Professional Documents
Culture Documents
1 2 3 4
JOURNAL BUSINESS
DOCUMENTS
SIMPLE
BOOKKEEPING
CLASSIFYING
INTRODUCTION
BOOKKEEPING
Bookkeeping involves the chronological
Refers to the recording of business transactions
in the books of the business.
writng or recording of business
transactions and events in the books of
It is based on the premise that business accounts for the first time.
transactions must be properly recorded. All business transactions are recorded in
Income Expense
ASSET ACCOUNT TITLES
1. Cash - It describes money, either in paper or in coins.
2. Accounts receivable - It describes collectibles from customers who made sales transactions on credits.
3. Notes receivable - It describes collectibles that are supported with promissory notes.
4. Supplies on hand - It describes unused office or store supplies.
5. Unused factory supplies - It describes unutilized manufacturing supplies.
6. Inventory - It describes unsold goods that are intended for sale. The types of inventories for
manufacturing business are as follows:
a. Raw materials inventory - It refers to unutilized materials in the production of goods.
b. Work-in-process inventory - It refers to unfinished goods at the end of the period.
c. Finished goods - It refers to unsold finished goods.
7. Equipment - It describes tools and equipment like calculators, computers, or any equipment directly
related to the producton of goods.
8. Furniture and fixtures - It describes assets like chairs, tables, and display cases.
LIABILITY ACCOUNT TITLES
The account titles that are commonly used in the recordkeeping of the transactions of small
businesses include the following:
1. Accounts payable - It describes the financial obligations arising from goods purchased or services
received.
2. Notes payable - It describes the financial obligations supported with notes.
3. Utilities payable - It describes the unpaid obligations on light and water consumptions.
4. Salaries payable - It describes the unpaid salaries of the workers.
CAPITAL ACCOUNT TITLES
The capital account titles are as follows:
The business transactions that are recorded in the two-column general jounal are based on
business documents, which basically support the existence of transactions. All entries
appearing in the general journal are fully supported with business documents. Before any
recording process takes place, all the supporting documets must be arranged chronologically.
BUSINESS DOCUMENTS
The most common types of business documents that support transactions and events are as
follows:
1. Purchase order - It is an official business document issued by the buyer to the seller of goods.
2. Invoice - It is a commercial business document issued by the seller to the buyer.
3. Official receipt - It is a commercial document that indicates payment or receipt of cash.
4. Delivery receipt - It is a document that serves as an evidence that the goods or services are received.
5. Receiving report - It is a document used within the business upon receipt of the goods shipped by the
courier or forwarder.
6. Check - It is a document that orders a payment of money from the current account maintained in the
bank.
7. Voucher - It is an internal business document that authorizes the incurrence or payment of obligations.
3
SIMPLE BOOKKEEPING
SIMPLE BOOKKEEPING
Remember the following fundamental concepts in bookkeeping:
Compound entry - A journal entry that appears to have two debit values, while credit
has only one value.
Simple journal entry - A jounal entry with only one debit and one credit.
Double-entry bookeeping - For every debit, there is
always a corresponding credit.
4
CLASSIFYING
It refers to all the transactions of the month that are grouped based on the nature or
characteristics of the account.
Classifying is the grouping of similar business transactions and events and it is the second
mechanical phase of the whole accounting process.
CLASSIFYING
Posting - The process of transferring the same information from the journal to the ledger.
LEDGER
Another book of accounts used to record business transactions and events.
TWO SIDES:
1. Debit side
2. Credit side
STEP 1
• Check the completeness and arrangement of the ledger
• Arrange the ledger in the following order: Assets, Liabilities, Capital, Income, and Expense
STEP 2
• Label the different sections of the ledger properly
• The account title must be centered at the top of the page
• Indicate the page number at the rightmost side in line with the account title
• Write the year and the month only once on both the debit and credit sales
POSTING
STEP 3
a. Transfer the date first, followed by the amount
b. Indicate in the folio column of the ledger the page number of the journal
c. Indicate in the folio column of the general journal the page number of the ledger
d. Make a brief explanation in the particulars column of the ledger. ThIs is optional.
STEP 4
• Repeat all the procedure in step 3 for the credit entry
STEP 5
• Repeat step 3 and 4 in the next entry in the journal until all entries are completely posted
• Remember that posting is usually made at the end of the month after recording the last transaction.
FOOTING THE ACCOUNT
• Footing - The process of adding the debit and the credit money columns of the ledger and finding
their balances.
• 2 MAJOR PARTS:
1. Heading - It normally has three lines intended for the name of the business, title, and the date of
the trial balance.
2. Body - It presents the different account titles and their balances.
TRIAL BALANCE
• 2 KINDS OF TRIAL BALANCE:
1. The Trial Balance of Totals
2. The Trial Balance Balances - commonly used trial balance among the different businesses.
POSSIBLE ERRORS IN THE BOOKKEEPING PROCESS
• Once the trial balance is not in balance, possible errors could have been committed in the
bookkeeping process, such as the following:
1. Erroneous recording in the journal
2. Erroneous posting to the ledger
3. Mathematical mistakes
4. Omission
LESSON SUMMARY
d. After the posting process has been completed, foot or add the amounts of the debit and credit in the
ledger by observing the principles of footing.
e. Prepare the trial balance from the balances appearing in the ledger.
2. The two books of accounts used in all businesses are the following:
a. The Journal is also known as the book of original entry. All business transactions are recorded in the
journal for the first time.
b. The ledger is also known as the book of final entry. Information in the journal are transferred to the
ledger through the process of posting.
LESSON SUMMARY
• STEP 4 Start the posting process with the first debit entry found in the journal
a. Transfer the date first, followed by the amount.
b. Indicate in the folio column of the ledger the page number of the journal.
c. Indicate in the folio column of the general journal the page number of the ledger.
d. Make a brief explanation in the Particulars column of the ledger. This is, however,
optional.
• STEP 5 Repeat all the procedure in Step 4 for the credit entry.
• STEP 6 Repeat Steps 4 and 5 in the next entry in the journal until all entries are completely posted.
INCOME STATEMENT
Recall the processes in simple bookkeeping
STEP 1 Gathering and arranging the business
documents
The net income of P136,000 does not have any relation to the cash of the business.
Reference