5
Chapter 5 · Workspace The Accounting Cycle for a Service Business
Part II · Recording · Chapter 5

The Accounting Cycle for a Service Business

From source document to unadjusted trial balance — Steps 1 to 4 of the cycle, drilled with brand-new transactions that aren't in the book.

▶ Open the Service-Business Cycle Workbench

Run the entire accounting cycle for a brand-new service business — Silang Repair Services' first month. Journalize all eleven transactions in the general journal and watch them post live through the ledger, the unadjusted trial balance, the adjustments, the ten-column worksheet, and the finished financial statements. Every step of this chapter, one linked simulation.

Online-exclusive visual guides

1. The nine-step cycle — and where this chapter stops

Step 1 ✅
Analyze transactions from source documents.
Step 2 ✅
Journalize — chronological record in the books of original entry.
Step 3 ✅
Post to the general ledger (and subsidiary ledgers).
Step 4 ✅
Unadjusted Trial Balance — prove the ledger's equality. ← Chapter 5 ends here
Step 5
Adjusting entries (Chapter 6).
Step 6
Adjusted trial balance / worksheet.
Step 7
Financial statements.
Step 8
Closing entries — reset the nominal accounts.
Step 9 ◌
Optional: reversing entries on day 1 of the new period.

2. The four-question transaction analyzer

Run every transaction through the same four questions. Example — “Paid ₱6,000 for a 3-month internet plan”:

Ask…Answer for this transaction
① Which accounts are affected?Prepaid Internet; Cash
② What element is each?Both assets (the plan is a future benefit — an asset, not an expense yet)
③ Increase or decrease?Prepaid Internet ↑ ; Cash ↓
④ Debit or credit?Dr Prepaid Internet 6,000 · Cr Cash 6,000

Most journalizing errors are really Step-② errors — misclassifying the element. Decide WHAT it is before deciding where to debit.

3. Anatomy of a general journal entry

DateAccount Titles & ExplanationP/RDebitCredit
2026 Jun 05Cash10115,000
Service Revenue40115,000
Collected fees for aircon cleaning, Inv. 0042
Indent rule
Credited account is indented — debits hug the margin.
P/R column
Filled in only at POSTING time with the ledger account number — a built-in checklist of what's been posted.
Explanation
One line citing the source document. No document, no entry.

Practice tools

Tool 1 · Journal Entry Builder drill

Pick the correct full entry for each new transaction of SparkClean Aircon Services.

Tool 2 · T-account runner — Cash

SparkClean's June cash movements: beginning balance ₱32,000; collections ₱58,500; owner investment ₱20,000; payments to suppliers ₱26,300; salaries paid ₱18,000; owner withdrawal ₱7,500. Compute the ending Cash balance, then check.

Quiz · Twenty brand-new items