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ABM 1 Q1-Week 7 For Teacher1

This document provides an overview of the accounting cycle and nature of transactions in a service business for senior high school students studying accountancy, business, and management. It defines a service business and lists examples. The key steps in the accounting cycle are described, including transactions, journal entries, posting, trial balance, adjusting entries, financial statements, and closing books. Common business documents used in service businesses like receipts, invoices, and vouchers are also explained. The objectives are to describe the nature of transactions in a service business and identify different business documents used to record transactions.

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Kassandra Kay De Roxas
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423 views

ABM 1 Q1-Week 7 For Teacher1

This document provides an overview of the accounting cycle and nature of transactions in a service business for senior high school students studying accountancy, business, and management. It defines a service business and lists examples. The key steps in the accounting cycle are described, including transactions, journal entries, posting, trial balance, adjusting entries, financial statements, and closing books. Common business documents used in service businesses like receipts, invoices, and vouchers are also explained. The objectives are to describe the nature of transactions in a service business and identify different business documents used to record transactions.

Uploaded by

Kassandra Kay De Roxas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 11

THE NATURE OF

TRANSACTIONS IN A SERVICE
BUSINESS
for Fundamentals of Accountancy,
Business and Management 1
Senior High School (ABM)
Quarter 1 / Week 7

1
FOREWORD

This Self Learning Kit for Fundamentals of Accountancy,


Business and Management 1 is designed specifically for
Grade 11 Accountancy, Business & Management (ABM)
students in the Senior High School. In this learning kit, ABM
students will gain knowledge on the basic accounting
equations, concepts, theories, as well as analysis on the
different business transactions.
It is aligned with the BEC of the Department of
Education following the prescribed MELCs (Most Essential
Learning Competencies. It has the following features proven
to be valuable aids to learning Accounting even at home.
What happened
This section contains pre-activities like review of the
prior knowledge and a pretest on what you have learned in
their previous discussions.
What I Need To Know (Discussion)
This section contains definition of terms, examples and
the corresponding analysis on the different nature of
transactions in a service business and the different business
documents used to record business transaction.
What I have Learned (Post Test)
The exercises contained in this section are guaranteed
to build accounting comprehension, skills, and
competence. These serve as a diagnostic tool to identify
your areas of strengths and difficulties.
OBJECTIVES
At the end of the lesson, the learners are expected to:
K: Give examples on the nature of transactions in a
service business.
S: Identify the different types of business documents used
in recording transactions in a service business.
A: Appreciate the importance of service business
transactions in our community.

LEARNING COMPETENCY:
Describe the nature of transactions in a service business.
ABM_FABM11-Iva-d-29

I. What Happened

Can you
identify what
type of
business is
being shown in
these pictures?

1
PRE-TEST:

TEST YOUR UNDERTADING 1

Direction: List down five (5) examples of service business that you can find in our
community. Write your answer in your notebook.

Service Business (Examples)

1.

2.

3.

4.

5.

TEST YOUR UNDERTADING 2

Direction: Identify what type of major accounts are each of the following
statements. Write your answer in your notebook.

1. These are resources owned by a business.

2. It is an account bearing the name of the owner representing the original


and additional investment of the owner.

3. It is an account that increases the capital resulting from business activities


performed for a customer or a client.

4. These are the debts and obligations of the company to another entity.

5. It is an account that decrease business resources resulting from the


operation of business.

2
II. What You Need to Know

A service business is a commercial enterprise that provides work


performed in an expert manner by an individual or team for the benefit of
its customers. It provides a needed service for a fee. In general, service
businesses have no physical product sold to clients. Their services are
designed to facilitate the work of clients and in return are paid. This
include salons or barbershops, laundry services, car repairs, medical
centers, and services of professionals like lawyers and doctors.

DISCUSSION

THE ACCOUNTING CYCLE OF A SERVICE BUSINESS

THE ACCOUNTING CYCLE

1. TRANSACTIONS 8. CLOSING THE BOOKS

2. JOURNAL ENTRIES 7. FINANCIAL STATEMENTS

3. POSTING 6. ADJUSTING JOURNAL ENTRIES

4. TRIAL BALANCE 5. WORKSHEET

The life of a business is divided into accounting periods of equal


length. A standard sequence of accounting procedures is repeated for
each period. These uniform procedures done to accomplish the
accounting process are referred to as the accounting cycle. (F.
Ong,2016)

3
Step 1 - Transactions and/or Events

➢ Identification and measurement of external transactions and internal


events. At this stage, the documents used by the business are analyzed
whether it has financial impact or effect. Recall the rule that only
financial transactions are recorded and that the amount can be
measured. These two conditions must exist in order that a particular
transaction is recognized or recorded. As defined, financial
transactions are those activities that change the value of an asset,
liability, or an equity.

Examples of Financial Transactions in a Service Business:

Example 1: Receipt of cash from a client as advance payment to


repair a computer is a financial transaction:
Analysis: In this case (asset) will increase. At the same time, the
advances from client (liability) will also increase. The
advances from client is a liability because the business has
the obligation to render future service to the client.

Example 2: Payment of electric bill is a financial transaction.


Analysis: This will decrease the cash (asset) and reduce the income
of the business at the same time.

Examples of Non-Financial Transactions:

Example 1: Hiring and termination of employees

Example 2: Recognition from the government as most outstanding


business

Example 3: Death of owner

4
The information needed when recording transactions are taken from
forms used to document these transactions. In a typical service business, the
following are the business documents used:

1. Official Receipt or Cash Receipt

➢ This document is used when a business receives money or a


check. An Official Receipt or Cash Receipt is a document that
acknowledges that money or a check have been received.

2. Charge Invoice or Sales Invoice

➢ A charge invoice is a document used when a service has been


rendered, but the client will be billed only after a certain number
of days from the date of service. Often, a company will issue a
statement of account to a customer, with the charge or sales
invoice attached.

For example: In a laundry business, a customer may avail of the services of


the business. However, that customer and the owner of the business had a
prior agreement that all services availed by the customer will be paid only
after 30 days. In this case, a charge invoice is issued on the day the client
availed of the services.

3. Check or Cash Voucher

➢ The check voucher is a document used when a check is issued to


pay a certain supplier or vendor.

For example: In a laundry business, for the payment of monthly electricity


bills, the business may pay either in cash or check. But the company must
prepare a cash or check voucher to support this payment. This
document will serve as a record of payment and, at the same time, as
proof that payment has been made by the company.

5
III.What Have I Learned

POST TEST:
LET’S HAVE AN EVALUATION!

A. Direction: Identify the following transactions of a service business if it is


a Financial Transaction (FT) or Non-Financial Transaction (NFT).

TRANSACTION TYPE
1. Owner purchases supplies
2. Renders services to a
client
3. Hired an office secretary
4. Cash collections for
services rendered
5. Recognized as one of the
Top 10 Best Company of
the Region

B. Direction: Identify what type of business document will be used


to record the following transactions.
TRANSACTION TYPE of DOCUMENT
USED TO RECORD
1. ABC Company received Php
10,000 for a services rendered.
2. Paid cash to a supplier for
equipment purchased
3. Client A availed ABC Company’s
service, and promised to pay the
fee after 10 days.
4. Paid check to a supplier for
equipment purchased
5. XYZ Company rendered services to
a client on credit, and will be paid
after 15 days.

6
DEPARTMENT OF EDUCATION
SCHOOLS DIVISION OF NEGROS ORIENTAL

SENEN PRISCILLO P. PAULIN, CESO V


Schools Division Superintendent

FAY C. LUAREZ, TM, Ed.D., Ph.D.


OIC - Assistant Schools Division Superintendent
Acting CID Chief

ADOLF P. AGUILAR
OIC - Assistant Schools Division Superintendent

NILITA L. RAGAY, Ed.D.


OIC - Assistant Schools Division Superintendent

ROSELA R. ABIERA
Education Program Supervisor – (LRMS)

ARNOLD R. JUNGCO
Education Program Supervisor – (SCIENCE & MATH)

MARICEL S. RASID
Librarian II (LRMDS)

ELMAR L. CABRERA
PDO II (LRMDS)

CHRISTINE G. DE PADUA
Writer

CHRISTIAN EVEN D. SANTILLAN


Lay-out Artist

_________________________________

ALPHA QA TEAM
LITTIE BETH S. BERNADEZ
MERCYDITHA D. ENOLPE
RONALD G. TOLENTINO

BETA QA TEAM
ELIZABETH A. ALAP-AP
EPIFANIA Q. CUEVAS
NIDA BARBARA S. SUASIN
VRENDIE P. SYGACO
MELBA S. TUMARONG
HANNAHLY I. UMALI

7
REFERENCES
Andres, C., Barrido, A., and Honorario, C. 2016. Teaching Guide for Senior High School
FUNDAMENTALS OF ACCOUNTANCY, BUSINESS, AND MANAGEMENT 1. Quezon
City: Commission on Higher Education.

Business Dictionary. 2020. Accessed August 5, 2020 from


http://www.businessdictionary.com/definition/service-business

Long, F. 2016. Fundamentals of Accountancy, Business, and Management 1 for Senior


High School. Quezon City: C & E Publishing, Inc.

8
SYNOPSIS ANSKWER KEY
This Self Learning Kit serves as a guide for
students taking up Accountancy, Business&
Management to identify and describe the
nature of transactions of a service business
and its corresponding business documents
used to record. This helps the learners to
directly recognize all transactions under the
service type of business.
Enjoy the rest of the module. Have fun
while learning.

ABOUT THE AUTHOR


CHRISTINE G. DE PADUA
graduated at Saint
Francis College -
Guihulngan with a
degree of Bachelor of
Science in Business
Administration major in
Financial Management
in the year 2012. She took her Continuing Professional
Education (CPE ) units at Cebu Technological University -
Moalboal Campus in the year 2015. She is currently teaching at La Libertad
Technical - Vocational School (SHS),and at the same time designated as the
Teacher In-Charge of the Senior High School Department.

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