Liability

FAB JOURNAL ENTRY
M Jan.
1 20 Billed customer for Car Wash service
rendered, P5,000.
GENERAL JOURNAL
Date Account Title and Explanation Post. Debit Credit
2019 Ref.
Jan 20 Accounts Receivable 120 P 5,000
Service Income 410 P 5,000
To record service rendered

Increase in Asset = Increase in Equity

FAB JOURNAL ENTRY
M Jan.
1 30 Paid salaries of employees, P10,000
GENERAL JOURNAL
Date Account Title and Explanation Post. Debit Credit
2019 Ref.

Jan 30 Salaries Expense 520 P 20,000

Cash 110 P 20,000
To record payment of salaries

Decrease in Asset= Decrease in Equity

FAB JOURNAL ENTRY
M 1 1, 2019 An entity acquired land amounting to
Dec.
P 1,000,000; P 200,000 cash was paid.
GENERAL JOURNAL
Date Account Title and Explanation Post. Debit Credit
2019 Ref.

Dec 1 Land 150 P 1,000,000

Cash 110 P 200,000
Accounts Payable 210 P 800,000
To record acquired land

Increase in Asset= Increase in Liability

P 800,000
FAB The Normal balance of an
M 1 Account
Account Debit Credit
ASSETS Increase (+) Decrease(-)
LIABILITIES Decrease (-) Increase (+)
EQUITY Decrease(-) Increase (+)
INCOME/REVENUE Decrease(-) Increase (+)
EXPENSES Increase (+) Decrease(-)
 Account Debit Credit

FAB The Rules of ASSETS

LIABILITIES
(+)
(-)
(-)
(+)
M 1 Debit and EQUITY
INCOME/REVENUE
(-)
(-)
(+)
(+)
Credit EXPENSES
DRAWINGS
(+)
(+)
(-)
(-)
Account Debit Credit
Cash Investment by the owner Cash Capital
Purchase of Office Supplies Office Supplies Cash
Payment of Account Payable Account
Cash
Payable
Rendered Service to the customer, cash received Cash Service Revenue
Payment of Expenses Expenses Cash
Rendered Service to customers, on account Account
Service Revenue
Receivables
Collection of Account Receivables Account
Cash
Receivables
Cash Withdrawals by the owner Drawing Cash
 Account Debit Credit

FAB The Rules of ASSETS

LIABILITIES
(+)
(-)
(-)
(+)
M 1 Debit and EQUITY
INCOME/
(-) (+)

Credit REVENUE
EXPENSES
(-)

(+)
(+)

(-)
DRAWINGS (+) (-)

Account Debit Credit

Cash Investment by the owner Cash Capital
Purchase of Office Supplies Office Supplies Cash
Payment of Account Payable Account Payable Cash
Rendered Service to the customer, cash received Cash Service Revenue
Payment of Expenses Expenses Cash
Rendered Service to customers, on account Account Receivables Service Revenue
Collection of Account Receivables Account
Cash
Receivables
Cash Withdrawals by the owner Drawing Cash
FAB Self-Check
M 1
Nelson Daganta formed the Painted Signs Avenue on Oct.1, 2018. He deposited
in GE Money Bank under the name of the new business entity. During the month
of October 2018, the following transactions occurred:
Oct 1 Invested P 250,000 cash.
2 Acquired a service vehicle in the amount of P 190,000 on account
3 Acquired supplies for cash, P 57,000
9 Received P 87,000 cash for signs painted.
10 Paid the month’s rent, P 25,000.
11 Painted signs for Cagayan Mobile on account, P 170,000.
12 Paid P 55,000 on account from Oct. 2
16 Withdrew P 25,000 for personal use.
23 Collected P 35,000 from Cagayan Mobile.
27 Paid Salaries of P57,000 for the month.
30 Paid BayanTel P7,500 for the month.
31 Paid a bill form AdAsia for P 5,500 of advertising for the month.
FAB
M1
FAB JOURNAL ENTRY
M 1 1, 2019 An entity acquired land amounting to
Dec.
P 1,000,000; P 200,000 cash was paid.