CB Batch 34

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Notebook 2. Recording Transactions

◀︎ Previous: The Chart of Accounts
Next: Recording Transactions in the General Journal ▶︎

Identifying Accountable Transactions

Business transactions or events are analyzed whether they are accountable or not. Only transactions which are identified to be
accountable transactions are recorded in the accounting records. A transaction or event is accountable when it meets the following
criteria:

1. It involves the business entity.

2. It can be measured in terms of money.
3. It occurred on a specific date or for a specific period.
4. It affects the assets, liabilities or equity of the business.
5. It is supported by a document.

Examples of accountable transactions:

Mr. Luca Pacioli established Pacioli General Services and had the following transactions for the month of January:

Jan 2 Investment of P100,000 capital funds by Mr. Pacioli into the business
Jan 7 Receipt of a Charge Invoice from a supplier for the purchase of a desktop computer amounting to P30,000.
Jan 9 Purchase of supplies amounting to P8,000 in cash.
Jan 15 Issuance of a Service Invoice for an amount of P40,000 to a customer for services rendered on account.
Jan 17 Receipt of P28,000 cash from customers in payment of their account.
Jan 22 Payment in cash and receipt of an official receipt from supplier for payment of accounts, P22,000.
Jan 31 Cash payment of P12,000 for the salary of an employee.
Jan 31 Mr. Pacioli withdrew P10,000 cash from the business.

Examples of non-accountable transactions:

The owner of the business spent P80,000 for his wedding.

The owner spent transportation and representation expenses amounting to P5,000.
A secretary was hired for P15,000 monthly salary.
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 The company received from a customer a sales order amounting to P100,000 worth of goods.
The company issued to a supplier a purchase order amounting to P200,000 worth of inventory.
The company entered into a contract to provide services for the next 5 years, at an amount of P500,000 per year.
The company has been using the electricity for the first month of its operations but has not yet received the electric bill.
The company has been recognized by the local government unit as the best service provider in the locality. It is foreseen to grow
into a P10 million company in the next few years.

Business Documents
The business documents forms serve as evidence to support the accountable transactions or events. These documents provide the
data concerning the parties involved, the exchange made, the date and the money value of the exchange made. Some of the
common business documents include the following:

1. Sales Invoice – document issued to customer for specific materials or supplies furnished or services rendered. It is called
Purchase Invoice from the point of view of the customer.
2. Delivery Receipt – document signifying delivery of goods and receipt of inventory.
3. Official Receipt – document issued to acknowledge receipt of cash.
4. Deposit Slip – document used to deposit cash and cheques to a bank.
5. Purchase Invoice – a bill from a vendor for specific materials or supplies furnished or services rendered. It is called Sales
Invoice from the point of view of the supplier.
6. Disbursement Voucher – a written, approved record of payment of cash.
7. Withdrawal Slip – document used to withdraw cash from a bank.
8. Cheque Issuance Record – a record of cheques issued by the company.
9. Promissory Notes – a written promise to pay a certain sum of money to the payee. It may sometimes bear an interest over a
period of time.
10. Bank Statement – a document listing the bank transactions of the depositor.
11. Billing Statement or Statement of Account – document listing the unpaid invoices of a customer. Oftentimes, it lists
chronologically the invoices, payments and adjustments to the account of the company.
12. Business Letters – correspondences to other companies, organizations or government entities which may serve as a basis in
recording an accountable transaction or event.

◀︎ Previous: The Chart of Accounts

Next: Recording Transactions in the General Journal ▶︎

Table of contents

Introduction
The Chart of Accounts
Identifying Accountable Transactions
Recording Transactions in the General Journal
Posting to the General Ledger
Trial Balance

◀︎ Quiz 1. Introduction to Accounting

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Quiz 2. Recording Transactions ▶︎

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