ENTREPRENEURSHIP

OBJECTIVES

At the end of the lesson, the learner is expected to:

1. Perform book keeping tasks;

2. Determine the basics of bookkeeping;

3. Know the importance of a bookkeeper; and

4. Understand the benefits of having a good bookkeeping system for a

business.
 Lesson 5:
Bookkeeping
The systematic method of
recording and processing
financial transactions is
called bookkeeping. Now
that we have defined the
meaning of bookkeeping
we will proceed with the
meaning of Bookkeeper.
 What is a Bookkeeper?

A bookkeeper is an employee of
a small to the mid-size entity
that performs the processing
and recording of the day-to-day
financial operations of a
business.
After the bookkeeper records transactions, the
accountant or the business owner will review
the bookkeeper’s work and make the required
adjusting entries before the company's financial
statements are finalized.
The method of using debit and
credit to record a transaction is
called the double-entry
bookkeeping. This is invented
by the Father of Modern
Accounting Luca Pacioli in the
fourteenth century. This is the
bookkeeping system used up to
this day.
To understand the double-bookkeeping system here is an
example below:

You purchased a brand new P30,000 laptop for your recently-

opened meat shop business. Under double-entry accounting,
you would make two entries: you trade one asset (cash) for
another asset (laptop). So you have to adjust both the cash
and laptop accounts in your books.
Under double-entry accounting, every debit always has an
equal corresponding credit, which keeps the following
equation in balance. Always keep this in mind:

Assets = Liabilities + Equity

Accountants call this the accounting equation, and it’s the
foundation of double-entry bookkeeping. If at any point
this equation is out of balance, that means the
bookkeeper has made a mistake somewhere along the
way.

In this example, only the assets side of the equation is

affected: your assets (cash) decrease by P30,000 and
your laptop assets increase by P30,000, and the equation
remains balanced.
Let’s try another example. Let’s say you just bought
P20,000 of meat inventory on credit. In this case, the asset
that has increased in value is your Inventory. Because you
bought the inventory on credit, your accounts payable
account also increases by P20,000.
Let’s take a look at the accounting equation again:

Assets = Liabilities + Equity

In this case, assets (+P20,000 in inventory) and

liabilities (+P20,000) are both affected. Both sides of
the equation increase by P20,000, and the equation
remains balanced.
Last example: how do you record accounts receivable
under this accounting method? When you send an
invoice to a client after finishing a sale of P5,000 that
costs P4,000, you would “debit” accounts receivable
and “credit” the sales account.
REFERENCES
1. Ronaldo S. Batisan, DIWA Senior High School Series:
Entrepreneurship Module. Diwa Learning Systems Inc.
2. Angeles A. De Guzman, Entrepreneurship (For Senior High
School, Applied Subject, ABM Strand). Lorimar Publishing, Inc.
2016
3. Eduardo A. Morato Jr., Entrepreneuship, 1st ed., Manila. REX
Books.
4. Raymund B. Habaradas and Tereso S. Tullao, Jr., Pathways to
Entrepreneurship, 2016, Phoenix Publishing House.