EXAMPLES OF

MAJOR
ACCOUNTS
Ex. of each major accounts and their normal balance
Assets
• Cash and Cash Equivalents
• Receivables A decrease in an asset
• Inventory is a Credit
• Financial Assets
• Prepaid Expenses – Supplies, Rent, etc
• Property Plant and Equipment
• Investment Properties
• Biological Assets
• Other - assets
Normal balance - Debit
Ex. of each major accounts and their normal balance
Liabilities
A decrease in a liability • Accounts Payable
is a debit • Loans Payable
• Unearned Revenues
• Accrued Expense Paybale and other
Payables
• Interest Payable
• Other borrowings
Normal balance - Credit
Ex. of each major accounts and their normal balance
Equity
A decrease in Equity is • Initial Investment of the owner
a debit (Withdrawals, • Additional Investment of the owner
Net loss (Expenses of • Net Income ( Revenues/Income is
the business is greater greater than the expenses of the
than its income)) business)

Normal balance - Credit

Normal balance of a Withdrawal is
a Debit
Ex. of each major accounts and their normal balance
Income
• Sales • Commissions Income
• Service Income • Rental Income
• Interest Income • Others
• Gains on Sale of an
Asset
• Unrealized Gains
Contra-revenue accounts • Realized Gains

Normal balance - Credit

Ex. of each major accounts and their normal balance
Expenses
• Salaries and Wages • Bad Debt Expenses
• Rental Expenses • Utilities Expenses
• Cost of Sales/Cost of Goods Sold • Others
• Depreciation
• Interest Expenses
• Loss on Sale of Assets
• Unrealized Losses

Normal balance - Debit

 Example of Contra Accounts
ACCUMULATED DEPRECIATION- PROPERTY PLANT AND EQUIPMENT
ALLOWANCE FOR DOUBTFUL ACCOUNTS / BAD DEBT / UNCOLLECTIBLE
ACCOUNTS- ACCOUNTS RECEIVABLE
SALES DISCOUNT - SALES
SALES RETURNS AND ALLOWANCES - SALES
PURCHASE DISCOUNT- PURCHASES
PURCHASE RETURNS AND ALLOWANCES - PURCHASES
DRAWING – CAPITAL/EQUITY
 BOOK OF
ACCOUNTS
 QUICK RECAP

Source Trial Financial

Journals Ledger
Documents Balance Statements
 SOURCE
DOCUMENTS
 Business Documents Examples
Source Documents Usual Purpose
Sales Invoice A cash sales invoice is issued to evidence a sale for cash; a charge sales
invoice or credit sales invoice is issued to evidence a sale where goods are
sold on account or on credit
Delivery Receipt A document prepared by the enterprise and signed by the customer to
evidence the acceptance/receipt of the goods delivered to the customer.
Official receipt Issued by the business to evidence the receipt of cash from customers, the
proprietor, and other parties.
Bank statements A summary of all financial transactions occurring over a certain period
(usually one month) on a bank account. It shows the beginning balance of
the account, any increases or decreases (with brief explanations) and the
ending balance of the account.
Minutes of meetings Written record of meetings (such as shareholders or the board of directors
of a corporation)
 Business Documents Examples
Source Documents Usual Purpose
Vendor’s invoice This is actually a sales invoice, except that it is issued to the enterprise by
the enterprise’s suppliers or vendors. A bill for goods purchased or
services availed
Purchase requisition forms Source document which evidences an employee’s request for the
purchase of needed goods or supplies. Purchase requests must be
approved by management before an actual purchase is made.
IOUs A note acknowledging indebtedness to the enterprise. Usually prepared,
signed, and issued by employees who request and receive cash advances
from the enterprise
Promissory notes An unconditional promise in writing made by one person (called the
maker) to another, signed by the maker, engaging to pay on demand, or
at a fixed or determinable future time, a sum certain in money to order
or to bearer.
 Business Documents Examples
Source Documents Usual Purpose
Job time tickets Forms containing information on the time spent working at a
particular customer order
Certificate of stock Document evidencing ownership of shares in a corporation
Time records/timesheets A detailed record showing time-in and time-out of employees for a
particular period of time
Journal vouchers Document used for transactions and journal entries for which there is
no other source documents. Usually prepared in connection with the
year-end adjustments to the accounting records and for correcting
errors in the records. (You must check also for approvals of the journal
vouchers)
Check Vouchers Used to facilitate the authorization of cash disbursement transactions
 Business Documents Examples
Source Documents Usual Purpose
Job time tickets Forms containing information on the time spent working at a
particular customer order
Certificate of stock Document evidencing ownership of shares in a corporation
Time records/timesheets A detailed record showing time-in and time-out of employees for a
particular period of time
Journal vouchers Document used for transactions and journal entries for which there is
no other source documents. Usually prepared in connection with the
year-end adjustments to the accounting records and for correcting
errors in the records. (You must check also for approvals of the journal
vouchers)
Check Vouchers Used to facilitate the authorization of cash disbursement transactions
JOURNALS
 Tools for bookkeeping

Cheap Mid-range Expensive

Excel SAP
Microsoft
QuickBooks,
Manual Others
ORACLE
Journals
Example screenshot of an Oracle Journal Entry
Example Screenshot of an SAP Journal Entry
LEDGER
 LEDGER
General Ledger – often called as the
ledger, this refers to a group of accounts

Subsidiary Ledger – a device used in

storing the details of certain general ledger
accounts
EXAMPLE OF JOURNAL AND LEDGER
Account Code – Normally
from the Chart of accounts
(Purpose is to cross refer to
the Ledger after posting)

GENERAL JOURNAL

Page number of when the

transaction occurred in the
journal (Purpose is to cross
refer the transaction to the
Journal after posting)

LEDGER (T-ACCOUNT)
 TRIAL
BALANCE
 EXAMPLE OF A TRIAL BALANCE
Happy Birthday Co. Trial Balance – Dec 31, 2019
Cash 500.00
Accounts Receivable 600.00 Total equal debits
Supplies 700.00 and credits of a
Vehicles 800.00
Trial Balance (TB)
doesn't always
Accounts Payable 200.00
mean that there
Unearned Revenues 300.00
are no errors in the
Owner's Investments 2,090.00
TB
Owner's Withdrawal 200.00
Revenue 800.00
Salaries 300.00
Transportation 200.00
Income tax expenses 90.00
3,390.00 3,390.00
 LOCATING ERRORS IN TRIAL BALANCE
The following procedures when done in sequence
may save considerable time and effort in locating
errors:

1. Prove the addition of the trial balance columns by

adding these columns in the opposite direction.
 LOCATING ERRORS IN TRIAL BALANCE
2. If the error does not lie in addition, determine the
exact amount by which the trial balance is out of
balance.
• If the discrepancy is divisible by 2, look for a
balance equal to one half of the amount
erroneously entered in the wrong column of the
trial balance.
 LOCATING ERRORS IN TRIAL BALANCE

• If the discrepancy is divisible by 9, this suggests

either a transposition error (reversing the order
of numbers) or a slide error (moving of the
decimal point).
 LOCATING ERRORS IN TRIAL BALANCE
3. Compare the accounts and amounts in the trial
balance with that in the ledger. Be certain that no
account is omitted.
4. Recompute the balance of each ledger account.

5. Trace all postings from the journal to the ledger

accounts.
 ERRORS NOT DETECTED IN A TRIAL BALANCE
❑ Failure to record or post a transaction
❑ Recording the same transaction more than once
❑ Recording an entry but with the same erroneous
debit and credit amounts
❑ Posting a part of a transaction correctly as a debit
and credit but to the wrong account
ERRORS NOT DETECTED IN A TRIAL BALANCE
• Recheck the footing of the debit columns and
credit columns of the trial balance.
• Assuming in Happy Birthday Co.’s trial balance, the
amount of revenue – P800, is erroneously listed as
part of cash in the debit column figures. The total
debits would be P4,190, while total credits would
be P2,590, resulting in a difference of 1,600.
Divide the difference by 2 and you will get 800, the
amount of the account which has been
erroneously listed.
• If the difference is divisible by 9, this suggest a
transplacement error or a transposition error.
Questions?
Thank you!