CHAPTER 5

(Books of Accounts and Double-entry System)

TWO BOOKS OF ACCOUNTS

1. Journal
2. Ledger

Journal
TYPES OF JOURNALS
1. Special Journal (similar nature)
1. Sales Journal (sales on account)
2. Purchases Journal (purchases on account)
3. Cash Receipts Journal (receipt of cash)
4. Cash Disbursements Journal (payment of cash
2. General Journal (can’t be recorded on special journal)

Ledger
--book of secondary entries/ final entries

KINDS OF LEDGER
1. General Ledger (all accounts in trial balance)
2. Subsidiary Ledger (breakdown of balances of controlling accounts)

Controlling Account
--group of accounts with similar nature.

General Journal
1. Date Column
2. Account Titles Column
3. Account numbers Column
4. Dr. & Cr. Columns
5. Posting Reference (cross-reference Journal Entries to the ledger)
6. Journal Entry Number (GJ No. ( number journal entries)

Special Journal
Sundry
--miscellaneous/ various

DOUBLE-ENTRY SYSTEM
1. Concept of Duality (two-fold effect on values)
2. Concept of Equilibrium (equal debits and credits)

NORMAL BALANCES OF ACCOUNTS

Type of Account Normal Balance
1. Asset Debit
2. Liability Credit
3. Equity Credit
4. Income Credit
5. Expenses Debit

Contra Account
--deduction to their related accounts
--normal credit balance

Adjunct Account
--addition to their related accounts
--normal debit balance