Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF ENGINEERING
COMPUTER ENGINEERING DEPARTMENT

COEN 3483: Total Quality Management in Computer Engineering

Chapter 4: Basic Recordkeeping

SECOND SEMESTER, A.Y. 2019 – 2020

First Edition

Dr. Antonio Y. Velasco Dev. ED.

Introduction

Fig 1. How money flows through a business?

What is Recordkeeping?

Bookkeeping/Recordkeeping - is the recording of financial transactions.

Transactions include sales, purchases, income, receipts and payments by an
individual or organization. Bookkeeping is usually performed by a bookkeeper.

Purpose

 The purpose of a good recordkeeping system is to provide management

information to use in operating the business.
 The recordkeeping system provides the foundations for monitoring and
measuring the progress of the business. It provides a blueprint for fiscal control
by monitoring and measuring sales, costs of goods sold, gross profits, expenses
and taxes.

Manual Recordkeeping

 ADVANTAGES
o Less Expensive
o Aware of Duplication of Data
 DISADVANTAGES
o Time consuming
o Acquire more space
o Possible for human errors.
Electronic Recordkeeping

 ADVANTAGES
o automatically tallies amounts and provides ready-made reporting.
o can produce invoices and provide summaries and reports for GST and
income tax purposes.
o keeps up with the latest tax rates and tax laws, and rulings.
o allows you to report certain information, such as your activity statement, to
us electronically (if the package meets our requirements)
o requires less storage space
o allows you to back up records and keep back-ups in a safe place in case
of fire or theft.
o enables you to use your time more efficiently.
 DISADVANTAGES
o Expensive to implement
o Systems can cause confusion
o Employees may be unwilling/unable to adopt to new technology
o Greater technology requires more maintenance
o System failures may be an issue (i.e. power failure may render system
useless for periods of time)

What are the Basic Recordkeeping?

 Journal
o is a book for recording business transactions in chronological order. A
simple method of recordkeeping is to use 13-column paper for journals. It
is also called a “book of original entry”.
o Types of Journal
 cash receipts journal – Cash coming into the business (cash
sales, bank loans, interest income).
 cash disbursement journal - Cash going out of the business
(expenses: rent, insurance, payroll, purchases,)
 sales journal and purchases journal - Sales and Purchases on
credit. These journals are the original entry for the accounts
receivable and accounts payable.
 payroll journal - is used to show employee gross wages,
taxes/other deductions withheld and net wages.
 general journal - is used for miscellaneous entries and
adjustments such as depreciation and inventory.
 Accounting system
o is built around a list of account names called a chart of accounts.

 General Ledger
o is a cumulative (year to date) book that contains the individual accounts
maintained by the business and shows the balances in each account.
 Financial statements (Balance sheet and income statement) are
prepared using the account balances from the general ledger.
 balance sheet - is a financial report as of a specific date that
lists the assets, liabilities and owner's equity of a company. It
is a "snapshot" of the business at a point in time.
 income statement or profit and loss statement - is the
financial report that shows if the business had a profit or
loss. It is the Revenue minus the Expenses.
Single Entry vs Double Entry Recordkeeping

 Single-entry system
o The primary bookkeeping record in single-entry bookkeeping is the cash
book, which is similar to a checking (cheque) account register but
allocates the income and expenses to various income and expense
accounts. Separate account records are maintained for petty cash,
accounts payable and receivable, and other relevant transactions such as
inventory and travel expenses. These days, single entry bookkeeping can
be done with DIY bookkeeping software to speed up manual calculations.

Example of a Single Entry System

 Double entry
o A double-entry recordkeeping used a set of rules for recording financial
information in a financial accounting system in which every transaction
or event changes at least two different nominal ledger accounts.

Steps to Effective Records Management

1. Determine what records you need to have. Every organization needs certain
records to function. However, according to Advanced Information Technologies,
the volume of paper records doubles every 3.3 years. You need to determine
what records you have to keep and what records can be tossed.

2. Take inventory to see what records you are keeping. An effective records-
management program begins with an audit of every piece of paper and electronic
file in your organization. You should know what records you currently maintain
before developing your records-management policy.

3. Create a document retention schedule based on legal requirements and

business needs. The foundation of a records-management program is the
 retention schedule. You need to list every type of document you generate along
with its life span. This process should be completed with appropriate legal,
financial and business consultation.

4. Figure out the best way to store each type of record. In this day and age of
technological options, there are a variety of ways of permanently storing records:
paper, computer disks, ROM, microfilm, tape, etc. Choose your storage solutions
based on these considerations: space, cost, flexibility, safety and integrity.

5. Create a location for records storage. Just as there are various media for
records storage, there are many locations for storing records: in work areas, a
records department, a centralized internal location, or in an external location.
Choosing a storage location will depend on how often and how quickly you need
to access the records.

6. Develop appropriate security to protect records from damage, loss or

unauthorized access. There is no getting away from the security and integrity in
records management. This is another area often regulated by law.

7. Develop a procedure for archiving inactive records. Records management

should be a routine part of your business operations. Records should be
regularly evaluated for transfer to archive and long-term storage solutions. The
transfer process should include a system to track the location of stored records.

8. Create a policy and procedure for destroying expired records. Few records
need to be or should be kept permanently. They can be destroyed after a
predefined period.

“Keeping records enhances the pleasure

of the search and the chance of finding
order and meaning in these events.”

-Aldo Leopold
Activity

Directions: Choose the most correct answer from the given set.

Electronic Manual
Recordkeeping
Recordkeeping Journal Recordkeeping General Ledger
System
Disadvantage Advantage
Manual Electronic
Payroll Journal Recordkeeping Recordkeeping Recordkeeping Balance Sheet
Disadvantage Advantage

1. Employees may be unwilling/unable to adopt to new technology

2. Allows you to back up records and keep back-ups in a safe place in

case of fire or theft.

3. Aware of Duplication of Data

4. Acquire more space

5. The recording of financial transactions. Transactions include sales,

purchases, income, receipts and payments by an individual or organization

6. A cumulative (year to date) book that contains the individual accounts

maintained by the business and shows the balances in each account.

7. Used to show employee gross wages, taxes/other deductions withheld

and net wages.

8. A book for recording business transactions in chronological order

9. Provides the foundations for monitoring and measuring the progress of

the business

10. A financial report as of a specific date that lists the assets, liabilities
and owner's equity of a company. It is a "snapshot" of the business at a point in time

ANSWER SHEET
1. Electronic Recordkeeping Disadvantage
2. Electronic Recordkeeping Advantage
3. Manual Recordkeeping Advantage
4. Manual Recordkeeping Disadvantage
5. Recordkeeping
6. General Ledger
7. Payroll Journal
8. Journal
9. Recordkeeping System
10. Balance Sheet