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Tuguegarao City
Hi guys, this is now the 4th week of our journey together in FAR. I hope you are good, physically, mentally and
spiritually.
Do you experience information overload right now? Change the way you look at your life right now, if you want
to fulfill your dream to become a CPA into a reality. Think of all your sacrifices as your investment into your
future. Sounds good, Okay? Amen your will be done Lord!
Last week, you learned about the basic accounting equation, its uses and applications and the five major types
of accounts..
1. The Journal-is also known as the book of original entry. It is a record of the day-to-day transaction called
journal entries that follows a chronological order (by date). The act of recording in the journal is called
“Journalizing” .
1. Special Journal which is used to record transactions of similar items come in many forms:
Sales Journal – is used to record sales on credit terms
Purchases Journal – is used to record purchases on account
Cash Receipts Journal – is used to record all transactions involving receipts of cash
Cash Disbursements Journal – is used to record all transactions involving the payments of cash
2. The General Journal is the simplest form of the journal. It is a record of all transactions that can not
be recorded in all of the other transaction journals. In the absence of special journals, the
General Journal is used to record all journal entries.
2. The Ledger – also known as the book of final entry is used to record all transactions after the journalizing
process is done. The process of transferring amounts from the journal to the ledger is called “Posting”
a) General Ledger is a record of all accounts appearing in the trial balance, a sample manual
ledger is shown below:
b) Subsidiary Ledger provides a breakdown of the balances of some controlling accounts. Some
of the most common subsidiary ledgers are the Accounts Receivable,
Accounts Payable, Fixed Assets S/L to and other S/Ls that maybe set up by
the business according to its needs.
AS you can see from the sample, the amount appearing on the General Ledger is transferred to the Subsidiary
ledger that with breakdown. The account and amount in the G/L is the controlling account. In the S/L entries
we come to know that the amount of P4,000 has 2 accounts of P2,000 each.
The Double-Entry System – Let me explain the double entry system by way of a diagram. A journal entry
always has two sides, the DEBIT and the CREDIT side. At all times, we maintain the equality of the debit and
credit. In layman’s terms, for every value that we give, we receive the same value in return. The key is give
and receive.
Stated in another way, a debit entry always has a corresponding credit entry.
https://www.asiabookkeeping.com/double-entry-system/
Understanding Normal Balances of Accounts:
Proceed to the Drills portion. (Write this in your Journal of Learning) Exercise mental honesty, hone
your mastery of the rules of debit and credit. This is where your strong basic foundation should start.
The diagram below analyzes normal balances of accounts based on its position in the accounting equation. If
you have observed, ASSETS are on the left side of the accounting equation, so increases in assets are
recorded on the debit side and decreases on the debit side.
Contra and Adjunct Accounts:
Contra accounts are deductions from the related account. Example: Allowance for Doubtful Accounts is a
contra account to Accounts Receivable.
Adjunct Accounts – are additions to the related account. Example: Premium on Bonds Payable is an adjunct
of Bonds Payable because it is added to the carrying amount of the Bonds.
REFERENCES
Textbooks
1. Ballada, W. (2019). Basic Financial Accounting and Reporting. Manila: DomDane Publishers.
2. Cabrera, E.(2017) Fundamentals of Accounting Volume I, GIC Enterprises & Co., Inc., Manila
3. Millan, Z. V. (2020). Financial Accounting and Reporting (Fundamentals). Baguio City: Bandolin
Enterprise.
4. Valencia, E. and Roxas, G. (2017), Basic Accounting, Valencia Educational Supply
5. Valix, C. and Peralta, J. (2018). Financial Accounting Volume I GIC Enterprises & Co., Inc., Manila
Online Reference
Learning Materials
1. Worksheets (teacher-made)