Republic of the Philippines

Department of Education
National Capital Region
DIVISION OF CITY SCHOOLS – MANILA
Manila Education Center Arroceros Forest Park
Antonio J. Villegas St. Ermita, Manila

FUNDAMENTALS OF ACCOUNTANCY,
BUSINESS AND MANAGEMENT 1

Source: https://www.fool.com/knowledge-center/a-list-of-account-titles-in-accounting.aspx

Quarter 1 Week 5 Module 6

Learning Competencies:
1. illustrate the format of a general and
special journals; and
2. illustrate the format of a general and
subsidiary ledger.
 HOW TO USE THIS
MODULE?
Before starting the module, I want you to set aside other task/s that may disturb
you while enjoying the lessons. Read the simple instructions below to have
successfully enjoy the objectives of this kit. Have fun!
1. Follow carefully all the contents and instructions indicated in every page
of this module.
2. Write on your notebook the concepts about the lessons. Writing
enhances learning that is important to develop and keep in mind.
3. Perform all provide activities in the module.
4. Let your facilitator/guardian assess your answer using the answer key
card.
5. Analyze conceptually the post-test and apply what you have learned.
6. Enjoy Studying.

PARTS OF THE MODULE

 Expectations - These are what you will be able to know after

completing the lessons in the module.
 Pre-test - This will measure your prior knowledge and the concepts
to be mastered throughout the lesson.
 Looking Back to your Lesson - This section will measure what
learning‟s‟ and skills did you understand from the previous lesson.
 Brief Introduction- This section will give you an overview of the
lesson.
 Activities - This is a set of activities you will perform with a partner.
 Remember - This section summarizes the concepts and applications
of the lessons.
 Check your Understanding - It will verify how you learned from the
lesson.
 Post-test - This will measure how much you have learned from the
entire module

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 This module was written for you to accomplish at home. It was carefully
designed so that you can work at your own pace and allow self-discovery of the
concept through activities that you will perform. Activities were also selected to allow
independent learning which also aims to develop students‟ reading comprehension
skills through understanding written texts.
After going through the module, you are expected to:
1. illustrate the format of general and special journal; and
2. illustrate the format of a general and subsidiary ledger.

I. Identification
Directions: Identify the following statements. Write your answer on the space
provided before each number.
_ 1. It is also called the “book of original entries”, the accounting
record where business transactions are first recorded.
_ 2. The journal simplifies the recording process, thus providing an
efficient way of recording and retrieving of information.
_ 3. This journal is used for all other transactions that cannot be
recorded in the special journals.
_ 4. It is a systematic compilation of a group of accounts. It is used
to classify the effects of business transactions on the accounts.
_ 5. It is a group of ledgers like accounts that contains the
independent data of a specific general ledger.
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakakeng Sur, Baguio City

II. TRUE or FALSE

Directions: Before each statement, write TRUE if the statement is correct or FALSE
if it is incorrect.

1) General Journal is the most basic accounting journal.

_2) Income increases equity; while expense decreases equity.
_3) Assets and Expenses have normal debit balances.
_4) General ledger provides a breakdown of the controlling
accounts in the subsidiary ledger.
_ 5) The two books of accounts are Journal and the Ledger.
6) A Contra Asset account has a normal debit balance.
_ 7) If an account has a normal credit balance, its contra account
must have a normal debit balance.
_ 8) Contra accounts are presented in the financial statements as
addition to their related accounts.

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 _ 9) The concept of equilibrium views each transaction as having a
two-fold effect on values – a value received, and a value parted with.
_ 10) Some transactions are recorded by a debit alone or a credit
alone.
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakakeng Sur, Baguio City

Before we go to this module 6, kindly recall topics that we discussed

already: Accounting Definition, Nature and History, Users of Accounting Information,
Principle and Concepts of Accounting, Accounting Equations, Major Accounts in
Accounting; and also, kindly check if you still remember that -
 An account is a record of the increases and decreases in specific items of asset,
liability, equity, income or expenses. It has three parts namely: (1) account title,
(2) debit side, and (3) credit side.
 Debit is the left side of an account while credit is the right side
 The balance of an account is the difference between the total debits and credits
in that account.
 The five major accounts are assets, liabilities and equity while the income
statement accounts are income and expenses.
 A chart of accounts is a list of all the accounts used by the business.
 Account numbers are assigned to each account to facilitate recording cross-
referencing, and retrieval of information.

If you have a problem, contact your teacher. If you have not, continue
reading and analyzing.

The journal
Let‟s talk Journals and Ledger! Are you ready? Any Questions? Why is journal
considered an original book of entry?
Answer: It is Original Book of Entry because the journal is used to record all
transactions and events initially in chronological order (meaning what transaction
happens now, must be recorded, so on and so forth). And for each transaction, the
journal shows the debit and the credit.

There are two types of journals, the general journal and the special journal.
1. GENERAL JOURNAL
This general journal is the most basic journal. Typically, a general journal has
spaces for dates, account titles and explanations, references, and two amount
columns, as shown below.

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 General Journal
Date Account Title and Reference Debit Credit
Explanation

Question: What are the significant contributions of this journal to the

recording process?

Answer: This discloses in one place the complete effects of a transaction,

provides a chronological record of transactions, and helps to prevent or locate errors
because the debit and credit amounts for each entry can be easily compared.

Next, how can we journalize transactions? What do you call the process?
Answer: The entering of transaction data in the journal is called journalizing.
The companies make separate journal entries for each transaction.
Let’s study the journalizing process, where:
• 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 debt is recorded in the Debit column.
• The credit account title (that is, the account to be credited) which is indented
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. A blank space separates
individual journal entry 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.

Let‟s have an example. Record the following transactions:

• September 1, 2015 Mr. Ben Tambling invested ₱500,000 in a restaurant

business by opening an account with Super Bank.
• September 5, 2015 purchased kitchen appliances for his business
amounting to ₱100,000 by issuing a check.
• September 6, 2015 started his operations and made a sale for that day
amounting to ₱20,000.

General Journal
Date Account Title and Explanation Ref Debit Credit

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9/1/15 Cash 500,000

B. Tambling Capital 500,000

To record the investment of Ben Tambling

9/5/15 Kitchen Appliances

Cash 100,000

To record purchase of kitchen appliance

9/6/15 Cash 20,000

Sales 20,000

To record sales for the day

What do you observe?

Some entries involved only two accounts, one debit and one credit. An entry
like this is considered a Simple entry. Some transactions, however, require more
than two accounts in journalizing. An entry that requires three or more accounts is a
Compound Entry. All the transactions in the above examples are simple entries. An
example of a compound entry is the following:

 On September 7, 2015, Mr. Tambling purchased a motorcycle costing

₱80,000. He pays ₱30,000 cash and agrees to pay the remaining ₱50,000 on
account (to be paid later). The compound entry is as follows:

General Journal
Date Account Title and Explanation Ref Debit Credit

9/7/15 Transportation Equipment 80,000

Cash 30,000

Accounts Payable 50,000

To record purchase of motorcycle by paying

cash and the balance on account.

Any problem? You may contact the teacher if you have any. If the example is
clear, congratulations and you may proceed to:
2. SPECIAL JOURNALS
Some businesses encounter voluminous quantities of similar and recurring
transactions which may create congestion if these transactions are recorded
repeatedly in a single day or a month in the general journal. Take the case of our
example above, if Mr. Tambling will record the sales per day using the Official
Receipt “sales” account repeatedly. In order to facilitate efficient and practical
recording of similar and recurring transactions, a special journal is used.
Any Questions? What are the commonly used special journals and their
uses?
Answer:

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 • Cash Receipts Journal – used to record all cash that has been received.
• Cash Disbursements Journal – used to record all transactions involving cash
payments.
• Sales Journal (Sales on Account Journal) – used to record all sales on credit
(on account).
• Purchase Journal (Purchase on Account Journal) – used to record all
purchases of inventory on credit (or on account)

Let’s take that one by one!

The Cash Receipts Journal is used to record transactions involving receipt or
collection of cash. Here is the format:
Cash Receipts Journal

Date Description (Particulars) Ref Debit Credit Credit Credit

Cash Sales Account Sundry

Receivables

• The date of the transaction is entered in the date column.

• A brief explanation of the transaction is entered in the description column.
• 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.
• The Debit Cash column represents the amount of cash received for a
particular transaction.
• Major categories of receipts, such as cash sales and collection of accounts
receivable are provided with separate columns. These transactions are frequent and
repetitive items; therefore, a separate column is provided.
• The column sundry is used for various miscellaneous and less regular items,
such as capital investment, receipt of loan proceeds, among
others.
(Remember that the source document for this journal is the Official Receipts
or Cash Receipts issued by the business.)

The next is Cash Disbursements Journal (CDJ)

The cash disbursements journal is the opposite of the cash receipts journal. It
is the journal where all cash payments are recorded. Refer the format below:

Cash Disbursement Journal

Date Descriptions (Particulars) Ref Check or Credit Debit Debit Debit Debit
Voucher Account Supplies Sundr
Number Cash Payables Salarie y
s

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 • The date of the transaction is entered in the date column.
• A brief explanation of the transaction is entered in the description column.
• 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.
• The Check or Voucher number represents the identifying number of the
check issued for the related cash payment. Most of the time, a check or cash
voucher accompanies the disbursement. The voucher number may be used as the
alternative for this column.
• The Debit Cash column represents the amount of cash received for a
particular transaction.
• Major categories of receipts, such cash sales and collection of accounts
receivable are provided with separate columns. These transactions are frequent and
repetitive items; therefore, a separate column is provided.
• The column sundry is used for various miscellaneous and less regular items,
such as capital investment, receipt of loan proceeds, among others.
(The source documents used to update this journal are the check voucher or cash
voucher, cash receipts or official receipts from suppliers or vendors.)

Followed by Sales Journal (Sales on Account Journal)

The Sales Journal or Sales on Account Journal is used in recording several
sales transactions on account. The source document for this journal is the charge
invoice or sales invoice (for credit transactions) to various customers or clients.
Please recognized the format below:
Sales Journal

Date Description (Customer Name) Ref Charge Invoice Debit Credit

or Sales Invoice Account Sales
No. Receivables

• The date of the transaction is entered in the date column.

• A brief explanation of the transaction is entered in the description column or
the name of the customer.
• 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.
• The Charge Invoice Number or Sales Invoice Number represents the
identifying number of the source document issued to the customer when the sale
was made.
• The Debit Accounts Receivable column represents the amount of the sale
transactions indicated in the charge invoice.
• The Credit Sales column represents the amount of the sale transactions
indicated in the charge invoice.
(The source document for this journal is the Charge Invoice issued by the
business.)

And lastly, Purchase Journal (Purchases on Account Journal)

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 The Purchase journal or the Purchases on Account Journal is used to record
recurring transactions of purchases on account. (The source documents for the
purchase journal are the invoices from the supplier of the company.) An example of
a Purchase Journal is shown below:

Purchase Journal

Date Description (Customer Name) Ref Charge Invoice Debit Credit

or Sales Invoice Purchases Accounts
No. (From Payable
Suppliers)

• The date of the transaction is entered in the date column.

• A brief explanation of the transaction is entered in the description column or
the name of the supplier.
• 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.
• The Charge Invoice Number or Sales Invoice Number represents the
identifying number of the source document issued by the supplier when the items,
goods or merchandise were delivered to the company when the purchase was
made.
• The Debit Purchases column represents the amount of the goods purchases
as indicated in the charge invoice from the supplier
• The Credit Accounts Payable column represents the amount of the goods or
items purchased on credit from the supplier. The amount is indicated in the charge
invoice issued by the supplier.
(The source document for this journal is the charge invoice from the supplier
or vendor.)

Questions: Are the Cash Receipts, Cash Disbursement, Sales Journal and
Purchase journal different? and their sources?
Answer:
• Cash Receipts Journal – is used to record all cash that has been received
and the sources are Official receipt and cash receipt.
• Cash Disbursements Journal –is used to record all transactions involving
cash payments and the sources are check voucher or cash voucher, cash receipts or
official receipts.
• Sales Journal (Sales on Account Journal) – [s used to record all sales on
credit (on account) and the source is Charge invoice by the business.
• Purchase Journal (Purchase on Account Journal) –is used to record all
purchases of inventory on credit (or on account) and the source is charged invoice
from the supplier or vendor.

Any Questions? Is that Clear? If it is clear, let’s move to Ledger.

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 What is a Ledger?

Answer: Ledger refers to the accounting book in which the accounts and their
related amounts as recorded in the journal are posted periodically. The ledger is also
called the „book of final entry’ because all the balances in the ledger are used in
the preparation of financial statements. This is also referred to as the T-Account
because the basic form of a ledger is like the letter „T‟.

What are the kinds of Ledger?

Answer: the general ledger and the subsidiary ledgers.

Let‟s look, what is General Ledger? The general ledger (commonly referred
by accounting professionals as GL) is a grouping of all accounts used in the
preparation of financial statements. The GL is a controlling account because it
summarizes all the activities that have taken place as recorded in its subsidiary
ledger.
The format of a general ledger is shown below:
General Ledger
Account: Cash Account No. 1000
Date Item Ref Debit Credit Balance

What do you observe?

Answer:
• There is an account portion that refers to the account title for example: cash,
accounts receivable.
• There is an account number that is assigned number for each account title to
facilitate ease in recording and cross-referencing.
• There is a Date column identified when the transaction happened.
• There is an item column that represents the source journal and the nature of
the transactions
• There‟s a Reference that identifies the page number of the general or
special journal from which the information was taken.
• Debit and Credit columns are used in recording the amount of transactions
from the general journal or special journal.
• There‟s also a Balance Column that represents the running balance of the
Account after considering the debit and credit amounts. If the running balance
amount is positive, the account has a debit balance whereas if it has a negative
running balance, the account has a credit balance.

Any Questions? Can we move? If it’s clear, Let’s study the next….

What is a SUBSIDIARY LEDGER? A subsidiary ledger is a group of like

accounts that contains the independent data of a specific general ledger. A
subsidiary ledger is created or maintained if individualized data is needed for a

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specific general ledger account. The example of a subsidiary ledger is the individual
record of various payables to suppliers. The total amount of these subsidiary ledgers
should equal the balance in the Accounts Payable general ledger.
An example of subsidiary ledgers is shown below:

Accounts Payables
Subsidiary Ledger
Vendor/Supplier: Zimmer Food Corporation Vendor No.: 501

Address: Marzan St, Sampaloc, Manila

Date Item Ref Debit Credit Balance

What do you observe?

 The upper portion indicates the name and address of the vendor or
supplier.
• The vendor number is an assigned number for each vendor as reference in
keeping the records of a supplier.
• The Date column identifies when the transaction happened.
• The description column describes the nature of the transaction.
• The Reference identifies the page number of the general our special journal
from which the information was taken.
• The Debit and Credit columns reflect the various effects of every transaction
to the record of the supplier or vendor.
• The Balance column provides the running balance of every supplier.
(Take note that the total running balance for all subsidiary ledgers
should equal the Accounts payable general ledger.)

Any Questions? If not, well and Good, Practice more!

ACTIVITIES

Independent Activity 1: Uses of Journals and Ledgers. Write “J” if the

statement refers to a use of the journal and “L” if it is referring to the use of a ledger:
_ 1. It provides information about the financial health of the business.
2. It ensures that a double-entry bookkeeping system is observed
when recording transactions.
3. It provides a more reliable evidence of transactions.
4. It assists in tracking the flow of business transactions for a given
period.
5. It provides an adequate explanation of each entry.
6. It assists management in monitoring business performance.

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 7. It provides a systematic record of transactions.
8. It presents necessary information about the transactions.
9. It provides information about the results of business operations.
_10. It shows detailed information about specific assets, liabilities, and
owner‟s equity of the business.
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakakeng Sur, Baguio City

Independent Activity 2: Format of journals and ledgers. In your notebook or pad

paper, write the answers to the following requirements.( Rubrics in Checking
Essays: Content = 30%, Understanding/Application = 25%, Original Thinking = 25%,
Structure = 10% and Grammar = 10%.)
1. Illustrate the format of a general journal being used by an actual business.
(note: the data may be gathered either personally or using the internet or other
textbooks). (5 points)
2. Does the business use special journals? If yes, illustrate the format/s of the
special journal/s used. (5 points)
3. Illustrate the format of a general ledger being used by an actual business.
4. Does the business use subsidiary ledgers? If yes, illustrate the format/s of
the subsidiary ledger/s used. (5 points)
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakakeng Sur, Baguio City

REMEMBER

 The JOURNAL is the record transactions and events in chronological order referred to as
the book of original entry.
 GENERAL JOURNAL is the most basic journal. Typically, a general journal has spaces for
dates, accounts titles and explanations, references, and two amount columns.
 SPECIAL JOURNAL is used when the business encounters voluminous quantities of similar
and recurring transactions which may create congestion if these transactions are recorded
repeatedly in a single day or a month in a general journal. E.g. Cash Disbursement Journal
(CDJ), Sales Journal (Sales on Account Journal), Purchase Journal (Purchase on Account
Journal).
 The LEDGER refers to the accounting book in which the accounts and their related amounts
as recorded in the journal are posted periodically and called the “book of final entry’,
because all the balances in the ledger are used in the preparation of financial statements.
This is also referred to as the T-Account because the basic form of a ledger is like the letter
“T”.
 GENERAL LEDGER (commonly referred by accounting professionals as GL) is a grouping
of all accounts used in the preparation of financial statements.
 SUBSIDIARY LEDGER is a group of ledgers like accounts that contains the independent
data of a specific general ledger

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Directions: MULTIPLE CHOICE
Choose the letter corresponding to the correct answer for each of the following
questions provided below:

1. Which of the following statements is not valid?

a. Income increases equity; thus, it has a normal credit balance.
b. Expense decreases equity, thus, it has a normal debit
c. Expense is an addition on the right side of the accounting equation.
d. Asset has a normal debit balance
2. The following are the types of special journals except?
a. Cash disbursement journal b. General journal
c. Cash receipt journal d. Purchases journal
3. Journal is used for what type of accounting process?
a. Summarizing b. Journalizing
c. Posting d. Measuring
4. Ledger is used for what type of accounting process?
a. Summarizing b. Journalizing
c. Posting d. Measuring
5. Which of the following is not an example of controlling accounts?
a. Accounts Payable b. Equipment
c. Accounts Receivable d. Land.
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakakeng Sur, Baguio City

I. Identify what special journal is applicable for the following transactions:

1. Collected ₱10,000 from a customer in payment of his account.

2. Bought 100 pieces of mugs to be sold in the store amounting to ₱1,500 on
account.
3. Sold five pieces of mugs to X, ₱320 cash.
4. Sold two pieces of mugs to Y, ₱112 cash.
5. Purchased office supplies for cash, ₱500.
6. Paid ₱20,000 monthly rental.
7. Paid salary of staff, ₱15,000
8. Sold 100 pieces of mugs to Unicup, Inc., ₱5,600 on account.
9. Sold 500 pieces of mugs to Bugsmore Corp. for ₱15,300 payable one month after
delivery.
10. Purchase on account 1,000 pieces of mugs for ₱12,400
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakakeng Sur, Baguio City

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I. NORMAL BALANCE ACCOUNTS
Directions: Indicate the normal balance of the account (DR for debit or CR for
credit) and in what financial statement (BS for Balance Sheet or IS for Income
Statement) the account name should appear.

Account Name Dr or Cr BS/SFP or IS

e.g. Cash Dr BS/SFP
1 Dividend income
2 Cash overdraft
3 Merchandise inventory
4 Prepaid supplies
5 Unearned rent income
6 Adan, Drawings
7 Purchases
8 Sales
9 Cost of Sales
10 Sales Discounts
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakakeng Sur, Baguio City

II. Using T – account analysis: Compute for the ending balance or carrying amount
of the following: Cash, Accounts Receivable, Building, Equipment, Notes Payable

Lucas has the following balances on his book:

Cash ₱50,000 Accumulative 500,000

Depreciation-Building
Account Receivable 200,000 Accumulative 75,000
Depreciation-Building
Building 1,000,000 Notes Payable 100,000
Equipment 500.000 Cash collections 50,000
Allowance for bad debts 50,000 Cash payment 10,000
• Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and Management part 1, Bandolin Enterprise,
(Publishing and Printing) Bakakeng Sur, Baguio City

III. Critical Thinking.

Rubrics in Checking Essays: Content = 30%, Understanding/Application = 25%,
Original Thinking = 25%, Structure = 10% and Grammar = 10%.

1. Why do we need to use Journal and Ledger in recording business

transactions? Explain. (10 points)

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Student:
_
_
_
__ _
_
_
_
_
_
_
Teacher: The accounting rules and regulations manage the financial flow and the
use of financial resources could be done in a proper manner by the government. The
major factor that has significance in accounting regulations is attached to the
national financial structure. If the companies will follow the accounting regulations,
then the illegal activities and financial irregularities could also be minimized and it
further contributes into the national economy. Thus, in this way my learning towards
the accounting regulation was immense. The appropriate technique and manner to
store accounting information and valuation of assets and liabilities. - Bureau of
Internal Revenue.
. To further understand the lessons kindly visit:
1. https://www.iedunote.com/types-of-accounting-journal
2. https://www.accountancyknowledge.com/books-of-accounts/
3. bizfluent.com/about-6687322-general-ledger-vs--subsidiary.
4. www.wisegeek.com/what-is-the-difference-between-a...
5. http://simplestudies.com/general-ledger-to-subledger-reconciliation.html
6. www.accountingnotes.net/accounting/journal/difference...
7. www.dummies.com/.../general-and-special-accounting-journals
8. en.wikipedia.org/wiki/special journal
9. www.youtube.com/watch?v=JRg2CMJZOoM
10. www.youtube.com/watch?v=kQz1fxt01ic

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