ACCOUNTING FOR NON-

ACCOUNTANTS

GINA F. GATDULA
August 18-20, 2021
What is accounting?
It is the language of business

- expressed in monetary terms

( in pesos)
What is accounting?
-it is the process of recording, classifying
and summarizing economic events through
certain documents or financial statements.
What is accounting?
Its purpose is to provide
information that will help the
user make correct financial
decisions.
 Accounting vs. Bookkeeping
• Bookkeeping refers to the painstaking and
detailed recording of economic activity and
business transaction

• Accounting involves bookkeeping. It refers

to the design of the bookkeeping system
and addresses the many problems in
measuring the financial effects of the
economic activity.
Accounting Equation Concepts
The financial condition of the business is
summarized in the following accounting
equation:

Assets = Liabilities + Members’ Equity

Accounting Equation Concepts
 Assets – what you own

 Liabilities – what you owe from other

people

 Members’ Equity – what you contributed

Accounting Equation Concepts
Assets (what the coop owns) - is
composed of:

Liabilities (what the coop owes); and

Members’ Equity (what the members
contributed)
Accounting Equation Concepts
The Statement of Financial Condition is
also called the BALANCE SHEET, the equal
side means the 2 sides have to balance.

Assets = Liabilities + Members’ Equity

Double Entry Bookkeeping System

 This is based on the accounting equation -

The total assets on the one side is counter

balanced by the total liabilities and
members’ equity.
 Assets = Liabilities +
Members’ Equity
ASSETS LIABILITIES MEMBERS’
EQUITY

NORMAL POSITION Debit Credit Credit

INCREASE Debit Credit Credit

DECREASE
Credit Debit Debit
Income and Expense
INCOME EXPENSE
NORMAL POSITION Credit Debit

INCREASE Credit Debit

DECREASE Debit Credit

Cooperative Financial Statements

 Statement of Financial Condition (Balance

Sheet)

 Statement of Operations (Income

Statement)
Statement of Financial Condition
(Balance Sheet) Terms
 Definition – a financial statement that
measures the financial position of a
cooperative at a specific time
Balance Sheet Terms
 Assets – all the resources owned by the
co-op as of the date of the balance sheet
 Current assets – all resources that are
reasonably expected to be realized in cash or
intended for sale or consumation within 12
months after the balance sheet date
Balance Sheet Terms
 When is an asset recorded?

-The coop must control the item (ownership)

- The item must have some value
- The item must have in value that can be
measured
 Cash on Hand  Unearned Interests and
 Checks & Other Cash Discounts
Items  Allowance for Probable
 Cash in Bank Losses on Loans
 Petty Cash Fund  Accounts Receivable
 Revolving Fund Trade – Current
 Loans Receivable –
 A/R Trade – Past Due
Current  A/R Trade –
Restructured
 L/R – Past Due
 A/R Trade – In Litigation
 L/R – Restructured
 L/R – Loans in
 Allowance for Prob.
Litigation Losses on A/R Trade
 Advances to Officers,
Employees and
Members
 Due from Accountable
Officers and
Employees
 Merchandise
Inventory
 Unused Supplies
 Prepaid Expenses
Balance Sheet Terms

 Non-Current Assets – includes tangible,

intangible, operating and financial assets of a
long-term nature
 Real and Other Properties Acquired (ROPA)
Balance Sheet Terms
 Property, Plant & Equipment – tangible assets with
an estimated useful life beyond one year, are used
in the conduct of the business, and not intended
for sale in the ordinary course of business.
 Land  Transportation
 Land Improvements Equipment
 Building and  Leasehold Rights &
Improvements Improvements
 Construction in  Accumulated
Progress Depreciation
 Furniture, Fixtures &
Equipment
 Machineries, Tools
and Equipment
 Kitchen, Canteen &
Catering Equipment /
Utensils
Balance Sheet Terms
 Biological Assets – Animals – cost of breeding
stock/working animals
 Intangible Assets – Identifiable non-monetary asset
without physical substance
 Franchise Cost
 Other Non-Current Assets
 Cooperative Development Cost
 Computerization Cost
 Other Funds and Deposits
 Deposits on Returnable Containers
Balance Sheet Terms
 Liabilities – debts of the cooperative
 Current Liabilities – obligations reasonably
expected to be settled within the normal
business operating cycle, that: (a) is due
within 12 months after balance sheet date; (b)
is held primarily for the purpose of being
traded; (c) does not have an unconditional
right to defer settlement of the liability for at
least 12 months after balance sheet date
 Savings Deposits  Withholding Tax
 Time Deposits Payable
 Accounts Payable –  Accrued Expenses
Trade  Interest on Share
 A/P – Non Trade Capital Payable
 Loans Payable –  Patronage Refund
Current Payable
 SSS/ECC/Philhealth/  Due to Union/Federation
Pagibig Premium (50% of the total annual
Contributions Payable allocation for the CETF)
 SSS/Pagibig Loans
Payable
Balance Sheet Terms
 Non-CurrentLiabilities – liabilities payable
beyond one year
 Loans Payable
 Revolving Capital
Payable
 Retirement Fund
Payable
 Members’ Benefit and
Other Funds Payable
Balance Sheet Terms

 Equity – excess of a co-op’s assets over

its liabilities
 Authorized Share  Undivided Net Surplus
Capital  Net Loss
 Unissued Share  Donations/Grants
Capital  Statutory Funds
 Subscribed Share  Reserve Fund (at least
Capital 10%)
 Subscription  Coop. Education &
Receivable Training Fund (not more
than 10%)
 Paid-up Share Capital  Community Development
 Treasury Shares Fund (at least 3%)
Capital  Optional Fund (not more
 Deposit for Share than 7%)
Capital Subscription
Paid-up Share Capital
(at least 25% of Subscribed SC) 62,500
Subscription Receivable 187,500
------------
Subscribed Share Capital
(at least 25% of Authorized SC) 250,000
Unissued Share Capital 750,000
-------------
Authorized Share Capital 1,000,000
Statement of Operations (Income
Statement) Terms
 Definition – a financial statement
presenting the revenue, expenses and
earnings (losses) of a cooperative during a
specified period of time.
Income Statement Terms
 Revenue Items – gross inflow of economic
benefits during the period arising in the
course of the ordinary activities of the co-
op when those inflows result in increases
in equity, other than increases relating to
contributions from equity participants
 Income from Credit  Income from Marketing /
Operations Consumers / Production
 Interest Income from Operations
Loans  Sales
 Service Fees  Sales Returns &
 Filing Fees Allowances
 Fines, Penalties,  Sales Discounts
Surcharges  Other Income
 Income from Service  Income/Interest from
Operations Investment/Deposits
 Service Income  Membership Fee
 Commission Income
 Miscellaneous Income
Income Statement Terms
 Cost of Goods Sold – the cost/value of
commodity sold as determined using
physical or perpetual inventory system
 Purchases
 Raw Material
Purchases
 Purchase Returns &
Allowances
 Purchase Discounts
 Freight In
 Direct Labor
 Inventory Loss
Income Statement Terms

 Cost of Services – all costs incurred that

are directly related to the generation of
power, water and other services
Income Statement Terms
 Expenses – gross outflows of economic
resources and incurrence of obligations in
the course of the ordinary activities of the
co-op when those outflows result in
decreases in surplus
 Financing Cost  Retirement Benefit
 Interest Expense on Expenses
Borrowings  Officers’ Honorarium and
 Interest Expense on Allowances
Deposits  Litigation Expenses
 Other Financing  Office Supplies
Charges  Meetings and
 Selling/Marketing Conferences
Cost  Trainings/Seminars
 Power, Light & Water
 Administrative Cost
 Travel & Transportation
 Salaries& Wages
 Insurance
 Employees’ Benefits
 Repairs & Maintenance
 SSS, Philhealth, ECC,
 Rentals
Pagibig Premium
Payable
 Taxes, Fees and  Affiliation
Fee
Charges  Social & Community
 Communication Service Expense
 Representation  Provision for CGF
 Gas, Oil & Lubricants (KBGF)
 Collection Expense
 Depreciation
 Amortization
 Provision for Probable
Losses
 Bank Charges
 General Assembly
Expenses
 Members’ Benefit
Expense
Income Statement Terms
 Other Items – Subsidy / Gain (Losses)
 Gains or Losses on Sale of Property &
Equipment
 Gains or Losses in Investment
 Prior Years’ Adjustment