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THE ACCOUNT
Account is a formal record that represents, in
BOOKKEEPING NC-3 words, money or other unit of measurement,
certain resources, claims to such resources,
transactions or other events that result in
LECTURE 3
changes to those resources and claims
THE ACCOUNT AND
THE JOURNAL

GENSAN COLLEGE OF TECHNOLOGY, INC.

BOOKKEEPING NC-3
In partnership with the
TECHNICAL EDUCATION AND
SKILLS DEVELOPMENT AUTHORITY

THE ACCOUNT…origin THE ACCOUNT…origin

Bookkeeping is the recording of all financial
transactions undertaken by a business (or an
individual). A bookkeeper (or book-keeper),
sometimes called an accounting clerk is a person
who keeps the books of an organization. The
organization might be a business, a charity or
even a local sports club
Double-entry accounting is a record keeping in
which each business transaction affects at least
two accounts.
The double-entry system is used because you are
entering the transaction amount twice.

BOOKKEEPING NC-3 BOOKKEEPING NC-3

THE STRUCTURE OF AN ACCOUNT THE STRUCTURE OF AN ACCOUNT

ACCOUNT ACCOUNT

DEBIT (DR) CREDIT (CR) DEBIT (DR) CREDIT (CR)

- an entry to the left hand side of an
account. Entry on the left side of a
DOUBLE-ENTRY BOOKKEEPING system
that represents the addition of an
ASSET or expense or the reduction to
a LIABILITY or REVENUE.
- an entry to the right hand side of an
account. Entry on the right side of a
DOUBLE-ENTRY BOOKKEEPING system
that represents the reduction of an
ASSET or expense or the addition to a
LIABILITY or REVENUE.

BOOKKEEPING NC-3 BOOKKEEPING NC-3

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THE STRUCTURE OF AN ACCOUNT THE STRUCTURE OF AN ACCOUNT

ACCOUNT ACCOUNT

Left Side Right Side Left Side Right Side

DEBIT (DR) CREDIT (CR) DEBIT (DR) CREDIT (CR)

- an entry to the left hand side of an - an entry to the right hand side of an ASSETS LIABILITIES
account. Entry on the left side of a account. Entry on the right side of a EXPENSES EQUITY
DOUBLE-ENTRY BOOKKEEPING system DOUBLE-ENTRY BOOKKEEPING system INCOME
that represents the addition of an that represents the reduction of an
ASSET or expense or the reduction to ASSET or expense or the addition to a
a LIABILITY or REVENUE. LIABILITY or REVENUE.

Normal Side Normal Side Normal Side Normal Side

BOOKKEEPING NC-3 BOOKKEEPING NC-3

RULES OF DEBIT AND CREDIT:

THE CHART OF ACCOUNTS
Rules illustrated…

Account Normal Side Debit (DR) Credit (CR)

ASSETS Debit INCREASE DECREASE
LIABILITIES Credit DECREASE INCREASE
EQUITY Credit DECREASE INCREASE
INCOME Credit DECREASE INCREASE
EXPENSE Debit INCREASE DECREASE

BOOKKEEPING NC-3

THE CHART OF ACCOUNTS THE CHART OF ACCOUNTS

Chart of Accounts is a systematic listing of all ACCOUNT TITLE CODE CLASSIFICATION NORMAL SIDE
accounts used by an entity. CASH 100 CURRENT ASSET DEBIT
ACCOUNTS RECEIVABLE 120 CURRENT ASSET DEBIT
INVENTORY 150 CURRENT ASSET DEBIT
A chart of accounts (COA) is a tool that provides PROPERTY AND EQUIPMENT 190 NON-CURRENT ASSET DEBIT
a complete listing of every account in the general ACCOUNTS PAYABLE 200 CURRENT LIABILITY CREDIT
ledger of a company, broken down into LOANS PAYABLE 290 NON-CURRENT LIABILITY CREDIT
OWNER’S EQUITY
subcategories. 300 EQUITY CREDIT
PERSONAL DRAWINGS 310 CONTRA-EQUITY DEBIT
GROSS SALES 400 INCOME CREDIT
RENT EXPENSE 510 EXPENSE DEBIT
SALARY EXPENSE 520 EXPENSE DEBIT
REPAIRS AND MAINTENANCE 530 EXPENSE DEBIT
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When to
THE ACCOUNTING CYCLE THE ACCOUNTING CYCLE Journalize?

The accounting cycle The Accounting Cycle is composed of the following steps

1. Collection and Verification of Source Documents

2. Analyze Each Transaction
3. Journalize Each Transaction
4. Post to Ledger The Accounting
Cycle
5. Prepare a Trial Balance
• Journalize Adjusting Entries
• Prepare Adjusted Trial Balance
6. Prepare a Work Sheet
7. Prepare Financial Statements
BOOKKEEPING NC-3
• Journalize and Post Closing Entries BOOKKEEPING NC-3

8. Prepare a Post-Closing Trial Balance

Aaahhhh!
THE ACCOUNTING CYCLE THE JOURNAL
The Accounting Cycle is composed of the following steps

1. Collection and Verification of Source Documents

2. Analyze Each Transaction
3. Journalize Each Transaction
4. Post to Ledger The Accounting
Cycle
5. Prepare a Trial Balance
• Journalize Adjusting Entries
• Prepare Adjusted Trial Balance
6. Prepare a Work Sheet
7. Prepare Financial Statements
• Journalize and Post Closing Entries BOOKKEEPING NC-3 BOOKKEEPING NC-3

8. Prepare a Post-Closing Trial Balance

THE JOURNAL THE JOURNAL

Journal
Journal is a book where all transactions are
initially recorded.
Journal entry are the logging of business
transactions and their monetary value
into the t-accounts of the accounting journal as
either debits or credits. A journal
entry is usually backed up with a piece of paper; a
receipt, a bill, an invoice, or
some other direct record of the transaction;
making them easy to record and to
BOOKKEEPING NC-3
maintain traceability for each transaction. BOOKKEEPING NC-3

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JOURNAL
THE JOURNAL
Journal
Journal entry

Journalize (the transactions) is the process of

recording a business transaction in a
journal.

BOOKKEEPING NC-3

JOURNAL ENTRY JOURNAL ENTRY STRUCTURE

Is that all?
OTHER SPECIFIC TOPICS THE ACCOUNT…specific
Contra accounts
A contra account is used to reduce the value of a
related account when the two are netted
together. A contra account's natural balance is the
opposite of the associated account. If a debit is
the natural balance recorded in the related
account, the contra account records a credit.

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THE ACCOUNT…specific
Real accounts
The balance in a real account is not closed at the
end of the accounting year. As a result, a real
account begins each accounting year with its
balance from the end of the previous year.
Because the end-of-the-year balance is carried
forward to the next accounting year, a real
account is also known as a permanent account.
May be tangible or intangible.
Assets, Liabilities, Equity
THE JOURNAL ENTRY…specific
Adjusting Journal Entry
An adjusting journal entry is an entry in a
company’s general ledger that occurs at the end
of an accounting period to record any
unrecognized income or expenses for the period.
When a transaction is started in one accounting
period and ended in a later period, an adjusting
journal entry is required to properly account for
the transaction.
ACCRUAL ACCOUNTING
Accrual accounting is an accounting
method where revenue or expenses
are recorded when a transaction
occurs rather than when payment is
received or made. The method
follows the matching principle,
which says that revenues and
expenses should be recognized in
the same period.
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THE ACCOUNT…specific
Nominal accounts
The balance in a nominal account is closed at the
end of the accounting year. As a result, a nominal
account begins each accounting year with a zero
balance. Since the balance does not carry forward
to the next accounting year, a nominal account is
also referred to as a temporary account.
Income, Expenses
BOOKKEEPING NC-3 BOOKKEEPING NC-3
THE JOURNAL ENTRY…specific
Closing Journal Entry
Closing entries are journal entries made at the
end of an accounting period to transfer the
balances of various temporary ledger accounts to
some permanent ledger account.
BOOKKEEPING NC-3 BOOKKEEPING NC-3
THE ACCOUNT…under Accrual Accounting
Accrued expenses are expenses a company needs to account for, but
for which no invoices have been received and no payments have been
made. Accrued expenses would be recorded under the section
“Liabilities” on a company’s balance sheet.
Accrued revenue are amounts owed to a company for which it has
not yet created invoices for. They are recorded as “Assets” on a
balance sheet.
Deferred expenses are expenses a company has prepaid. They are
recorded as “Assets” on a balance sheet.
Deferred revenue is income a company has received for its products
or services, but has not yet invoiced for. They are considered
BOOKKEEPING NC-3 “Liabilities” on a balance sheet. BOOKKEEPING NC-3
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LECTURER End of Lecture 3

ALONEY B. SOMIDO, JR.

Email: absomido.jr@gmail.com
Mobile: 0917-157-9347; 0933-861-3298
Landline: (083)302-25-69
FB Msgr: Al Bato Somido Jr.; m.me/aloneysomidojr

Under the guidance of

MS. ARIANE KRISTINE FORTINEZ
Bookkeeping NC-3 Trainor

Thank you!