CBLM - Bookkeeping NC III (Aporbo, J)

COMPETENCY-BASED LEARNING MATERIALS
Sector: HEALTH, SOCIAL, AND OTHER

COMMUNITY DEVELOPMENT
SERVICES SECTOR
Qualification Title: BOOKKEEPING NC III
Unit of Competency: JOURNALIZE TRANSACTIONS
Module Title: JOURNALIZING TRANSACTIONS
ADVENTIST TECHNOLOGICAL INSTITUTE

Dicoloc Jimenez Misamis Occidental
Date Developed: Document No. TIS-BK3-01

JUNE 2021 Issued by:
Bookkeeping NC III Date Revised:
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HOW TO USE THIS COMPETENCY BASED LEARNING MODULE
Welcome to the Module in Journalizing Transactions. This module

contains training materials and activities for you to complete.
The unit of competency “Journalize Transactions " contains the

knowledge, skills and attitudes required for Bookkeeping NC III course. It
is one of the specialized modules at National Certificate III (NCIII) level.
You are required to go through a series of learning activities in order to

complete each learning outcome of the module. In each learning outcome
there are Information Sheets and Resource Sheets (Reference Materials for
further reading to help you better understand the required activities). Follow
these activities on your own and answer the self-check at the end of each
learning outcome. You may remove a blank answer sheet at the end of each
module (or get one from your facilitator/trainer for assistance.
Recognition of Prior Learning (RPL)
You may already have some or most of the knowledge and skills covered
in this module because you have:
 been working for someone

 already completed training in this area
If you can demonstrate to your trainer that you are competent in a

particular skill or skills, talk to him/her about having them formally
recognized so you don’t have to do the same training again. If you have
qualifications or Certificates of Competency from previous trainings, show
them to your trainer. If the skills you acquired are still current and relevant
to the unit/s of competency they may become part of the evidence you can
present for RPL. If you are not sure about the currency of your skills,
discuss this with your trainer.
This module was prepared to help you achieve the required competency,
in Bookkeeping NC III. This will be the source of information for you to
acquire knowledge and skills in this particular trade independently and at
your own pace, with minimum supervision or help from your instructor.
 Talk to your trainer and agree on how you will both organize the training
under this module. Read through the module carefully. It is divided into
sections that cover all the skills and knowledge you need to successfully
complete.
 Work through all information and complete the activities in each section.
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Read the information sheets and complete the self-checks provided in this
module.
 Most probably your trainer will also be your supervisor or manager. He/
She is there to support you and show you the correct way to do things.
Ask for help.
 Your trainer will tell you about the important things you need to consider
when you are completing the activities and it is important that you listen
and take notes.
 You will be given plenty of opportunities to ask questions and practice on

the job. Make sure you practice your new skills during regular work shifts.
This way you will improve both your speed and memory and also your
confidence.
 Talk to more experienced work mates and ask for their guidance.
 Use self-check questions at the end of each section to test your own
progress.
 When you are ready, ask your trainer to watch you perform the activities
outlined in this module.
 As you work through the activities, ask for written feedback on your
progress. Your trainer keeps feedback/pre-assessment reports for this
reason. When you have completed this learning material and feel
confident that you have had sufficient knowledge and skills, your trainer
will arrange an appointment with a registered assessor to assess you.
The results of the assessment will be recorded in your Competency

Achievement Record.

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BOOKKEEPING NC III
COMPETENCY-BASED LEARNING MATERIALS
List of Competencies
No. Unit of Module Title Code

Competency
1 Journalize Journalizing Transactions HCS412301
Transactions
2 Post Transactions Posting Transactions HCS412302
3 Prepare Trial Preparing Trial Balance HCS412303
Balance
4 Prepare Financial Preparing Financial Reports HCS412304
Reports
5 Review Internal Reviewing Internal Control HCS412305
Control System System

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MODULE CONTENT
PROGRAM/COURSE : Bookkeeping NC III
UNIT OF COMPETENCY: Journalize Transactions
MODULE TITLE : Journalizing Transactions
Introduction:
This module is designed to cover the knowledge, skills, and attitudes

for Journalizing Transactions in accordance with industry practice and
generally accepted accounting principles/Philippine Financial Reporting
Standards. It will provide an in-depth discussion on the nature of
accounting as well as the business organization.
LEARNING OUTCOMES:
At the end of this module, you MUST be able to:
1. Prepare chart of accounts
PERFORMANCE CRITERIA:
1. Nature of business is determined based on client information
2. List of asset, liability, equity, income, and expense account titles are
prepared in accordance with industry practices
3.Accounting manual is prepared in accordance with industry practice
LEARNING OUTCOME # 1 PREPARE CHART OF ACCOUNTS

Contents:
1. Nature of business and accounting

2. Introduction to Chart of Accounts
3. Preparation of Chart of Account
Assessment Criteria:
1. Nature of business is determined based on client information
2. List of asset, liability, equity, income, and expense account titles are
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prepared in accordance with industry practices
3. Accounting manual is prepared in accordance with industry practice
CONDITIONS:
Students/ Trainees must be provided with the following:

1.Workplace: real or simulated work area
2.Appropriate tools and equipment, Computer, LCD Projector and Screen
3.Materials/supplies relevant to the activity, Journal Book
Training materials:
 Competency Based Learning Materials

 Competency Standards
 Training Regulations
 Competency Based Curriculum
 Labels
 Information Sheet
 Self-Checks
 Task Sheet
Assessment Method:
 Written Test
 Performance Test

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Learning Experiences
Learning Outcome No. 1 Prepare chart of accounts
Learning Activities Special Instruction

Read Information Sheet 1.1-1 Read and understand the
Accounting and Its Environment information sheet and all related
Accounting and Its Environment books on the nature of business.
You may also download and
read from the internet the related
topics.
Answer Self-Check 1.1-1 Answer the Questions carefully and

Check your work with the Answers cross check your answers with the
Key Answer key prepared. You must
answer the questions correctly
before proceeding to the next
activity

Typical Account Titles Use information sheet and all related
Typical Account Titles Used books in Typical Account Titles
Used.
Self-Check 1.1-2 Answer the Questions carefully and
Check your work with the Answers cross check your answers with the
Key Answer key prepared. You must
answer the questions correctly
before proceeding to the next
activity

Introduction to Chart of Account information sheet with the topic of
Introduction to Chart of Account
Introduction to Chart of Accounts and perform the Task Sheet
Perform Task Sheet No. 1.1-3 Task Sheet will help you practice
your skills.
Evaluate your own work using the
Performance Criteria. Be
ready to present your work for final
evaluation and recording.

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INFORMATION SHEET 1.1-1
Accounting and Its Environment

Learning Objective:
After reading this information sheet, the student must be able to
define and understand the meaning of accounting, bookkeeping and
business; identify and describe the types of business organizations and the
activities performed by each organization.
ACCOUNTING
It is a service entity. Its function is to provide quantitative
information, primarily financial in nature, about economic entities that is
intended to be useful in making economic decisions.
It is the process of identifying, measuring and communicating economic
information to permit informed judgments and decisions by users of the
information.
It is the art of recording, classifying and summarizing in a significant
manner and in terms of money, transactions and events which are, in part
at least, of a financial character, and interpreting the results thereof.
FORMS OF BUSINESS ORGANIZATIONS

Sole Proprietorship .
This has a single owner called the proprietor. This tends to be small
service-type businesses and retail establishments. The owner receives all
profits, absorbs all losses and is solely responsible for all debts of the
business.
Partnership.

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It is a business owned and operated by two or more persons who bind
themselves to contribute money, property or industry to a common fund,
with the intention of dividing the profits themselves.
 Corporation.
It is an artificial being created by operation of law, having the rights of
succession and the powers, attributes and properties expressly authorized
by law or incident to its existence.
ACTIVITIES PERFORMED BY BUSINESS ORGANIZATIONS

Service companies - performed service for a fee (e.g., law firms, accounting
and audit firms, stock brokerage, beauty salons and recruitment agencies).
 Merchandising companies - purchase goods that are ready for sale and
then sell these to customers.
Manufacturing companies - buy raw materials, convert them into
products and then sell the products to other companies or to final
consumers.
FUNDAMENTAL CONCEPTS
Entity Concept .
It is the most basic concept in accounting. An accounting entity is an
organization or a section of an organization that stands apart from other
organizations and individuals as a separate economic unit.
Periodicity Concept.
An entity’s life can be meaningfully subdivided into equal time periods
for reporting purposes. This concept allows the users to obtain timely
information to serve as abasis on making decisions about future activities.
Stable Monetary Unit Concept.
The Philippine Peso is a reasonable unit of measure and that its
purchasing power is relatively stable
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BASIC PRINCIPLES
Objectivity Principle .
Accounting records and statements are based on the most reliable data
available so that they will be as accurate and as useful as possible. Reliable
data are verifiable when independent observers can confirm them.
Historical Cost .
This principle states that acquired assets should be recorded at their
actual cost and not at what management thinks they are worth as at
reporting date.
Revenue Recognition Principle.
Revenue is to be recognized in the accounting period when goods are
delivered or services are rendered or performed.
Expense Recognition Principle.
Expenses should be recognized in the accounting period in which goods
and services are used up to produce revenue and not when the entity pays
for those goods and services.
Adequate Disclosure.
Requires that all relevant information that would affect the user’s
understanding and assessment of the accounting entity be disclosed in the
financial statements
Consistency Principle. The firms should use the same accounting
method from period to period to achieve comparability over time within a
single enterprise.
SPECIALIZED ACCOUNTING SERVICES

Auditing
Is the independent examination that ensures the fairness and reliability
of the reports that management submits to users outside the business
entity.
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Cost Accounting
Deals with the collection, allocation and control of the cost of producing
specific goods and services.
Financial Accounting
Is focused on the recording of business transactions and the periodic
preparation of reports on financial position and results of operations.
Financial accountants accord importance to generally accepted accounting
principles.
Internal Auditing.
Is concerned with the examination of the information system, records and
operations of the entity to ensure the effectiveness and efficiency of
operations and the integrity of records.
. Is concerned with the identification of the sources and uses of resources
consistent with the provisions of city, municipal, provincial and national
laws.
Tax Accounting
Includes the preparation of tax returns and the consideration of the tax
consequences of proposed business transactions or alternative courses of
action.
Management Consulting
Is the catchall term that describes the wide scope of advice CPAs provide
to the business? Services provided include advice on mergers and
takeovers, installation or modification of accounting systems, financial
planning models, inventory control systems.
International Accounting
Addresses the special problems associated with the international trade of
multinational business organizations.
USERS AND THEIR INFORMATION NEEDS
Investors

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They need information to help them determine whether they should buy,
hold or sell. Stockholders are also interested in information which enables
them to assess the ability of the enterprise to pay dividend
Employees. They are interested in information which enables theto assess
the ability of the enterprise to provide remuneratioretirement benefits and
employment opportunities.
•Lenders
They are interested in information which enables them
to determine whether their loans and interest thereon will be paid
when due Suppliers and other trade creditors . These users are interested
in information which enables them to determine whether amounts owing to
them will be paid on maturity.
•Customers
Customers have an interest in information about the continuance of an
enterprise especially when they have a long-term involvement with or are
dependent on the enterprise.
•Government and their agencies
These users require information to regulate the activities of the
enterprise, determine taxation policies and as a basis for national income
and similar statistics.
•Public
Financial statements may assist the public by providing information
about the trends and recent developments in the prosperity of the enterprise
and the range of its activities.
SELF-CHECK 1.1-1
TRUE or FALSE
Instructions: Write T if the statement is TRUE and write F if the
statement is FALSE

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1. _____Accounting information may not be supported by independent,
unbiased evidence.
2. _____Trading or merchandising differs from a manufacturing in that the
former renders services for profit.
3. _____A corporation is legal entity, organized by operations of law.
4. _____Manufacturing is converting raw materials into finding products.
5. _____Knowledge of accounting is very useful for the accountant only and
not to anybody who is engaged or interested in business.
6. _____Governmental bodies or agency uses accounting information to
assist them whether to extend credit or not.
7. _____Trading or merchandising is a business that deals with buying and
selling of the same goods in the same form for profit
B. Identification:
Instructions: Supply the space provided with the correct answer
8. __________________The owners in a business organized by the operation of
law.
9. ___________________Nature of business activities which renders services to
the customers for a fee to generate income.
10. ___________________It is the governing body of the corporation
C. Enumeration
1. Give the three (3) business organizations.
2. What are the three activities performed by business organizations?
3. Who are the seven (7) users of accounting information?

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ANSWER KEY 1.1-1
A
1. False
2. False
3. True
4. False
5. False
6. False
7. True
B.
8. Stockholder
9. Servicing
10. Board of Directors
C.
1. Single Proprietorship, Partnership, Corporation
2. Merchandising, Servicing, Merchandising
3.a.Owner
b. Creditor / Lender
c. Government and its Agencies
d. Suppliers
e. Customers
f. Public

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g. Employee

TYPICAL ACCOUNT TITLES USED
Learning Objective:
After reading this information sheet, the student must be able to identify
and describe the different account titles used in accounting; and classify
each account according to accounting elements
BALANCE SHEET
I. Assets – is a resource controlled by the enterprise as a result of past
events and from which future economic benefits are expected to flow to the
enterprise
Current Assets:
a. is expected to be realized in, or is held for sale or consumption in, the
normal course of the enterprise’s operating cycle; or
b. is held primarily for trading purposes or for the short-term and expected
to be realized within twelve months of the balance sheet date; or
c. is cash or a cash equivalent asset which is not restricted in its use
Examples:
1.Cash – Is any medium of exchange that a bank will accept for deposit at
face value. It includes coins, currency, checks, money order, bank deposits
and drafts.
2. Notes Receivable – it is a written pledge that a customer will pay the
business a fixed amount of money on a certain date.

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3.Accounts Receivable – These are claims against customers arising from
sale of services or goods on credit.
4.Inventories – these are assets, which are:
(1) held for sale in the ordinary course of business;
(2) in the process of production for such sale;
(3) in the form of materials supplies to be consumed in the production
process or in the rendering of services.
5. Prepaid Expenses – These are expenses paid for by the business in
advance. It is an asset because the business avoids having to pay cash in
the future for a specific expense. These prepaid items represent future
economic benefits –assets – until the time these start to contribute to the
earning process; these, then, become expenses.
Non-current Asset-all other assets not under the current asset should be
classified to non-current assets
Examples:
1.Property, Plant and Equipment – these are tangible assets that are held
by an enterprise for use in the production or supply of goods or services, or
for rental to others, or for administrative purposes and which are expected
to be used during more than one period.
2.Accumulated Depreciation – It is a contra account that contains the sum
of the periodic depreciation charges. The balance of this account is
deducted from the cost of the related asset to obtain book value.
3.Intangible Assets – these are identifiable, non-monetary assets without
physical substance held for use in the production or supply of goods or
services, for rental toothers, or for administrative purposes. These include
goodwill, patents, copyrights, licenses, franchises, trademarks, secret
processes, subscription lists and non-competition agreement.
II. Liabilities – is a present obligation of the enterprise arising from past
events, the settlement of which is expected to result in an outflow from the
enterprise of resources embodying economic benefits.
Current Liability:
a. is expected to be settled in the normal course of the enterprise’s operating
cycle; or
b. is due to be settled within twelve months of the balance sheet date.

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Examples:
1.Accounts Payable – This account represents the reverse relationship of
the accounts receivable. By accepting the goods or services, the buyer
agrees to pay for them in the near future
2.Notes Payable – This is like a note receivable but in a reverse sense, the
business entity is the maker of the note; that is, the entity is the party who
promises to pay the other party a specified amount of money on a specified
future date.
3.Accrued Liabilities – Amounts owed to others for unpaid expenses. This
account includes, salaries payable, utilities payable, interest payable and
taxes payable.
4.Unearned Revenues – This happens when the business entity receives
payment before providing its customers with goods or services.
*Non-current Liability: all other liabilities that can’t be classified in the
current liabilities.
Examples:
1. Mortgage Payable – This account records long-term debt of the business
entity for which the business entity has pledged certain assets as security to
the creditor.
2. Bonds Payable – Business organizations often obtain substantial sums of
money from lenders to finance the acquisition of equipment and other
needed assets. The bond is a contract between the issuer and the lender
specifying the terms of repayment and the interest to be charged.
III. Owner’s Equity
– Is the residual interest in the assets of the enterprise after deducting
all its liabilities.
Capital – This account is used to record the original and additional
investments of the owner of the business entity. It is increased by the
amount of net income earned during the year or is decreased by a net loss.
Cash or other assets that the owner may withdraw from the business
ultimately decrease it. This account title bears the name of the owner.
Withdrawals – When the owner of a business entity withdraws cash or
other assets, such are recorded in the drawing or withdrawal account rather
than directly reducing the owner’s equity account.
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Income Summary – it is a temporary account used at the end of theca
counting period to close income and expenses. This account shows the net
income or net loss for the period before closing to the capital account
INCOME STATEMENT
I. Income – Is increases in economic benefits during the accounting
period in the form of inflows or enhancements of assets or
decreases of liabilities that result in increases of equity, other than
those relating to contributions from equity participants.
Service Income – Revenues earned by performing services for a

customer or client.
Sales – Revenues earned as a result of sale of merchandise.
II. Expenses – Are decreases in economic benefits during the

accounting period in the form of outflows or depletions of assets or
incurrence of liabilities that result in decreases of equity, other
than those relating to distributions to equity participants.
Cost of Sales – The cost incurred to purchase or to produce the

products sold to customers during the period; also called Cost of
Goods Sold.
Salaries or Wages Expenses – Includes all payments as a result of

an employer-employee relationship.
Utilities Expense – Expenses related to use of

telecommunications facilities, consumption of electricity, fuel and
water.
Rent Expense – Expenses for space, equipment or other asset

rentals.
Supplies Expense – Expenses of using supplies in the conduct of

daily operations.
Insurance Expense – Portion of premiums paid on insurance

coverage which has expired.

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Depreciation Expense – The portion of the cost of a tangible asset
allocated or charged as expense during an accounting period.
Uncollectible Accounts Expense – The amount of receivables

estimated to be doubtful of collection and charged as expense
during an accounting period.
Interest Expense – An expense related to use of borrowed funds
SELF-CHECK 1.1-2
Classify the following account titles
Instructions:
Write (A) FOR ASSETS, (L) for LIABILITIES, ( OE ) for OWNER’S
EQUITY, (I) for INCOME and (E) for EXPENSE.
1 Repairs and Maintenance____ 16 Taxes and licenses______

2 Margie Landocio, Capital_____ 17 Land ______
3 Unused Office Supplies _____ 18 Commission Income____
4 Cash on Hand ______ 19 Interest Expense _____
5 Notes receivable______ 20 Prepaid Rent ____
6 Accounts payable ______ 21 Notes Payable ______
7 Margie Landocio, Drawing__ 22 Furniture and Fixtures __
8 Transportation equipment___ 23 Building _____
9 Accounts receivable_____ 24 Interest Income ____
10 Delivery Equipment _____ 25 Office Supplies _____
11 Petty Cash Fund _____ 26 Tools _____
12 Unearned Interest Income __ 27 Rent Expense ____
13 Shop Supplies Used _____ 28 Retainer Fees Income ___
14 Advances to employees 29 Prepaid Insurance _____
15 Postage and 30 Insurance Expense _____
Documentations _______
ANSWER KEY 1.1-2

1.Expense 16. Expense
2.Owner’s Equity 17. Asset
3.Asset 18. Income
4.Asset 19. Expense
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5.Asset 20. Asset
6.Liability 21. Liability
7.Owner’s Equity 22. Asset
8.Asset 23. Asset
9.Asset 24. Income
10. Asset 25. Asset
11. Asset 26. Asset
12. Liability 27. Expense
13. Expense 28. Income
14. Asset 29. Asset
15. Expense 30. Expense

INTRODUCTION TO CHART OF ACCOUNT
Learning Objective:
After reading this information sheet, the student must be able to

prepare a Chart of Account for a certain company using the correct format.
Chart of accounts is a listing of all the accounts in the general ledger,

each account accompanied by a reference number. To set up a chart of
accounts, one first needs to define the various accounts to be used by the
business. Each account should have a number to identify it. For very small
businesses, three digits may suffice for the account number, though more
digits are highly desirable in order to allow for new accounts to be added as
the business grows. With more digits, new accounts can be added while
maintaining the logical order. Complex businesses may have thousands of
accounts and require longer account reference numbers. It is worthwhile to
put thought into assigning the account numbers in a logical way, and to
follow any specific industry standards. An example of how the digits might
be coded is shown in this list:
Account Numbering
1000 - 1999: asset accounts

2000 - 2999: liability accounts
3000 - 3999: equity accounts
4000 - 4999: revenue accounts
5000 - 5999: cost of goods sold
6000 - 6999: expense accounts
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7000 - 7999: other revenue (for example, interest income)
8000 -8999: other expense (for example, income taxes)
By separating each account by several numbers, many new

accounts can beaded between any two while maintaining the logical order.
Defining Accounts
Different types of businesses will have different accounts. For example, to

report the cost of goods sold a manufacturing business will have accounts
for its various manufacturing costs whereas a retailer will have accounts
for the purchase of its stock merchandise. Many industry associations
publish recommended charts of accounts for their respective industries in
order to establish a consistent standard of comparison among firms in
their industry. Accounting software packages often come with a selection of
predefined account charts for various types of businesses. There is a trade-
off between simplicity and the ability to make historical comparisons.
Initially keeping the number of accounts to a minimum has the advantage
of making the accounting system simple. Starting with a small number of
accounts, as certain accounts acquired significant balances they would be
split into smaller, more specific accounts. However, following this strategy
makes it more difficult to generate consistent historical comparisons. For
example, if the accounting system is set up with a miscellaneous expense
account that later is broken into more detailed accounts, it then would be
difficult to compare those detailed expenses with past expenses of the same
type. In this respect, there is an advantage inorganizing the chart of
accounts with a higher initial level of detail. Some accounts must be
included due to tax reporting requirements.
Other accounts should be set up according to vendor. If the

business has more than one checking account, for example, the chart of
accounts might include an account for each of them.
Order Balance sheet accounts tend to follow a standard that lists the most
liquid assets first. Revenue and expense accounts tend to follow the
standard of first listing the items most closely related to the operations of
the business. For example, sales would be listed before non-operating
income. In some cases, part or all of the expense accounts simply are listed
in alphabetical order.
Sample Chart of Accounts

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The following is an example of some of the accounts that might be
included in a chart of accounts.
Asset Accounts:
Current Assets
1000 Petty Cash
1010 Cash on Hand (e.g. in cash registers)
1020 Regular Checking Account
1030 Payroll Checking Account
1040 Savings Account
1050 Special Account
1060 Investments - Money Market
1070 Investments - Certificates of Deposit
1100 Accounts Receivable
1140 Other Receivables
1150 Allowance for Doubtful Accounts
1200 Raw Materials Inventory
1205 Supplies Inventory
1210 Work in Progress Inventory
1215 Finished Goods Inventory - Product #1 building Improvements
1690 Land
1700 Accumulated Depreciation, Furniture and Fixtures
1710 Accumulated Depreciation, Equipment
1720 Accumulated Depreciation, Vehicles
1730 Accumulated Depreciation, Other
1740 Accumulated Depreciation, Leasehold
1750 Accumulated Depreciation, Buildings
1760 Accumulated Depreciation, Building Improvements
Other Assets
1900 Deposits
1910 Organization Costs
1915 Accumulated Amortization, Organization Costs
1920 Notes Receivable,
Payable
Non-current Payable
2380 Local Payroll Taxes Payable

2390 Income Taxes Payable
2400 Other Taxes Payable
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2410 Employee Benefits Payable
2420 Current Portion of Long-term Debt
2440 Deposits from Customers
2480 Other Current
Liabilities
Long-term Liabilities
2700 Notes Payable

2702 Land Payable
2704 Equipment Payable
2706 Vehicles Payable
2708 Bank Loans Payable
2710 Deferred Revenue
4040 Product #3 Sales
4060 Interest Income
4080 Other Income
4540 Finance Charge Income
4550 Shipping Charges Reimbursed
4800 Sales Returns and Allowances
4900 Sales Discounts
Cost of Goods Sold
5000 Product #1 Cost

5050 Raw Material Purchases
5100 Direct Labor Costs
5150 Indirect Labor Costs
5200 Heat and Power
5250 Commissions
5300 Miscellaneous Factory Costs
5700 Cost of Goods Sold, Salaries and Wage
5730 Cost of Goods Sold, Contract Labor
5750 Cost of Goods Sold, Freight
5800 Cost of Goods Sold,
5850 Inventory Adjustments
5900 Purchase Returns and Allowances
5950 Purchase Discounts
Expenses
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6000 Default Purchase Expense
6010 Advertising Expense
6050 Amortization Expense
6100 Auto Expenses
6150 Bad Debt Expense
6200 Bank Fees
6250 Cash Over and Short
6300 Charitable Contributions Expense
6350 Commissions and Fees Expense
6400 Depreciation Expense
6450 Dues and Subscriptions Expense
6500 Employee Benefit Expense, Health Insurance
6510 Employee Benefit Expense, Pension Plans
6520 Employee Benefit Expense, Profit Sharing Plan
6530 Employee Benefit Expense, Other
6550 Freight Expense
6600 Gifts Expense
6650 Income Tax Expense, Federal
6660 Income Tax Expense, State
6670 Income Tax Expense, Local
6700 Insurance Expense, Product Liability
6710 Insurance Expense, Vehicle
6750 Interest Expense
6800 Laundry and Dry Cleaning Expense
6850 Legal and Professional Expense
6900 Licenses Expense
How to Set Up a Chart of Accounts
Set up a chart of accounts as one of the first steps in beginning a new

business . A chart of accounts is the listing of all the accounts in a general
ledger, and it usually includes reference numbers to help classify the
accounts by type. The chart organizes and tracks all of the business
activities and makes it possible to generate reports in a logical sequence to
track the financial history and progress of the business. Here's how to set
up a basic chart of accounts.
Instructions
1.Organize the business by classifying the items into what the business
owns (assets), what the business owes (liabilities), the value of the business

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to the owners (equity), business income (revenues) and what the business
spends to provide the income (expenses.)
2.Give each asset account a unique name, such as cash-checking, cash-
savings, accounts receivable, inventory, investments and fixed (or
depreciable) assets. Assign sequential numbers to these accounts from 1000
to 1999. The range of the account numbers allows the addition of new
account names and numbers as the business expands.
3.Name each liability account with a unique name, such as accounts
payable, notes payable, loans payable, wages payable, and payroll taxes
payable to track any amounts the business owes to others. These may be
further divided into short term liabilities (amounts due to be paid within one
business year or less) and long - term liabilities (amounts due to be paid
later than one business year). Assign sequential numbers to these accounts
from 2000 to 2999.
4.Classify each equity account with a unique name. These include common
stock, paid-in capital and retained earnings (if the business is a corporation)
partner distributions and partners' equity (if it's a partnership ), and
members' equity (if it's an LLC). Assign sequential numbers to these
accounts from 3000 to 3999.
5.Assign unique names to each revenue account, such as sales, commission
income, rent income and other income. Assign account numbers from 4000
to 4999 to these accounts. Revenue accounts track all the income the
business brings in during the year.
6. Determine all of the costs of doing business within one business year.
These are the expenses of the business, and they are segregated according
how they are related to the production of income.
For example, cost of goods sold accounts relate to manufacturing products,
producing services and purchasing inventory. Number these accounts from
5000 to 5999.
General expenses, including office expenses, advertising, accounting and
legal expenses get numbers from 6000 to 6999, and wages and payroll
expenses get numbers from7000 to 7999.
7.Segregate any revenue and expenses which are not part of the normal
course of the company's main business. This category might include Income
from such activities as interest income from notes receivable or gain or loss
from the sale of business assets. Similarly, there maybe expenses that are
not related to the production of the company's products or services, such as

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income tax expense or mortgage expense. Number these accounts 8000 to
8999.
TASK SHEET 1.1-3

Title: Prepare Chart of Accounts
Performance Objective:
Given the necessary supplies and materials needed, you
should be able to prepare a completed Chart of Accounts in
accordance with the generally accepted accounting principles
Supplies/Materials : Bond Paper
Equipment : Computer and Printer with Ink
Steps/Procedure:
1.Prepare the Heading, starting with Name of the Company.
2.Identify the account titles to be used.
3. Classify the account titles according to ASSET, LIABILITIES,
OWNER’S EQUITY, INCOME and EXPENSE.
4. Assign a three (3) digit Account Number for each account title
starting with 1 – Assets, 2 – Liabilities, 3 – Owner’s Equity, 4 –
Income and 5 – Expense.
5.Print the document / Report.
6.Present your work to your trainer.
Assessment Method: Performance Criteria Checklist
Performance Criteria
Checklist 1.1-2
Name: _____________________
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CRITERIA YES NO
Did you…..
1.Prepare the heading for the report?
2.Identify the Account Titles Used?
3.Classify the account titles according to categories?
4.Assign a three (3) digit Account Number to each Account

Title?
5.Print the document?
Recommendations /
Suggestions:______________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Checked by:
GEM BUHIA
Teacher
List of References:
https://www.google.com/search?
q=CBLM+JOURNALIZE+TRANSACTION&source=hp&ei=eT3MYPXjKcLorQH6
https://www.coursehero.com/file/28168265/CBLM-Journalize-Trans-
enhanced-docx-2pdf/
https://livrosdeamor.com.br/documents/core-1-journalize-transactions-
5c08acd7d1783
https://bench.co/blog/accounting/chart-of-accounts/

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https://gocardless.com/guides/posts/what-is-a-chart-of-accounts/

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COMPETENCY-BASED LEARNING MATERIALS

Sector: HEALTH, SOCIAL, AND OTHER

ADVENTIST TECHNOLOGICAL INSTITUTE

Date Developed: Document No. TIS-BK3-01

Welcome to the Module in Journalizing Transactions. This module

The unit of competency “Journalize Transactions " contains the

You are required to go through a series of learning activities in order to

Recognition of Prior Learning (RPL)

 been working for someone

If you can demonstrate to your trainer that you are competent in a

 You will be given plenty of opportunities to ask questions and practice on

The results of the assessment will be recorded in your Competency

Date Developed: Document No. TIS-BK3-01

No. Unit of Module Title Code

Date Developed: Document No. TIS-BK3-01

PROGRAM/COURSE : Bookkeeping NC III

UNIT OF COMPETENCY: Journalize Transactions

MODULE TITLE : Journalizing Transactions

This module is designed to cover the knowledge, skills, and attitudes

At the end of this module, you MUST be able to:

1. Prepare chart of accounts

1. Nature of business is determined based on client information

3.Accounting manual is prepared in accordance with industry practice

LEARNING OUTCOME # 1 PREPARE CHART OF ACCOUNTS

1. Nature of business and accounting

1. Nature of business is determined based on client information

3. Accounting manual is prepared in accordance with industry practice

Students/ Trainees must be provided with the following:

 Competency Based Learning Materials

Date Developed: Document No. TIS-BK3-01

Learning Outcome No. 1 Prepare chart of accounts

Learning Activities Special Instruction

Answer Self-Check 1.1-1 Answer the Questions carefully and

Read Information Sheet 1.1-2 Read and understand the

Read Information Sheet 1.1-3 Read and understand the

Date Developed: Document No. TIS-BK3-01

INFORMATION SHEET 1.1-1

FORMS OF BUSINESS ORGANIZATIONS

Date Developed: Document No. TIS-BK3-01

ACTIVITIES PERFORMED BY BUSINESS ORGANIZATIONS

SPECIALIZED ACCOUNTING SERVICES

USERS AND THEIR INFORMATION NEEDS

Date Developed: Document No. TIS-BK3-01

Date Developed: Document No. TIS-BK3-01

Date Developed: Document No. TIS-BK3-01

Date Developed: Document No. TIS-BK3-01

INFORMATION SHEET 1.1-2

Date Developed: Document No. TIS-BK3-01

Date Developed: Document No. TIS-BK3-01

Service Income – Revenues earned by performing services for a

Sales – Revenues earned as a result of sale of merchandise.

II. Expenses – Are decreases in economic benefits during the

Cost of Sales – The cost incurred to purchase or to produce the

Salaries or Wages Expenses – Includes all payments as a result of

Utilities Expense – Expenses related to use of

Rent Expense – Expenses for space, equipment or other asset

Supplies Expense – Expenses of using supplies in the conduct of

Insurance Expense – Portion of premiums paid on insurance

Date Developed: Document No. TIS-BK3-01

Uncollectible Accounts Expense – The amount of receivables

Interest Expense – An expense related to use of borrowed funds

1 Repairs and Maintenance____ 16 Taxes and licenses______

ANSWER KEY 1.1-2

INFORMATION SHEET 1.1-3

1 Repairs and Maintenance 16 Taxes and licenses__