SIMPLIFIED ACCOUNTING FOR NON-ACCOUNTANTS

It is a fact that all activities of man here on Planet Earth will under a simple and in some other ways a complicated accounting.

To go back, let us first define what accounting is when we undergo the first month of the first year in College. As a summary, accounting has been defined as a chronological recording of the transactions and events and interpreting the result thereof.

To be of great help to the beginners, let us assume that for illustrative example, we will use ABC Trucking Co. managed and owned by Alexander Balagosa Codilla This firm is engaged inthe services of hauling goods from any point to FROM THE PIER AND AIRPORT OF DAVAO CITY< TO ANY POINT OF Mindanao.
But before going into detailed transactions, let us refresh our mind with the components of the accounts we usually saw in the profit and loss statement and Balance Sheet of a company engaged in hauling services.

ASSETS-

Anthing that is owned are called assets. As in the case of ABC Trucking, we can consider the following Assets:

1. Ten Unit Delivery Trucks Php 1,000,000 each or Php5,000,000
2. Assorted Tools and Equipments Php 120,000
3. Shop Building Php 500,000
4. Gasoline Storage Php 300,000
5. Large quantities of gasoline Php 100,000
6. Large quantitiles of oils and lubricants 50,000
7. Adequate supplies of Tires, and fast moving spare parts 500,000
8. Organizational expense (documentations, franchise and related organizationalexpenses Php 150,000
9. One Unit Expedition Php 2,500,000
10. Cash Available for the operation 1,000,000

LIABILITIES

Anything that is owned is a liability. Among them are, but not limited tothe following:

1. Buying anything for the trucking operation or personal use of the owner-operator of the business is considered a liability.
2. Any amount taken by the trucking owner in advance for a services not yet rendered is considered a liability

Assuming that to acquire the assets mentioned above, he secured a loan of Php 10,000,000 from Land Bank of the Philippines payable 10 years from 2009, with interest of 10% per annum


CAPITAL OR NETWORTH

This is what the trucking owner is worth for. The formula to arrive at networth is as follows:

TOTAL ASSETS LESS LIABILITIES EQUALS NETWORTH. In accounting equations, it would be stated this way: TOTAL ASSETS= LIABILITES PLUS NETWORTH (capital)
By the way the use of Networth and capital here in the Philippines is still allowed
and the BIR is not yet sso strict in its used interchangeably.

Using the above figures, we can now determine the networth of Alexander Balagosa Codilla, owner of ABC Trucking Co.

Php total seets he owend (all items from No. to 10
Php total liability he owned the Land Bank of the Philippines (minus)
PHP BALance representing his worth

Names of Revenue and Expenses Accounts Used in Trucking business

Asset Accounts

1. Cash
2. Service Receivable
3. Delivery Equipment
4. Unused Supplies
5. Organizational Expense
6.