BOOKS OF

ACCOUNTS
INTRODUCTION
LEARNING OBJECTIVES:
1. DEFINE JOURNAL AND LEDGER
2. RECORD SIMPLE BUSINESS TRANSACTIONS
USING JOURNAL AND LEDGER

3. U N D E R S TA N D T H E U S E S O F T H E T W O
BOOK OF ACCOUNTS (JOURNAL AND LEDGER)
IN RECORDING BUSINESS TRANSACTIONS
ACCOUNTING
PROCESS OF IDENTIFYING,
RECORDING, AND COMMUNICATING
ECONOMIC EVENTS OF AN
ORGANIZATION TO INTERESTED
USERS
• Where do 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?
THE T WO MA JOR
T YPES OF BOOK
OF ACCOUNTS
JOURNAL AND
LEDGER
JOURNAL

•Book of original entry

GENERAL
JOURNAL
JOURNALIZING
PROCESS
•The date of the transaction which is
entered in the Date column.
•The debit account title (that is, the
account to be debited) which is entered
first at the extreme left margin of the
column headed “Account Titles and
Explanation,”, and the amount of the debit
is recorded in the debit column.
•The credit account title (that is,
the account to be credited) which
is intended and entered on the
next line in the column headed
“Account Titles and explanation,”
and the amount of the credit is
recorded in the credit column.
•A brief explanation of the transaction
which appears on the line below the
credit account title. A space is left
between journal entries. The blank
space separates individual journal
entries and makes the entire journal
easier to read.
•The column titled ref. (which
stands for reference) which is left
blank when the journal entry is
made. This column is used later
when the journal entries are
transferred to the ledger accounts.
JOURNALIZING
NORMAL BALANCE OF ACCOUNTS
 ILLUSTRATION
• September 01, 2015 Mr. Ben Mabait invested PHP500,000 in a
restaurant business by opening an account with superbank.
• September 05, 2015 purchased kitchen appliances for his
business amounting to Php 100,000 by issuing a check.
• September 06, 2015 started his operations and made a sales
for that day amounting to Php20,000.
• On September 07, 2015, Mr. Mabait purchased a motorcycle
costing Php 80,000. He pays Php 30,000 cash and agrees to
pay the remaining Php 50,000 on account (to be paid later)
• Let us take the case of Pedro Matapang, a computer technician. Pedro decided to open his
computer repair shop on February 14, 2022, naming it Matapang Computer Repairs. Pedro
knows that business transactions should be separated from personal finances. Thus, he
decided to invest PHP350,000 in this business. He deposited the amount with Nation Bank.
• February 15, 2022 - Pedro purchased one computer unit from XY Computer Store to be
used for the business. He issued check number 001 amounting to PHP15,000.
• February 16, 2022 - Pedro hired Juana Magaling, an experienced secretary.
• February 17, 2022 – Repaired the computer of Jean and collected PHP 8,000
• February 17, 2022- Purchased supplies Php 5,000
• February 18, 2022 – Repaired Mike’s computer. However, Mike will pay PHP18,000 on March
18, 2022
• February 19, 2022 – Pedro purchased Office Supplies from MM Merchandise amounting to
PHP10,000 on account. Pedro will pay this on March 30, 2016.
• February 25, 2022 – Paid the salary of Juana amounting to PHP4,000
• February 28, 2022 – Paid electricity bill amounting to Php 7,000
 SPECIAL
JOURNALS
• CASH RECEIPTS JOURNAL
• CASH DISBURSEMENT JOURNAL
• SALES JOURNAL (SALES ON ACCOUNT
JOURNAL)
• PURCHASE JOURNAL (PURCHASE ON ACCOUN
JOURNAL)
CASH RECEIPTS
JOURNAL
 CASH
DISBURSEMENT
JOURNAL
 Cash Disbursement Journal

DATE DESCRIPTION ( PARTICULARS) REF Check or Voucher Number Credit Debit Debit Debit Credit
Cash Accounts Payable Salaries Supplies Sundry
SALES JOURNAL
 SALES JOURNAL

DATE DESCRIPTION ( CUSTOMER NAME) REF Charge Invoice or sales invoice Debit Credit

Accounts Receivable Sales

PURCHASE
JOURNAL
 PURHASE JOURNAL

DATE DESCRIPTION ( SUPPLIER'S NAME) REF Charge Invoice or sales invoice no. (from supplier) Debit Credit
Purchases Accounts Payable
LEDGER
GENERAL LEDGER
GROUPING OF ALL ACCOUNTS USED IN THE
P R E PA R AT I O N O F F I N A N C I A L S TAT E M E N T S

CONTROLLING ACCOUNT BECAUSE IT

S U M M A R I Z E S A L L T H E A C T I V I T I E S T H AT H A V E
TA K E N P L A C E A S R E C O R D E D I N I T S S U B S I D I A R Y
LEDGER
 GENERAL LEDGER
Account: Cash

DATE ITEM REF Debit Credit Balance

 LEDGER
GROUPING OF THE ENTITY’S ACCOUNTS
GENERAL LEDGER
“REFERENCE BOOK” OF THE
AC C O U N T I N G S YS T E M A N D I S U S E D
TO C L A S S I F Y A N D S U M M A R I Z E
T R A N S AC T I O N S , A N D TO P R E PA R E
DATA F O R B A S I C F I N A N C I A L
S TAT E M E N T S .
 C L A S S I F I E D I N TO 2 :
• B A L A N C E S H E E T O R P E R M A N E N T AC C O U N T S
( A S S E T S , L I A B I L I T I E S , A N D OW N E R ’ S E Q U I T Y )

• I N C O M E S TAT E M E N T O R T E M P O R A RY
AC C O U N T S
(INCOME AND EXPENSES)
SUBSIDIARY
LEDGER
SUBSIDIARY LEDGER

•Is a group of like accounts that contains the

independent data of a specific general ledger.
•Is created or maintained if individualized data is
needed for a specific general ledger account.
1. DIFFERENCIATE GENERAL LEDGER
FROM A SUBSIDIARY LEDGER
2. DIFFERENCIATE GENERAL JOURNAL
FROM A GENERAL LEDGER