ATENEO DE NAGA UNIVERSITY
College of Business and Accountancy
1st Semester – S/Y 2025-2026
PRINCIPLES OF ACCOUNTING
Exercise 1 [Link], CPA
1.1. Identify the correct element, normal sign, presentation in the financial statements and classification of the
following given account.
Presentation Nominal or
Account/Transaction Element Normal Sign
in the FS Real?
Cash and cash equivalents
Restricted cash
Trade receivables to be
collected in two years after
the reporting period
Advances to employees
payable in four years after the
reporting period
Inventories
Trading securities
Prepaid rent to be consumed
for six months after the
reporting period
Machinery used in production
Furniture and fixture
Building
Intangible assets
Accumulated depreciation
Trade payables to be settled
in three years after the
reporting period
Income tax payable
Notes payable to be paid
within one year after the
reporting period
Notes payable to be paid
within two years after the
reporting period
Advances from stockholders
to be paid within three years
after the reporting period
FMCC, Capital
FMCC, Withdrawals
Service income
Cost of services
Salaries and employee
benefits
Rent expense
Utilities expense
Insurance expense
Repairs and maintenance
expense
Miscellaneous expense
Gain on sale of machinery
Interest income
Interest expense
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1.2. Analyze the following given transactions and identify the type and effect of each in the elements of the
financial statements.
Effect
Transaction Type
Asset Liability Equity Income Expense
Purchase of supplies
Settlement of accounts
payable
Proceeds from loan
Additional investment in the
business
Unpaid salaries
Sale of equipment above its
carrying amount
Acquisition of company
vehicle on account
Issuance of promissory note
for a purchase on account
Payment of rent
Sale of inventory on account
Collection from credit
customers
Return of merchandise to
supplier
Withdrawal from equity for
personal use
Payment of 2-year building
insurance policy
Periodic depreciation of office
building
1.3. Describe each of the following line items:
Dina Muli established his photocopying center on May 1, 2025. The following represents his business
transactions for the month of May:
No. Cash A/R Supplies Equipment A/P N/P DM, Service Rent Utilities
Capital Income Expense Expense
1. 100,000 100,000
2. (5,000) 5,000
3. (12,000) 30,000 18,000
4. 18,000 18,000
5. 12,500 12,500
6. 36,000 36,000
7. (8,000) 8,000
8. (5,400) 5,400
9. (10,000) (10,000)
10. (18,000) (18,000)
Answers:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
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1.4. Establish the following accounts in a financial transaction worksheet: Cash, Accounts Receivable, Supplies,
Service Vehicle, Accounts Payable and Daganta, Capital. Record in the worksheet the transactions listed
above.
Linda Luna formed Liceo Signage on October 1, 2025. He deposited P350,000 in GE Money Bank under the
name of the new business entity. During the month of October 2025, the following transactions occurred:
Oct. 2 Acquired a service vehicle in the amount of P215,000 on account.
3 Acquired supplies for cash, P42,000.
9 Received P82,500 cash for signs painted.
10 Paid the month’s rent, P12,500.
11 Painted signs for Cagayan Mobile on account, P110,000.
12 Paid P115,000 on account from Oct. 2.
16 Withdrew P35,000 for personal use.
23 Collected P40,000 from Cagayan mobile.
27 Paid salaries of P67,000 for the month.
30 Paid BayanTel P8,500 for communication services for the month.
31 Paid a bill from AdAsia for P15,500 of advertising for the month.
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