Accounting

Accounting is the art of recording, classifying, and summarizing in a

significant manner and in terms of money, transactions and events
which are, in part at least of financial character, and interpreting the
results thereof.
Assets = Liabilities + Shareholders Equity
ASSET = LIABILITIES + EQUITY
Current Fixed Assets Intangible Current Non-Current
Cash and Cash Land Goodwill Accounts Long-terms: Capital
Equivalent Payable
Building Patent Notes Payable Retained
Accounts Short-term Earnings
Receivable Machinery Copyright Loans Bonds Payable

Inventory Furniture Trademarks

Supplies Vehicles

Prepaid Assets
DEBIT (CREDIT) CREDIT (DEBIT)
Assets = Liabilities + Shareholders Equity
Mr. Diaz organized a laundry shop business owned and managed by himself. He invested cash of
P600,000 and deposited in the account of his business named Diaz Dry & Fold Shop.

ASSET = LIABILITIES + EQUITY

Current Fixed Assets Intangible Current Non-Current
Cash P600,000 P600,000

DEBIT (CREDIT) CREDIT (DEBIT)

Assets = Liabilities + Shareholders Equity
Purchased supplies in the amount of P30,000 cash.

ASSET = LIABILITIES + EQUITY

Current Fixed Assets Intangible Current Non-Current
Supplies 30,000
Cash (P30,000)

DEBIT (CREDIT) CREDIT (DEBIT)

Assets = Liabilities + Shareholders Equity
Purchased office chairs and tables amounting to P50,000.

ASSET = LIABILITIES + EQUITY

Current Fixed Assets Intangible Current Non-Current
Cash (P50,000) Furniture
P50,000

DEBIT (CREDIT) CREDIT (DEBIT)

Assets = Liabilities + Shareholders Equity
Charged customer for the laundry contract of hotel linens and curtains, P150,000.

ASSET = LIABILITIES + EQUITY

Current Fixed Assets Intangible Current Non-Current
Account Revenue
Receivable P150,000
P150,000
DEBIT (CREDIT) CREDIT (DEBIT)
Assets = Liabilities + Shareholders Equity
Purchased additional supplies on account, P25,000.

ASSET = LIABILITIES + EQUITY

Current Fixed Assets Intangible Current Non-Current
Supplies Accounts
P25,000 Payable
P25,000
DEBIT (CREDIT) CREDIT (DEBIT)
Compliance Requirement
Any merchant or business organization in whatever form or nature, if
liable for any national tax as provided by the Tax Code, is mandated to
comply with the following requirements:

• Registration with BIR (See RMC No. 57-2020)

• Keeping accounting records and books
• Issuance of the sales invoice and official receipts
• Filing of tax returns and payment of related taxes
• Withholding of taxes on specified payments to suppliers-sellers
BIR Certificate of
Registration
This is a proof that your
business is registered as a
taxpayer with the BIR.

It is the legal basis under which

a business can operate and pay
taxes in the Philippines.
Books of Accounts
A book of account is where you keep the original record of all your business
transactions. There are 3 types of books of account:

Manual Books of Account
Loose-leaf Books of Account
Computerized Books of
Account
This includes journals, ledgers, or columnar books where you
manually document (handwrite) your business transactions.
This also includes journals and ledgers, but they are printed
instead of being handwritten. Bookkeeping through Microsoft
Excel (spreadsheets) can be considered as a loose-leaf book of
account as well.
A program or computerized system of bookkeeping that is usually
common for businesses with complex operations.
Kinds of Books
Kinds of Books VAT Non-VAT/OPT

Journal ✓ ✓

Ledger ✓ ✓

Cash Receipt ✓ ✓

Cash Disbursement ✓ ✓

Subsidiary Sales Journal ✓

Subsidiary Purchase Journal ✓

Preservation of Accounting Books
Taxpayer shall preserve the accounting books and other pertinent
documents for a period of ten years (before 2016, it was for 3 years
from the last entry in each books)
Recording of Transactions in General Journal
Books of Accounts

If a transaction cannot be recorded in a special journal, the

company records it in the general journal.
Sales Journal
Inv. Accounts Receivable – Dr
Date Description PR
No. Sales – Cr.
Sales Journal
Inv. Accounts Receivable – Dr
Date Description PR
No. Sales – Cr.
Jan 3 815 Sanchez Corporation √ 2,550
8 816 Vera and Sons √ 4,500
10 817 Jugo & Company √ 7,380
23 818 Ramos Company √ 3,198
25 819 Vera & Sons √ 4,080
Total 21,708
(112)(114)
Purchase Journal
Accounts Store Office Sundry
Inv. Purchases
Date Description PR Payable Supplies Supplies Account
No.
Credit Debit Debit Debit Debit
Purchase Journal
Accounts Purchase Store Office Sundry
Date Description PR Payable s Supplies Supplies Account
Credit Debit Debit Debit Debit
Jan 9 Bong Bongcac √ 6,720 6,720
3 Evalle Supply Co √ 4,950 4,950
17 Mallari & Co √ 6,480 6,480
22 Evalle Supply Co √ 210 114 96
24 Mongalo Mfg. Co √ 2,931 2,880 51
29 Punsalan Furniture √ 7,200 7,200
28,491 16,080 165 96
(211) (511) (115) (116) √
Cash Receipts Journal

Sundry Accounts Sales

Sales Cash
Date Description PR Accounts Receivable Discount
Credit Credit Credit Debit Debit
Cash Receipts Journal
Sundry Accounts Sales
Sales Cash
Date Description PR Accounts Receivable Discount
Credit Credit Credit Debit Debit
Jan 5 Jugo & company √ 4,800 96 4,704
9 Ramos Company √ 2,550 51 2,499
12 Sanchez Corp √ 2,070 2,070
15 Sales √ 14,985 14,985
Purchase returns and
18 512
Allowances
25 Jugo & Company √ 7,050 141 6,909
27 Notes Payabale 212 10,000 10,000
30 Sales √ 13,476 13,476
10,072 28,461 16,470 288 54,715
√ (411) (112) (413) (111)
Cash Disbursement Journal
Sundry Accounts Sales
Cash
Date Description PR Accounts Payable Discount
Debit Debit Credit Credit
Cash Disbursement Journal
Accounts
Sundry Accounts Sales Discount Cash
Date Check No. Description PR Payable
Debit Debit Credit Credit
Jan 1 5931 Rent Expense 712 1,350 1,350
5 5932 Misc. Selling Expense 619 390 390
5 5933 Mongalo Mfg Co / 9,300 186 9,114
10 5934 Mallari & Co / 2,430 2,430
11 5935 Punsalan Furniture Store / 4,350 4,350
15 5936 Bong Bongcac / 6,450 129 6,321
15 5937 Purchases 511 1,785 1,785
18 5938 Misc General Expense 719 549 549
22 5939 Advertising Expense 612 990 990
26 5940 Evalle Supply Co / 4,950 4,950
611
29 5941 E. Estrada Drawing 2,175 2,175
711
Sales Salaries 2,700 2,700
30 5942 514
Office Salaries 900 900
Transportation in 279 279
31 5943 121
Equipment 96 96
11,214 27,480 315 38,379
(/) (211) (512) (111)
General Journal
Amount
Date Description PR
Dr. Cr.
Jan 5 Accounts Payable – Bong Bongcac 211/ √ 270
Purchase Returns and Allowances 512 270
Received credit memorandum for
merchandise returned

Jan 14 Sales Returns and Allowances 412 330

Accounts Receivable – Jugo & Company 112/ √ 330
Issued credit memorandum No. 1
Special Journal
❑ Special journals substantially reduce the number of entries that
companies make in the general journal.

❑ Only transactions that cannot be entered in a special journal are

recorded in the general journal.

❑ Also, correcting, adjusting, and closing entries are made in the

general journal.
Review Question
Cash sales of merchandise are recorded in the:

a. cash payments journal.

b. cash receipts journal.
c. general journal.
d. sales journal.
Review Question
Which of the following is not one of the credit columns in the cash
receipts journal:

a. Other accounts.
b. Accounts payable.
c. Accounts receivable.
d. Sales.
Review Question
Cash payments of merchandise are recorded in the:

a. cash payments journal.

b. cash receipts journal.
c. general journal.
d. purchases journal.