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Analyzing Transactions SERVICE

The document discusses analyzing business transactions as the first step in the accounting cycle. It defines analyzing transactions as identifying how economic events affect the accounting equation of assets, liabilities, and capital. The document provides examples of analyzing sample transactions by identifying the accounts received (debit) and parted with (credit). It explains that analyzing transactions translates raw financial data into usable accounting records by deciding which accounts are affected.

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53 views

Analyzing Transactions SERVICE

The document discusses analyzing business transactions as the first step in the accounting cycle. It defines analyzing transactions as identifying how economic events affect the accounting equation of assets, liabilities, and capital. The document provides examples of analyzing sample transactions by identifying the accounts received (debit) and parted with (credit). It explains that analyzing transactions translates raw financial data into usable accounting records by deciding which accounts are affected.

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ian na
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NOTRE DAME OF DADIANGAS UNIVERSITY

Integrated Basic Education Department


Junior High School
Lagao, General Santos City

TECHNOLOGY AND LIVELIHOOD EDUCATION 9

Quarter: 2nd Date: 2022.11.07 – 2022.11.11


Week No.: 3 21st Century Skills:
Damean’s Beat: Presence and Participation  Critical Thinking
NDDU’s 4Cs:  Christian Leaders  Computing/ICT Literacy
 Competent Professionals  Communication
 Community-Oriented Citizens ☐ Creativity
☐ Culture-Sensitive Individuals  Collaboration
Teacher/s: Catherine B. Hermosa ☐ Cross Cultural Understanding
 Career and Learning Self Reliance

Module No.: 2

I. Topic: Analyzing Business Transactions


II. Learning Targets:
At the end of the lesson, I can be able to:
1. define business transaction and its effect.
2. imbibe the value of sharing.
3. classify the normal balance of account.

III. Introduction/Review/Content:

Last modular, we had discussed the account and T- account. For the recap, there are 7
rules of debits and credits and they are summarized by the 2 acronyms below.

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For DEAD acronym, it means that all expenses, assets and drawing have DEBIT normal
balance. Meaning, they have an increase effect on the debit side and decrease effect on the
credit side. On the other side, for COIL, all owner’s equity or capital, income or revenue and
liabilities have increase effect on credit side and decrease effect on the debit side. Thus, they
have a CREDIT normal balance.
In this module, we will be learning the first step of the accounting cycle which is analyzing
business transactions. The accounting cycle is a collective process of identifying, analyzing, and
recording the accounting events of a company. It provides a clear guide for the recording,
analysis, and final reporting of a business’s financial activities. The first step which is the
analysis of business transactions is the process of identifying the specific effects of economic
events on the accounting equation. Business transactions affect the assets, liabilities and
capital.

In every transaction there is always a dual effect in the accounting equation. Let us analyze
the transactions below.

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The first thing to do in analyzing transactions is to look for the keywords. What are the clues
that give you hint of the accounts affected. Is it asset, liability or capital account?
After determining the account, analyze which account is received and parted with by the company.
Remember, in every transaction, there is always debit which is the value received and credit which
is the value parted with. Accounts affecting the transactions can be asset, liability, income or
expense. Below is the analysis of De Castro Laundry Services.

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DATE DEBIT AMOUNT CREDIT AMOUNT

2015
July 5 Cash P 50,000 De Castro, P 50,000
Capital
July 8 Supplies 10,500 Cash 10,500

July 9 Equipment 18,000 Accounts 18,000


Payable
July 10 Cash 7,000 Service 7,000
Revenue
July 15 Rent 2,000 Cash 2,000
Expense
July 19 Accounts 3,500 Service 3,500
Receivable Revenue
July 23 Accounts 9,000 Cash 9,000
Payable
July 28 Cash 3,500 Accounts 3,500
Receivable
July 30 De Castro, 2,000 Cash 2,000
Drawing
Analyzing transactions takes information from original sources or activities and translates
that information into usable financial data. An original source is a traceable record of information
that contributes to the creation of a business transaction. For example, a sales invoice is
considered an original source. Activities would include paying an employee, selling products,
providing a service, collecting cash, borrowing money, and issuing stock to company owners.
Once the original source has been identified, the company will analyze the information to see
how it influences financial records. The analysis is basically deciding which accounts of the
business will be affected if it is Asset, Liability or Capital account.

IV. Check your Understanding:


Analyze the following transactions. Identify the debit and credit side.
V. Enrichment:
For further understanding, read Florendo, J. G. (2016).Fundamentals of accountancy, business,
and management 1. Quezon City:Rex Printing Company,Inc. pp. 164-170

VI. References/Materials:
Florendo, J. G. (2016).Fundamentals of accountancy, business, and management 1. Quezon
City:Rex Printing Company,Inc. pp. 164-170

Abitang, P. T., Casillo, B. A., Escario. C. U., Castro, A. P., & Asuncion, M. S. (2014). Basic
accounting for non-accountants. Manila: Mindshapers Co., Inc. pp. 31-37
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laptop, headset, cam

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