Accounting Books

Bryan A. Ison
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Learning Objectives
At the end of this lesson, you are expected to….

a. differentiate the general journal from general ledger;

b. understand the purpose of special journals and
subsidiary ledgers;
c. learn how to register the books of accounts to the
BIR.
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Recall
The Accounting Cycle
a. Analyzing business transactions
b. Journalizing transactions
c. Posting
d. Preparing trial balance
e. Adjusting entries
f. Adjusted Trial Balance
g. Preparing financial statements
h. Closing entries
i. Reversing entries
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How accounting is
done during the
ancient time?
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_____________________: the original bookkeeper

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Ancient Egyptians: the original bookkeeper

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_________________ Accounting
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Mesopotamian Accounting
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Father of Modern Accounting

 _________, who in 1494 first described the system of double-entry bookkeeping

used by Venetian merchants in his Summa de Arithmetica, Geometria, Proportioni et
Proportionalita.
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Father of Modern Accounting

 Luca Pacioli, who in 1494 first described the system of double-entry

bookkeeping used by Venetian merchants in his Summa de Arithmetica, Geometria,
Proportioni et Proportionalita.
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⊸ Activity
ACCOUNT TYPE NORMAL BALANCE IN CASE OF IN CASE OF
INCREASE DECREASE

ASSET

EXPENSE

LIABILITY

REVENUE/INCOME

CAPITAL/EQUITY

DRAWINGS

CONTRA
ACCOUNTS
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ACCOUNT TYPE NORMAL BALANCE IN CASE OF IN CASE OF

INCREASE DECREASE

ASSET DEBIT DEBIT CREDIT

EXPENSE DEBIT DEBIT CREDIT

LIABILITY CREDIT CREDIT DEBIT

REVENUE/INCOME CREDIT CREDIT DEBIT

CAPITAL/EQUITY CREDIT CREDIT DEBIT

DRAWINGS DEBIT DEBIT CREDIT

CONTRA OPPOSITE TO THE

ACCOUNTS NORMAL ACCOUNT
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In recording business transactions, the double entry accounting

method is used wherein it involves two accounts, one is debited
and one is credited. In this way, both sides of the accounting
equation remain equal.
 
Under the double-entry system, every business transaction is
recorded in at least in two accounts. One account will receive a
“debit” entry, meaning the amount be entered on the left side of
that account. Another account will receive a “credit” entry
meaning the amount will be entered on the right side of that
account.
 
.
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This is where the Rules on Debit and

Credit to guide the accountants and
bookkeepers in the double-entry system
and help them determine the normal
balances of an account.
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1.
Book of Accounts
JOURNALS AND LEDGERS
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Book of Accounts
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Book of Accounts
The books of accounts in accounting are generally: (a)
general journals and (b) general ledger is used as a
means to record events that transpired in the course of
the business.
There are two major types of books of accounts,
namely: (1) journal, and (2) ledgers.

Journalizing is the process of recording the business

transactions to the general journal, and posting is the
process of transferring or summarizing the transactions
from the journal to the general ledger.
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General
Journal
◇ A book of
account where all
transactions are
recorded.
◇ It is also called
the Book of
Original Entry.
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General
Ledger
◇ A book of
account where
all transactions
are classified
based on their
account titles.
◇ It is also called
the Book of Final
Entry.
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2.
Special
Journal
SPECIAL JOURNALS
are journals designed
for transactions that
are repetitive and
recurring, in which the
use of general journal
would be inefficient.
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Special Journals simplify the process of classification

and summarization of accounts from the transactions

a. SALES JOURNAL – used to record sales of goods or

services on credit. This credit sales or revenues are recorded
as receivables from customers.

b. PURCHASE JOURNAL – used to record all purchase

transactions from suppliers or vendors which are on credit and
credited on accounts payable.
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c. CASH DISBURSEMENT JOURNAL – used to record cash

payment of expenses and payables.

d. Cash Receipt JOURNAL – used to record cash sales of

goods and services and cash collections of receivables from
customers.

Transactions that cannot be recorded in the special

journals are recorded in the General Journal using the
JOURNAL VOUCHER SYSTEM
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General Ledger
◇ There are two types of general ledger format that are being used: (1) a
two-column journal
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General Ledger
◇ and (2) a three-column journal.
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Subsidiary Ledger
These are details of various accounts, like
accounts receivables and accounts payables that
are kept separately to provide better control of
the accounts which need extensive monitoring.
These are records that break down into parts
the amount of an account that is reflected in the
general ledger; per customer for the accounts
receivable and per supplier for the accounts
payable.
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Subsidiary
Ledger
SUBSIDIARY
LEDGERS
are ledgers
that support
the main
general ledger
account.
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PENCIL FOOTING
Pencil footing is a method used in
accounting to add together all the figures all
the debit and credit columns then write the
results in small pencil figures at the bottom of
the columns. The pencil footing is then used
to carry over the figures to another page.
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In the Philippines, these book of accounts

are registered with the Bureau of Internal
Revenue (BIR) for compliance and tax
monitoring purposes.
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Digital Accounting Tools

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3.
How to register
Books of Accounts
to BIR
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BIR Registration

BIR
Certificate
1 2 3 4 5 of
Registration
COR
Fill up the Submit the Register your
Form 1901 Fill up and pay Register your
Application receipts and
Form 0605 books of
Form invoices accounts
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Fill up the Form 1901

⊸ Form 1901 is the
Application form used for
registering your [new]
business as individual.
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Submit the Application

Form
⊸ Together with the ff.:
-DTI Certification
[if w/ business name]
-Barangay Clearance
-Government issued IDs
-Birth Certificate
-Driver’s License
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Fill up and pay

Form 0605
⊸ Payment of P530
together with the form
0605
⊸ 500 – reg. fee
⊸ 30 – loose stamp(DST)
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4 Register your receipts

and invoices

⊸ Form 1906 is the application

form for Authority to Print
Receipts and Invoices

⊸ NOTE: Option to buy at the

registrant counter [RDO] or
buying outside or producing your
own is available
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Sample
Authority to
Print
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5 Register your Books of Accounts

⊸ Form 1905 is the

Application Form
used for registering
the Books of
Accounts
NOTE:
⊸ Keeping and
maintaining these
are REQUIRED.
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SAMPLE
CERTIFICATE
OF
REGISTRATION
[COR]
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Application

“My family’s books of accounts”

1. Secure a notebook (even an unused old one)

2. List your family expenses
(e.g. Meralco bill, manila water bill, internet bill,
Netflix, YT premium, food expenses, groceries, etc.)
3. Keep track of your family expenses every month and
monitor the increase or decrease compare to your family
income.
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Evaluation
Instruction:Write TRUE if the statement is true or FALSE if the
statement is incorrect.
_____1. The events or transactions are inflows and outflows of
monetary activities that a business normally does in its day-to-day
operations.
_____2. Journalizing is the process of posting the business
transactions to the general journal.
_____3. Posting is the process of transferring or summarizing the
transactions from the general journal to the general ledger.
_____4. The double entry accounting is a method of accounting that
involves recording of transactions wherein two accounts are
affected, one is debited and the other is credited.
_____5. When a transaction has one debit and two or more credits, it
is called simple journal entry.
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_____6. Only credit sales are recorded in the sales journal book.
_____7. The purchase journal is the record for all credit and cash
purposes.
_____8. General journals are details of various accounts, like
accounts receivable and accounts payable that are kept seperately to
provide better control of the accounts which need extensive
monitoring.
_____9. The T-account is termed as the simplest form of an account
because you can summarize transactions through this without using
general ledger book and one can already prepare a trial balance.
_____10. Pencil footing is a method used in accounting to add
together all the figures on the debit and credit columns then write the
results in small pencil figures at the bottom of the columns.
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Assignment

Read and study all our power points lessons and

prepare for your Long Quiz next week.
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Thanks!