📘 Example 1: Owner Invests Capital
Transaction: Owner invests ₱100,000 in the business.
Debit Credit
Date Account
(₱) (₱)
July 7, 100,00
Cash
2025 0
Owner’s
100,000
Capital
✅ Example 1: Owner Invests Capital
Transaction: Owner invests ₱100,000 in the business.
Debit: Cash (₱100,000) – The business receives cash, which increases its assets.
Credit: Owner’s Capital (₱100,000) – This represents the owner's equity in the business,
which increases.
📌 This shows the business gaining cash and recognizing the owner's contribution as capital.
📘 Example 2: Paid Rent
Transaction: Paid ₱10,000 for office rent.
Debit Credit
Date Account
(₱) (₱)
July 7, Rent
10,000
2025 Expense
Cash 10,000
✅ Example 2: Paid Rent
Transaction: Paid ₱10,000 for office rent.
Debit: Rent Expense (₱10,000) – An expense account increases, which reduces equity.
Credit: Cash (₱10,000) – Cash is paid out, so the asset decreases.
📌 This reflects a cost of doing business, reducing both cash and net income.
📘 Example 3: Purchased Inventory on Credit
Transaction: Bought inventory worth ₱25,000 on credit.
Debit Credit
Date Account
(₱) (₱)
July 7,
Inventory 25,000
2025
Accounts
25,000
Payable
✅ Example 3: Purchased Inventory on Credit
Transaction: Bought inventory worth ₱25,000 on credit.
Debit: Inventory (₱25,000) – Inventory is an asset, and it increases.
Credit: Accounts Payable (₱25,000) – A liability is created because the business owes
money to the supplier.
📌 The business gains inventory but hasn’t paid yet, so it records a liability.
📘 Example 4: Received Cash from Customer
Transaction: Received ₱15,000 from a customer for services rendered.
Debit Credit
Date Account
(₱) (₱)
July 7,
Cash 15,000
2025
Service
15,000
Revenue
✅ Example 4: Received Cash from Customer
Transaction: Received ₱15,000 from a customer for services rendered.
Debit: Cash (₱15,000) – Cash increases as the business receives payment.
Credit: Service Revenue (₱15,000) – Revenue increases, which boosts equity.
📌 This shows income earned and cash received, increasing both assets and equity.
📘 Example 5: Paid Salaries
Transaction: Paid ₱20,000 in salaries to employees.
Debit Credit
Date Account
(₱) (₱)
July 7, Salaries 20,000
Debit Credit
Date Account
(₱) (₱)
2025 Expense
Cash 20,000
✅ Example 5: Paid Salaries
Transaction: Paid ₱20,000 in salaries to employees.
Debit: Salaries Expense (₱20,000) – An expense account increases, reducing equity.
Credit: Cash (₱20,000) – Cash decreases as it is paid out.
📌 This reflects a business expense that reduces both cash and profit.
