101 Things to do to pass the CPA Board Exams (and put the suffix CPA after your

name) 😇

1. Ask God for help.

2. Believe in yourself.
3. Believe you can pass the CPA Board Exams.
4. Get ready for some sacrifices in the review.
5. Build self-confidence over time.
6. Get your school documentations ready.
7. Register early at PRC.
8. Enroll in a formal review or be serious in a non-formal review.
9. Do your self-study sessions on time.
10. Do practice tests as much as you can.
11. Watch your diet.
12. Exercise regularly.
13. Take your vitamins daily.
14. Find a study area in the house.
15. Make your study area holy.
16. Organize your review materials.
17. Get updated review materials.
18. Connect with positive-thinking friends.
19. Accept help from someone.
20. Avoid fights for the meantime.
21. Stay away from distractions.
22. Stay away from malls or out-of-town trips except to relax.
23. Stay away from time-wasting friends.
24. Ask your lover or spouse to give you space.
25. Talk to friends and relatives about your quest.
26. Announce to the world that you will be a CPA soon.
27. Keep your promises.
28. Think big and positive.
29. Mingle with like-minded individuals.
30. Look for a review buddy.
31. Exchange notes with other reviewees.
32. Be courageous to ask questions even if it sounds silly.
33. Study the hardest first going to the easiest topics.
34. Allocate time to review.
35. Make for more time to review when required.
36. Bring a book where ever you may be.
37. Record yourself to an Ipod or recorder to memorize.
38. Read a book when you have idle time.
39. Find time to relax.
40. Sleep just about right.
41. Never underestimate yourself.
42. Don’t try to skip review sessions. (self-study)
43. Try not to miss you review classes (formal review)
44. Do things now than later.
45. Chew up your study one small chunk at a time.
46. Learn to read fast with high level of comprehension.
47. Memorize using your own acronyms.
48. Buy the best calculator for the exams.
49. Reward yourself when you finish a task.
50. Realize that learning new things is not that easy.
51. Do not be discouraged if you don’t understand things at first try.
52. Make a detailed study plan.
53. Stick to the study plan schedules.
54. Mind your own business.
55. Give yourself a break from time to time.
56. Motivate yourself to the max.
57. Don’t get yourself be swamped by biting more than you can chew.
58. Judge youself by achieving your goals.
59. Be proud of and thank your family who is with you in this endeavor.
60. Forget about past failures.
61. Don’t judge yourself by your grades in school.
62. Reward yourself if you succeeded to learn something new.
63. Recognize mental fatigue when it sets in.
64. Know when to stop studying.
65. Know when is the time you study best.
66. Know how to relax while studying.
67. Set realistic study goals for yourself.
68. Check off the goals you fulfilled and reward yourself accordingly.
69. Know the senses through which you learn best and use them.
70. Discover your learnings strenghts and use them.
71. Don’t feel stupid if you ask for help.
72. Find out why you find it hard to learn some topics.
73. Find a new way of solving problems.
74. Practice using mental calculations.
75. Find your best way to concentrate.
76. Be courageous even when others are afraid.
77. Give other people hope and inspiration.
78. Share your learnings and become a teacher to others.
79. Avoid griping and complaining.
80. Learn to detect trick questions.
81. Answer easy questions first.
82. When in doubt, stick to your first answer.
83. Read aloud something you particularly want to remember.
84. Tape record those topics that you are weak and play it over and over until you
master it.
85. If you are attending formal review classes, do group study with peers.
86. Avoid multi-tasking and keep focused.
87. Realize you may need to learn more.
88. Be willing to accept new information.
89. Write notes so you can read them later.
90. Don’t put off studying. Just do it.
91. Say no to time-consuming request from others.
92. Write your goal on the wall where you study.
93. Don’t let your emotions prevent you from learning.
94. Make it a habit to be aware of the time.
95. Answer fast so you can review your answers later.
96. Honor your parents for giving you what you have now.
97. Hold your head up even when you feel down and exhausted.
98. When you feel like quitting, remind yourself that you are almost there.
99. Hope for the best; prepare for the worst.
100. Stay humble no matter what happens.
101. And lastly, promise to give back to those who will follow you. Promise to yourself
that if you succeed in this challenge, you will help other people as well become a CPA
by mentoring at least one reviewee. When you give, more will be given unto you.
Source: https://philippinecpareview.blogspot.com/2011/10/101-things-to-do-to-pass-
cpa-board.html?m=1
#TheAccountant

"BASIC" ACCOUNTING EQUATION

A = L + OE
Assets = Liabilities + Owner's Equity
P100 = P60 + P40
"CHARACTERS" :)

a. BUSINESS = "Ikaw"
b. ASSET = Pag-aari "ng business"
c. LIABILITY = Utang "ng business" sa iba (Ex. Bank)
d. OWNER'S EQUITY = parang "Utang" "ng business" sa may-ari (owner)
#CommonMistake
Ang "Business" at ang "Owner" ay IISA..
*MALI po yan. Para maintindihan natin ang Accounting Equation (A=L+OE), ang una
nating dapat isipin ay magkaiba po sila. Magkaiba ang "BUSINESS" at ang "OWNER"
#HALIMBAWA
BUSINESS(Ikaw) = Buy & Sell ng damit
~kung ikaw si BUSINESS, kailangan mo ng "pera" pambili ng damit.
#QUESTION
Saan manggagaling ang pera?
Answer:
a. Mangungutang sa iba (Ex. Bank) P60
b. Mangungutang sa may-ari or owner P40
P60 + P40 = P100
Ang pera na ngayon ni "Business" ay P100
Business:
A = P100 (Pera/Asset)
L = P60 (Utang sa Bank)
OE = P40 (Utang sa Owner)
In simple words, ang Pera ng Business na P100 (ASSET):
~ay galing sa utang sa Bank P60 (LIABILITY), at galing sa "utang" sa Owner P40
(OWNER'S EQUITY)
A = L + OE
P100 = P60 + P40
#REMINDER
~In Form, parang ISA lang ang "Business" at "Owner"
~Pero in Substance, IKAW lang si " BUSINESS" (at "parang" pinautang ka lang ng sarili
mo)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"DEBIT AND CREDIT"
1. Bumili ka ng Laptop at nagbayad ka ng P50000
DEBIT: Laptop 50000
CREDIT: Cash 50000
Nagkaroon ka ng Laptop, kaya DEBIT
Nawalan ka naman ng Cash, kaya CREDIT
NOTE: (ASSET)
Pag "nagkakaroon" ka ng Asset(or bagay) = DEBIT
Pag "nawawalan" ka ng Asset (or bagay) = CREDIT
..............................................
2. Bumili ka ng Laptop pero utang, P50,000
DEBIT: Laptop 50000
CREDIT: Accounts Payable 50000
Nagkaroon ka ng Laptop, kaya DEBIT
Nagkaroon ka ng utang(Accounts Payable), kaya CREDIT
NOTE: (LIABILITY or UTANG)
Pag "nagkakaroon" ka ng utang = CREDIT
Pag "nawawalan" ka ng utang = DEBIT
#IMPORTANT
Baliktad ang ASSET at LIABILITY
(ASSET)
DEBIT: pag "nagkakaroon" ka ng Asset(or bagay)
CREDIT: pag "nawawalan" ka ng Asset (or bagay)
(LIABILITY)
CREDIT: pag "nagkakaroon" ka ng utang
DEBIT: pag "nawawalan" ka ng utang
..............................................
3. Binayaran mo na ang utang mo..
DEBIT: Accounts Payable 50000
CREDIT: Cash 50000
Nawala na ang utang mo(Accounts Payable), kaya DEBIT.
Nawalan ka din ng Cash, kaya CREDIT.
*Yehey, wala ka nang utang. :)

..............................................
4. Ginamit mo yung Laptop sa business mong Accounting Tutorial. Kumita ka ng
P20,000 pero "pautang".
DEBIT Accounts Receivable 20,000
CREDIT Service Income 20,000
Nagkaroon ka ng "pautang"(Asset siya kasi makokolekta mo siya), kaya DEBIT
Nagkaroon ka din ng kita o income, kaya CREDIT.
NOTE: (INCOME or KITA)
Pag "nagkakaroon" ka ng income = CREDIT
..............................................
5. Nakolekta mo na yung pautang mo sa tinuruan mong estudyante P20,000.
DEBIT Cash 20000
CREDIT Accounts Receivable 20000
Nagkaroon ka ng Cash, kaya DEBIT
Nawalan ka ng pautang(Accounts Recevable), kaya CREDIT
...............................................
6. Nagbayad ka ng P10,000 sa inuupahan mong lugar para sa tutorial.
DEBIT Expense 10000
CREDIT Cash 10000
Nagkaroon ka ng gastos(expense), kaya DEBIT
Nawalan ka din ng cash, kaya CREDIT.
NOTE: (EXPENSE or GASTOS)
Pag "nagkakaroon" ka ng gastusin = DEBIT
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Increase in Asset
Nagkaroon ka ng asset kasi pwedeng
-nanggaling sa inutang mo
-nag invest ka ng pera/gamit sa business mo
-galing sa serbisyo mo at kumita ka
Decrease in Asset
Nawalan ka ng asset kasi pwedeng
-nagbayad ka ng utang
-binawi mo yung capital mo sa business (withdrawal)
-may mga gastusin o expenses ka sa business mo
Equity = Capital + Revenue - Expenses - Drawings(Withdrawal)
Increase in Equity
Tumaas ang Equity mo dahil mas malaki ang kita(revenue) mo kaysa sa
gastos(expenses). Ang tawag dito ay "Net Income".
Pwede rin tumaas ang Equity pag nagdadagdag ka ng capital(pera o gamit) sa
business mo.
Decrease in Equity
Bumaba ang Equity mo dahil mas malaki ang gastos(expenses) mo kaysa sa revenue
or kita. Ang tawag dito ay "Net Loss".
Pwede rin bumaba ang Equity pag kumukuha ka ng capital(pera o gamit) sa business
mo. Withdrawals.
Normal Balances:
DEBIT (DEAL)
D-ividends (Drawings)
E-xpenses
A-sset
L-osses
CREDIT (GIRLS)
G-ains
I-ncome
R-evenues
L-iabilities
S-tockholder's (or Owner's) Equity
#TheAccountant

"BASIC" (PART 2)
Assets = Liabilities + Owner's equity
ASSETS
*Current assets
*Noncurrent assets
LIABILITIES
*Current liabilities
*Noncurrent liabilities
OWNER's EQUITY (see details below)
~~~~~~~~~~~~~~~~~~~~~~~~
"ACCOUNT TITLES"
#ASSETS
CURRENT ASSETS:
-Cash
-Trading Securities (Marketable Securities) (Fair value through Profit or Loss) (Short-
term Investment)
-Accounts Receivable
-(Allowance for Doubtful Accounts) (or Allowance for Bad debts or Allowance for
Uncollectible accounts)
-Notes Receivable
-Merchandise Inventory (for "merchandising" business)
-Accrued "_____" Income (Ex. Accrued "Interest" Income)
-Prepaid Expenses
a. (Supplies/Office Supplies/Store Supplies)
b. (Prepaid Rent, Prepaid Salaries, etc.)... keyword is "PREPAID"
-Advances "to" Employees (Advances "to" Supplier)
Other "current" assets...
NONCURRENT ASSETS:
-Land
-Building
-Machinery and Equipment
-Furniture & Fixtures
-(Accumulated Depreciation)
-Long term Investments
-Intangible Assets
Other "noncurrent" assets...
#LIABILITIES
CURRENT LIABILITIES:
-Accounts Payable
-Notes Payable (short-term)
-Accrued "_______" Expense
-"______" Payable
-Unearned "_____" Income
-Advances "FROM" Customers
Other "current" liabilities...
NONCURRENT LIABILITIES:
-Notes Payable (long-term)
-Bonds Payable
-Mortgage Payable
-Other "noncurrent" liabilities
#OWNER'S EQUITY
Beginning Capital
+Additional investments
+Income/Revenue/Gains
-Expenses/Losses
-Withdrawals/Drawings
#INCOME (Revenue/Gains)
-Service Income
Other income:
-"__________" Income (Ex. Interest income)
-"__________" Revenue (Ex. Interest revenue)
-Gain on sale
NOTE:
"Unearned income" and "Accrued income" are NOT income accounts.
#EXPENSES (& Losses)
-"_____" Expense (Ex. Interest expense)
-Loss on Sale
NOTE:
"Prepaid expense" and "Accrued expense" are NOT expense accounts.
#PS. Sa PART 3 po ang explanation ng bawat accounts.
#TheAccountant <3

"BASIC" (Part 3)
"FORMS" OF BUSINESS ORGANIZATION
1. SINGLE/SOLE PROPRIETORSHIP
2. PARTNERSHIP
3. CORPORATION
1. SINGLE/SOLE PROPRIETORSHIP is a business owned by only ONE INDIVIDUAL.
2. PARTNERSHIP is an association of "TWO or MORE" persons who bind themselves
to contribute money, property or industry(services) to a common fund, with the intention
of dividing the profits among themselves.
3.CORPORATION is an artifical being(not natural, like human being) created by
opearation of LAW, having the rights of SUCCESSION, and the POWERS AND
ATTRIBUTES expressly authorized by law or incident to its existence.
~~~~~~~~~~~~~~~~~~~~~~~~~~
"TYPES" OF BUSINESS
1. "SERVICE" BUSINESS
2. "MERCHANDISING/TRADING" BUSINESS
3. "MANUFACTURING" BUSINESS
1. SERVICE BUSINESS. This business renders services to customers or clients for a
fee.
(Sale of SERVICES)
2. MERCHANDISING/TRADING BUSINESS. This business buy goods or commodities
and sell them at a profit.
(Sale of GOODS)
3. MANUFACTURING BUSINESS. This business makes "finished goods" from "raw
materials" or unassembled parts. It "produces" the goods that it sells.
(Sale of GOODS)
1. SERVICE BUSINESS
(=>Services)
2. MERCHANDISING/TRADING BUSINESS
(Buy=>Sell)
3. MANUFACTURING BUSINESS
(Buy=>"Process"=>Sell)
~~~~~~~~~~~~~~~~~~~~~~~~~~
"ELEMENTS" of FS (Financial Statements)
1. ASSETS
2. LIABILITIES
3. OWNER'S EQUITY/CAPITAL
4. INCOME/REVENUE
5. EXPENSE
1. ASSETS are defined as RESOURCES controlled by the enterprise as a result of past
transactions and events and from which future economic benefits are expected to flow
to the enterprise.
~In simple words, these are PROPERTIES owned by the business.
2. LIABILITIES are defined as present OBLIGATIONS of an enterprise arising from past
transactions or events, the settlement of which is expected to result in an outflow from
the enterprise of resources embodying economic benefits.
~In simple words, these are the financial obligations or DEBTS of the business.It is also
described as CLAIM of the CREDITORS on the Assets of the enterprise.
3. OWNER'S EQUITY/CAPITAL represents the CLAIM of the OWNER on the Assets of
the business. It is the RESIDUAL INTEREST in the Assets of the business after
deducting all its liabilities.
a. "Owner's Capital"
-Initial investments
-Additional investments
-Permanent wIthdrawal
b. "Owner's Drawing"
-Temporary withdrawal
4. INCOME/REVENUE is the gross INFLOW of economic benefits during the period in
the form of INFLOWS or enhancements on assets or decrease in liabilities that result in
increase in equity, other than those relating to contributions from the owner or owners.
5. EXPENSE is defined as the gross OUTFLOW of economic benefits during the period
in the course of ordinary activities when these OUTFLOWS result in DECREASE in
equity other than those relating to distribution to owners.
~In simple words, these are COSTS incurred to produce income/revenue.
~~~~~~~~~~~~~~~~~~~~~~~~~~~
"CURRENT ASSETS"
1. Cash
2. Trading Securities / Marketable Securities / Fair value through Profit or Loss / Short-
term Investment
3. Accounts Receivable
4. (Allowance for Doubtful Accounts) (Allowance for Bad debts) (Allowance for
Uncollectible accounts)
5. Notes Receivable
6. Accrued "_____" Income (Ex. Accrued "Interest" Income)
7. Advances "to" Employees (Advances "to" Supplier)
Other "current" assets...
8. Merchandise Inventory (for "merchandising" business)
9. Prepaid Expenses
a. (Supplies/Office Supplies/Store Supplies)
b. (Prepaid Rent, Prepaid Salaries, etc.)... keyword is "PREPAID"
1. CASH is any medium of exchange that a bank will accept at face value. It includes
coins and currencies, checks, money orders and bank drafts.
2. TRADING SECURITIES are debt and equity securities that are purchased with the
intent of selling them in the "near term" or very soon.
3. ACCOUNTS RECEIVABLES are claims against debtors or customers arising from
services rendered on account and sale of merchandise on account.
4. ALLOWANCE FOR DOUBTFUL ACCOUNT relates to the company's receivables
which might not be collected.
(Contra-Asset)
5. NOTES RECEIVABLES are claims supported by promissory note.
Current asset, if short-term. (also Current if the problem is SILENT)
*Noncurrent asset, if long-term.
6. ACCRUED INCOME. Earned but not yet received/collected.
7. ADVANCES TO EMPLOYEES. Advance payment to an employee for services to be
rendered. (deducted from his/her salary on payday)
8. MERCHANDISE INVENTORY are goods on hand and are available for sale.
9. PREPAID EXPENSES are expenses PAID IN ADVANCE by the business ("Paid but
not yet incurred").
9a. SUPPLIES are being used by the business like papers, pens, pencils, folders,
staplers, etc.
~~~~~~~~~~~~~~~~~~~~~~~~~~~
"NONCURRENT ASSETS"
1. Land
2. Building
3. Machinery and Equipment
4. Furniture & Fixtures
5. Accumulated Depreciation
6. Intangible Assets
1. LAND is an asset that is not subject to depreciation. It appreciates (value increases)
as time goes by.
2. BUILDING can be acquired by PURCHASE or by means of CONSTRUCTION.
Construction costs may include materials, labor, overhead, permit or license, Architect
fee, Excavation cost, etc.
3. MACHINERY & EQUIPMENT includes computers, air-conditioning units, electric
fans, freezers, refrigerators, truck, etc.
4. ACCUMULATED DEPRECIATION. "Total" depreciated cost of a depreciable asset.
(Contra-Asset)
5. FURNITURE AND FIXTURES includes tables, chairs, filing cabinets, etc.
6. INTANGIBLE ASSET is an identifiable non-monetary asset "without physical
substance" or have no physical appearance but are expected to provide future
economic benefits to the company.
~~~~~~~~~~~~~~~~~~~~~~~~~~~
"CURRENT LIABILITIES"
1. Accounts Payable
2. Notes Payable (short-term)
3. Accrued "_______" Expense ("______" Payable)
4. Unearned "_____" Income
5. Advances "from" Customers
6. Current portion of long-term debt
1. ACCOUNTS PAYABLE are amounts due to creditors for ASSETS ACQUIRED on
account.
2. NOTES PAYABLE(short-term) are amounts due to creditors "within" one year,
evidenced by WRITTEN PROMISE to pay.
3. ACCRUED EXPENSES are amounts owed to others for UNPAID EXPENSES.
4. UNEARNED INCOME is revenue collected by the business in advance. (Received/
collected IN ADVANCE, but not yet earned).
5. ADVANCES "FROM" CUSTOMERS are revenue collected by the business in
advance "from customers". (Received/ collected IN ADVANCE, but not yet earned).
6. CURRENT PORTION OF LONG-TERM DEBT are portions of mortgage, notes,
bonds and other long-term indebtedness which are to be paid "WITHIN ONE YEAR"
from the Balance Sheet date (or end of Reporting Period).
~~~~~~~~~~~~~~~~~~~~~~~~~~~
"NONCURRENT LIABILITIES"
1. Notes Payable (long-term)
2. Bonds Payable
3. Mortgage Payable
1. NOTES PAYABLE (long-term) are amounts due to creditors "beyond" one year,
evidenced by WRITTEN PROMISE to pay.
2. BONDS PAYABLE is a liability owed by a company to obtain substantial sums of
money from lenders to finance the acquisition of equipment and other needed assets.
3. MORTGAGE PAYABLE. Long-term debt of the business for which the business entity
has PLEDGED certain assets as SECURITY to the creditor. In the event that the debt
payments are not made, the creditor can foreclose or cause the mortgaged asset TO
BE SOLD to enable the entity to settle the claim.
~~~~~~~~~~~~~~~~~~~~~~~~~~
"OWNER'S EQUITY"
Beginning Capital
+Additional investments
+Income/Revenue/Gains
-Expenses/Losses
-Withdrawals/Drawings
1. CAPITAL. This account is used to record the "ORIGINAL and ADDITIONAL
INVESTMENTS" of the owner of the business entity. It is increased by the amount of
PROFIT earned during the year or is decreased by a LOSS.
#NOTE: This account is also used to record the "PERMANENT withdrawal" of the
owner.
(PERMANENT withdrawal means withdrawal of INVESTED capital)
2. DRAWINGS/TEMPORARY WITHDRAWALS. Charged to this account are cash or
other assets withdrawn by the owner from the business for personal use (represented
by the owner's share in profit)
3. INCOME SUMMARY. It is a temporary account used at the end of the accounting
period to close income and expenses.'This account shows the profit or loss for the
period before closing to the capital account. (Future topic)
~~~~~~~~~~~~~~~~~~~~~~~~~~
"REVENUE/INCOME/GAIN"
-Sales
-Service Income
-Professional Fees
-Interest Income
-Rent Income
-Gain on Sales of other Assets
-Others
"EXPENSES"
-Cost of Sales
-Supplies Expense
-Salaries and Wages Expenses
-Insurance Expense
-Taxes and Licenses Expenses
-Doubtful Account Expenses
-Depreciation Expense
-Others
The REVENUE Accounts
Revenue represents the earnings of the business from sales of goods or service
rendered.
Revenue accounts have normal CREDIT balance. Below are some common revenue
accounts.
 Sales – an account used to summarize sale of goods of a trade or merchandising
business. This includes cash sales and sales on account.
 Service Income – the earning derived from service rendered by a servicing business
to its customers. This includes cash and on account service.
 Professional Fees – the earning derived from services rendered by a professional or
professional servicing firm which could be in cash or in collectibles to its clients.
 Interest Income – the earning representing the time value of money derived from
promissory notes received by the business, whether in cash or collectibles in future.
 Rent Income – the income earned from allowing others to use property or facility of the
business.
 Gain on Sales of other Assets – the income derived from the sales of assets used in
the business operation. There is a gain on sale if the proceeds exceed the book value
or cost of disposed asset. Examples are gain on equipment, gain on sale investments,
gain on sale of land, etc.
 Others
~~~~~~~~~~~~~~~~~~~~~~~~~~
The EXPENSES Account
Expenses are cost incurred in conducting the business activities.
Expense accounts have normal DEBIT balances. Some common expense accounts are
as follows:
 Cost of Sales – the value of merchandise sold
 Supplies Expense – the amount of supplies consumed or used by the business during
the period. Examples: used in papers, inks, ballpoint pens, etc.
 Salaries and Wages Expenses – the amount paid to service rendered by the
employees in the operation of the business
 Insurance Expense – the amount of insurance policy incurred during the current
period. Examples: premiums on building insurance, life insurance, plant insurance, etc.
 Taxes and Licenses Expenses – the cost of local as well as national taxes that are
incurred and required to be paid in connect with the conduct of business.
Examples:cost to acquire mayor’s permit, registration cost of the building, percentage
tax on sales, etc.
 Others
"ESTIMATED EXPENSE"
 Doubtful Account Expenses – the estimated amount of losses the uncollectible
accounts arising from credit sales of the current period. This is also called the debt
expense or uncollectible account expense.
 Depreciation Expense – represents the current periodic cost for using depreciable
plant assets. In accordance with the systemic cost of depreciable asset should be
allocated as expense over its useful life.
 Others
TAGALOG Links:
(ASSETS - 1)
https://m.facebook.com/TheAccountant.Tutorial/photos/a.711258305656378.107374182
5.264268673688679/1273257836123086/?type=3&source=48
(ASSETS - 2)
https://m.facebook.com/TheAccountant.Tutorial/photos/a.711258305656378.107374182
5.264268673688679/1274335792681957/?type=3&source=48
(ASSETS - 3)
https://m.facebook.com/TheAccountant.Tutorial/photos/a.711258305656378.107374182
5.264268673688679/1275359852579551/?type=3&source=48
(INCOME & EXPENSE) (LIABILITY)
https://m.facebook.com/TheAccountant.Tutorial/photos/a.711258305656378.107374182
5.264268673688679/1276607609121442/?type=3&source=48
(OWNER'S EQUITY/CAPITAL)
https://m.facebook.com/TheAccountant.Tutorial/photos/a.711258305656378.107374182
5.264268673688679/1277864558995747/?type=3&source=48
#TheAccountant

"BASIC" (Part 4)
ACCOUNTING PROCESS (or ACCOUNTING CYCLE)
1. ANALYZING business transactions by examining the source documents
2. JOURNALIZING transactions (General Journal)
3. POSTING to the ledger (General Ledger)
4. Preparing TRIAL BALANCE
5. Gathering of necessary "Adjustment Data" and preparing a WORKSHEET
6. Preparing FINANCIAL STATEMENTS
7. Journalizing and posting ADJUSTING ENTRIES
8. Journalizing and posting CLOSING ENTRIES
9. Preparing POST-CLOSING TRIAL BALANCE
10. Journalizing and posting REVERSING ENTRIES
#NOTE
No. 5 & No. 10 are "Optional" (not required)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
HISTORY OF ACCOUNTING (Luca Pacioli)
GLIMPSE OF THE PAST
1. Historical records show that the beginnings of record keeping or storing information
dates back some 76000 years ago in the Blombos caves of Africa
2. Accounting in Mesopotamia, circa 3500 B.C.
-produced some of the oldest known records of commerce (5000 years before the
appearance of double entry)
3. Accounting in Ancient Egypt, China, Greece and Rome.
4. Medieval Europe (13th Century)
- The introduction of double-entry bookkeeping.
DEBIT is Latin for "he owes"
CREDIT is Latin for "he trusts"
*The MESSARI (Italian: Treasurer's) accounts of the city of Genoa (1340) - is the oldest
discovered record of a complete double-entry system.
This contain DEBITS and CREDITS in bilateral form.
5. LUCA PACIOLI and DOUBLE-ENTRY BOOKKEEPING SYSTEM
Luca Pacioli's "SUMMA DE ARITHMETICA, GEOMETRIA, PROPORTIONI ET
PROPORTIONALITA"
-published in VENICE in 1494 included a 27-page, 36 short chapters on bookkeeping.
-BOOKS OF ACCOUNT DESIGNED BY LUCA PACIOLI
a. The MEMORANDUM, (a daybook), for the recording, in chronological order, of
business transactions as they occured.
b. The JOURNAL was the merchant's private account book. Entries consisted of a
narrative debit, credit, and explanation in one continuous paragraph.
c. The LEDGER - The money and date columns were almost identical to those in
modern ledgers, with entries consisting of brief paragraphs.
(DEBITS on the left side of a double page, and CREDITS on the right)
-TRIAL BALANCE is the end of Pacioli's accounting cycle. (Implications: Significance of
a statement of assumptions or premises)
-DEBIT amounts from the old ledger are listed on the left side of the balance sheet and
CREDITS on the right.
If the two total totals are equal, the old ledger is considered balanced.
If not (in balance), says Pacioli, "THAT WOULD INDICATE A MISTAKE IN YOUR
LEDGER, WHICH MISTAKE YOU WILL HAVE TO LOOK FOR DILIGENTLY WITH
THE INDUSTRY AND INTELLIGENCE GOD GAVE YOU."
-The SUMMA represents the first known printed treatise on bookkeeping; and was
translated into different languages. "It is widely believed to be the FORERUNNER of
modern bookkeeping practice."
-Thus, it can be said that LUCA PACIOLI systematized record keeping through the
DOUBLE-ENTRY BOOKKEEPING SYSTEM.
#BASIC
Part 1: Nov 1, 6pm (date of post)
Part 2: Nov 2, 6:24pm
Part 3: Nov 4, 7:44pm
#TheAccountant

“BASIC” Part 5
ASSETS = LIABILITIES + OWNER’S EQUITY
A = L + OE
DEBIT = CREDIT + CREDIT (for INCREASES)
Increase in Assets = DEBIT
Increase in Liabilities = CREDIT
Increase in Owner’s equity = CREDIT
~~~~~~~~~~~~~~~~~~~~~~
A = L + OE
CREDIT = DEBIT + DEBIT (for DECREASES)
~~~~~~~~~~~~~~~~~~~~~~
OWNER’S EQUITY:
Initial Investment or Beginning Capital (Capital account)
+Additional Investment (Capital account)
-Permanent Withdrawal (Capital account)
+Revenue or Income (Revenue or Income account)
-Expenses (Expense account)
-Drawings or Temporary Withdrawal (Drawing account)
#Note
EXPENSES and DRAWINGS reduce owner’s equity. Therefore,
“Increase” in EXPENSE = “Decrease” in Owner’s equity (DEBIT)
“Increase” in DRAWINGS = “Decrease” in Owner’s equity (DEBIT)
~~~~~~~~~~~~~~~~~~~~~~
#SUMMARY: INCREASE (Normal balance)
“ADE-LOR”
DEBIT: (A-D-E)
A-sset
D-rawings
E-xpense
CREDIT: (L-O-R)
L-iabilities
O-wner’s equity (or Capital)
R-evenue
---- OR ----
#SUMMARY: INCREASE (Normal balance)
“DEAL-GIRLS”
DEBIT: (D-E-A-L)
D-rawings (or Dividends)
E-xpense
A-sset
L-osses
CREDIT: (G-I-R-L-S)
G-ains
I-ncome
R-evenue
L-iabilities
S-hareholder’s equity (or Owner’s Equity) (or Capital)
~~~~~~~~~~~~~~~~~~~~~~
ACCOUNT TITLES:
Cash
Accounts Receivable
Office Supplies
Prepaid Rent
Prepaid insurance
Office Equipment
Office Building
Furniture and Fixtures
Accounts Payable
Mortgage Payable
VALIX, Capital
VALIX, Drawings
Service Income
Taxes and Licenses Expense
Repairs and Maintenance Expense
Salaries Expense
~~~~~~~~~~~~~~~~~~~~~~
"ANALYZING" business transactions
1.VALIX opened an account with BPI under the the Assisi Business Agency's name and
deposited P850,000 cash. He also invested two personal computers which he acquired
a year ago for P20,000 each but with a fair market value of P15,000 each.
Cash P850000
(Personal computers) = Office Equipment P30000 (P15000 x 2)
(Deposited/invested) = VALIX, Capital P880000 (P850000 + P30000)
ASSETS:
+ 850000 (+ Cash)
+ 30000 (+ Office Equipment)
LIABILITIES:
None
OWNER’S EQUITY:
+ 880000 (+ Owner’s equity) (+ VALIX capital)
A = L + OE
880000 = 0 + 880000
~~~~~~~~~~~~
2. Paid barangay and municipal taxes, P3,500.
(Paid) = Cash P3500
(Taxes) = Taxes & Licenses Expense P3500
ASSETS:
- 3500 (- Cash)
LIABILITIES:
None
OWNER’S EQUITY:
- 3500 (- Owner’s equity) (+ Taxes & Licenses Expense)
A = L + OE
(-3500) = 0 + (-3500)
~~~~~~~~~~~~
3. Bought a small office condominium for P500,000, giving P250,000 cash and signing a
mortgage payable in 10 years for the balance.
(Office condominium) = Office Building P500000
Cash P250000
Mortgage Payable P250000
ASSETS:
+ 500000 (+ Office Building)
- 250000 (- Cash)
LIABILITIES:
+ 250000 (+Mortgage Payable)
OWNER’S EQUITY:
None
A = L + OE
250000 = 250000 + 0
~~~~~~~~~~~~
4. Hired a secretary with monthly salary of P8,500.
"NO ENTRY" (Ignore)
~~~~~~~~~~~~
5. Bought office tables and chairs on credit from MANSION, INC., P40,000.
(Office tables and chairs) = Furniture & Fixtures P40000
(On credit) = Accounts Payable P40000
ASSETS:
+ 40000 (+ Furniture & Fixtures)
LIABILITIES:
+ 40000 (+ Accounts Payable)
OWNER’S EQUITY:
None
A = L + OE
40000= 40000 + 0
~~~~~~~~~~~~
6. Billed a client for services rendered, P20,000.
(Billed) = Accounts Receivable P20000
(Services rendered) = Service Income P20000
ASSETS:
+ 20000 (+ Accounts Receivable)
LIABILITIES:
None
OWNER’S EQUITY:
+ 20000 (+ Owner’s equity) (+ Service income)
A = L + OE
20000 = 20000 + 0
~~~~~~~~~~~~
7. Purchased computer ink, coupon bond paper and ballpens to be used in the office;
terms: cash basis, P4,500.
(Ink, coupon bond paper and ballpens) = Office Supplies P4500
(Cash basis) = Cash P4500
ASSETS:
+ 4500 (+ Office Supplies)
- 4500 (- Cash)
LIABILITIES:
None
OWNER’S EQUITY:
None
A = L + OE
0=0+0
~~~~~~~~~~~~
8. Paid fifty percent of the amount owed to MANSION, INC. (see #5)
(Paid ) = Cash P20000 (P40000 x 50%)
(Owed to MANSION #5) = Accounts Payable P20000 (P40000 x 50%)
ASSETS:
- 20000 (- Cash)
LIABILITIES:
- 20000 (- Accounts Payable)
OWNER’S EQUITY:
None
A = L + OE
-20000 = -20000 + 0
~~~~~~~~~~~~
9. VALIX "withdrew" "cash" of P50,000 and two reams of bond paper worth P1,000 for
personal use.
(Withdrew) = VALIX, Drawings P51000 (P50000+P1000)
Cash P50000
(Bond paper) = Office Supplies P1000 (Common Mistake: P1000 x 2 =>WRONG)
ASSETS:
- 1000(- Office Supplies)
- 50000 (- Cash)
LIABILITIES:
None
OWNER’S EQUITY:
-51000 (- Owner’s equity) (+ VALIX Drawings)
A = L + OE
-51000 = 0 + (-51000)
~~~~~~~~~~~~
10. Paid P400 for the repair of one of the computers.
(Paid) = Cash P400
(Repair) = Repairs and Maintenance Expense P400
ASSETS:
- 400(- Cash)
LIABILITIES:
None
OWNER’S EQUITY:
- 400 (- Owner’s equity) (+ Repairs and Maintenance Expense)
A = L + OE
-400 = 0 + (-400)
~~~~~~~~~~~~
11. Received P5,000 as payment for the services rendered to one of their clients.
(Received P5000) = Cash P5000
(Services rendered) = Service Income P5000
ASSETS:
+ 5000 (+ Cash)
LIABILITIES:
None
OWNER’S EQUITY:
+ 5000 (+ Owner’s equity) (+ Service Income)
A = L + OE
5000 = 0 + 5000
~~~~~~~~~~~~
12. Collected one half of the amount due from client of August 6th. (see #6)
(Collected) = Cash P10,000 (P20,000 x 1/2)
(Amount due from client) = Accounts Receivable P10,000 (P20,000 x 1/2)
ASSETS:
+ 10000(+ Cash)
- 10000 (- Accounts Receivable)
LIABILITIES:
None
OWNER’S EQUITY:
None
A = L + OE
0=0+0
~~~~~~~~~~~~
13. "Paid" "one year rent" for a special machine to be used in business operations,
P30,000.
(Paid) = Cash P30000
(One year rent) = Prepaid Rent P30000
ASSETS:
- 30000(- Cash)
+ 30000 (+ Prepaid Rent)
LIABILITIES:
None
OWNER’S EQUITY:
None
A = L + OE
0=0+0
~~~~~~~~~~~~
14. "Paid" "one year insurance" of the office condominium, P25,000.
(Paid) = Cash P25000
(One year insurance) = Prepaid Insurance P25000
ASSETS:
- 25000(- Cash)
+ 25000 (+ Prepaid Insurance)
LIABILITIES:
None
OWNER’S EQUITY:
None
A = L + OE
0=0+0
~~~~~~~~~~~~
15. Paid one half of the salary of the secretary. (see #4)
(Paid) = Cash P4250 (P8500 x 1/2)
(Salary) = Salaries Expense P4250 (P8500 x 1/2)
ASSETS:
- 4250 (- Cash)
LIABILITIES:
None
OWNER’S EQUITY:
- 4250 (- Owner’s equity) (+ Salaries Expense)
A = L + OE
0=0+0
#BASIC
Part 1: Nov 1, 6pm (date of post)
Part 2: Nov 2, 6:24pm
Part 3: Nov 4, 7:44pm
Part 4: Nov 7, 11:13am
#TheAccountant