Fundamentals of Accountancy

Learning Area Grade Level 11

W5 Quarter
Business and Management 1
3rd Quarter Date

I. LESSON TITLE Books of Accounts

II. MOST ESSENTIAL LEARNING The learners:
COMPETENCIES (MELCs) a. illustrate the format of a general journal and special journals
(ABM_FABM11-IIIf-23)
b. illustrate the format of a general and subsidiary ledger (ABM_FABM11-
IIIf-24)

III. CONTENT/CORE CONTENT Books of Accounts

Ref: Teachers Guide FABM, pages 65-79/ FABM1 Textbook, pages 61-69/
Quexhub PERC Learning Portal
Suggested
IV. LEARNING PHASES Learning Activities
Timeframe
A. Introduction 20 mins DAY 1
Panimula Good day! Welcome to another interesting week of learning. By the end
of our topic, you should be able to:
1. identify the uses of the two books of accounts (journal and ledger) to record
business transactions,
2. illustrate the format of journals and ledgers, and
3. manifest accuracy in recording business transactions using the two books of
accounts.
B. Development 40 mins Let us start your Pre-test. Read and understand the following questions. Write the letter of
Pagpapaunlad the correct answer in your accounting journal.
PRE-TEST
1. Which of the following is one of the special journals?
A. Sales journal B. Purchases journal
C. Cash receipts journal D. Options A, B, and C
2. What transaction is recorded first in the journal?
A. Most expensive entries B. Latest entries
C. Earliest entries D. Cheapest entries
3. Which of the following is one of the activities recorded in the cash
disbursements journal?
A. Purchase of merchandise in cash
B. Remittance of SSS Premium and other government dues
C. Payments of expenses and obligations
D. Options A, B, and C
4. Which account list contains the names and numbers of all the bookkeeping accounts
necessary for classifying income and expenses?
A. General journal B. General ledger
C. Subsidiary ledger D. Special journal
5. Which refers to the name for the list of accounts used in the bookkeeping system?
A. None of these are correct B. Subsidiary ledgers
C. Chart of accounts D. Double-entry bookkeeping

“Accounting is the process of identifying, recording, and communicating economic events

of an organization to interested users.” ( Weygandt et.al).

From that definition, where do you think we record the transactions that we have identified?
What are the tools that we use to document these transactions? How important are these
records in accounting?

I will leave these questions unanswered and I will ask these questions again after the
discussion of the subject matter.
 Let us begin!
Companies initially record transactions and events in chronological order (the order in
which they occur). Thus, the general journal is referred to as the book of srcinal entry.
General journal records all transactions that do not belong in any special journals. Examples
are purchases of office supplies, property and equipment on account, investment of a
proprietor not involving cash, and return of merchandise bought on account.

While the following are the special journals:

Sales journal records all merchandise sold on account. An example is when goods are purchased by customers on credit. Sales invoice or receipt is
the source document when recording transactions in Revenue/Sales Journal.
SALES JOURNAL S1
DATE INVOICE NO. CUSTOMER REF. ACCOUNTS SALES
NAME RECEIVABLE CREDI
DEBIT T

Cash receipts journal records all cash collections. Examples are sales of
merchandise in cash and collections from customer’s accounts.
CASH RECEIPTS JOURNAL CR1
DATE OR RECEIVE REF CASH SALES ACCOUNTS SALES OTHER
NO. D FROM DEBI DISCOUNT RECEIVABL CREDI ACCOUNTS
T DEBIT E T CREDITED
CREDIT

Purchases journal records all merchandise bought on account. An example is purchasing equipment on credit.
PURCHASE JOURNAL P1
DATE SUPPLIER NAME REF PURCHASE ACCOUNTS
S DEBIT PAYABLE
CREDIT

Cash disbursements journal records all cash payments. An example is the purchase of raw
materials in making furniture through cash, purchase of merchandise in cash, payments of
expenses and obligations, and remittance of SSS Premium and other government dues.
CASH DISBURSEMENTS JOURNAL CD1
DATE CHECK PAID REF ACCOUNTS PURCHASES OTHER PURCHASE CASH
VOUCHER TO PAYABL DEBIT ACCOUNTS DISCOUNT CREDI
NO. E DEBIT CREDIT T
(DR)CR

In recording transactions in a journal, the journal entry that was incurred the earliest should
be recorded first; the credit item should be indented from the debit item and should be
arranged in chronological order. The following are observed: (1) No peso sign will be
written for amounts reaching thousands;
(2) No comma will be written for amounts reaching thousands; (3) No decimal point will be written in amounts involving centavo. The following are
the components of a journal entry: (1) Transaction date; (2) Titles of the accounts being debited and credited; (3) Reference number; (4) Amount of
the debit and credit; and (5) Short narration of why the journal entry is being recorded.
GENERAL JOURNAL G1
DATE PARTICULARS REF. DR CR

General ledger and Subsidiary ledger Format

The general ledger includes the name of the account (e.g., cash and accounts receivable), account number, date of transaction, explanation or details
of the transaction, posting reference or PR (e.g., reference to the general journal or special journals), debit column, credit column, and a column for
balances for other types of general ledger forms.
ACCOUNT TITLE No.
DATE ITEMS PR DEBIT DATE ITEMS PR CREDIT
 Posting entries to the general ledger does not require much analysis since you will be using
the entries already recorded in the general or special journals. All journal entries must
similarly post to accounts in general ledger. All you need to do is to pick the entries from
the general journal and post them in the general ledger per account. Debits and credits are
numbers recorded as follows:

Debits are recorded on the left side of a T account in a ledger. Debits increase balances in
asset accounts and expense accounts and decrease balances in liability accounts, revenue
accounts, and capital accounts. Credits are recorded on the right side of a T account in a
ledger.

Credits increase balances in liability accounts, revenue accounts, and capital accounts, and decrease balances in asset accounts and expense accounts.
Debit accounts are asset and expense accounts that usually have debit balances, i.e., the total debits usually exceed the total credits in each debit
account. Credit accounts are revenue (income, gains) accounts and liability accounts that usually have credit balances.
Debit Credit
Asset Increase Decrease
Liability Decrease Increase
Income (revenue) Decrease Increase
Expense Increase Decrease
Capital Decrease Increase

That was awesome!

A subsidiary ledger is a group of similar accounts whose combined balances equal the
balance in a specific general ledger account. The general ledger account that summarizes
the account balance of a subsidiary ledger is called a control account or master account. For
example, an accounts receivable subsidiary ledger (customers' subsidiary ledger) includes a
separate account for each customer who makes credit purchases. A subsidiary ledger stores
specific types of accounting transactions. See the example below:

The subsidiary ledger includes the name of the account (e.g., cash and accounts receivable),
the account number for a specific account with the customer’s name on it (e.g. C. Daley-
AR1, B. Johnson-AR2, L. Jones-AR3), date of transaction, posting reference (e.g., reference
to the general journal or special journals), debit column, credit column, and a column for
balances.

The two ledgers have similarities with how they are made. The only
 difference is their purpose for different accounting transactions. As discussed in the
previous lesson, general ledgers provide a complete record of financial transactions over the
life of the company. It means that it is a summary of all financial transactions of a company.
On the other hand, a subsidiary ledger is used as storage of specific types of accounting
transactions (especially for large amounts of transactions). Every transaction listed in the
subsidiary ledger is periodically summarized and posted to an account in the general ledger
(control account), which in turn is used to construct the financial statements of a company.
Please take note that subsidiary ledgers are used only when there is a large amount of
transaction information that would clutter up the general ledger. This situation typically
arises in companies with significant sales volume. Thus, there is no need for a subsidiary
ledger in a small company. Journal entries for small companies could be immediately
summarized using a general ledger.

ACTIVITY 1 – Post It!

To have a better understanding of the posting process and to illustrate the format of ledger
accounts, we need to take a transaction. Call a friend that has the same strand as you and
prepare a journal entry, and then transfer it to the relevant ledger accounts.
On January 1, 2019, a company sold goods to customers for cash P25,000.

6. Engagement 20 mins DAY 2

Pakikipagpalihan Today, let us continue having fun with our yesterday’s lesson. Do the following activities
below. Write your answer in your accounting journal.
ACTIVITY 1- Walk not
Psalms 1:1-6 - Blessed [is] the man that walketh not in the counsel of the
ungodly, nor standeth in the way of sinners, nor sitteth in the seat of the
scornful.
What is written in the post-reference column of the journals to signify that the amount
has been posted?
7. Assimilation 30 mins ● After identifying the two books of accounts, compare and contrast what you know
Paglalapat about journals and ledgers using a Venn diagram. Answer it in a short bond paper.
● Now, let us go back to the unanswered questions during the introduction of our topic.
“Accounting is the process of identifying, recording, and communicating economic
events of an organization to interested users” (Weygandt et.al).

From that definition, where do you think we record the transactions that we have identified?
What are the tools that we use to document these
transactions? How important are these records in accounting? Answer these questions in your
accounting journal.

V. ASSESSMENT 10 mins Before we end this topic, please answer Exercise 7-1 on page 69 of
(Learning Activity Sheets for Fundamentals of Accountancy Business and Management 1 textbook by Florenz C. Tugas
Enrichment, Remediation or
Assessment to be given on Weeks
et al.
3 and 6)
VI. REFLECTION 5 mins ● Communicate the explanation of your personal assessment as indicated in the
Learner’s Assessment Card.
● In your accounting journal write your personal insights about the lesson using the
prompts below.
I understand that .
I realize that .
I need to learn more about .