Fundamentals of

Accountancy, Business
and Management 1
Learning Objectives:
1. Illustrate the format of a General Journal
and Special Journal
2. Illustrate the format of a general Ledger
and Subsidiary Ledger
Questions
1. What is your definition of accounting?
American Institute of Certified Public Accountants
(AICPA): “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.”
Questions
2. From the definition, where do we RECORD and
CLASSIFY the transactions that we have identified?
Books of Accounts
Journal
 chronological record of the entity’s transactions
 shows the effects of a business transactions in
terms of debits and credits
 book of original entry
 GENERAL JOURNAL is the simplest journal
Journalizing
• 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 debit is
recorded in the Debit column.
Journalizing
• 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. The blank space separates individual journal
entries and makes the entire journal easier to read.
To illustrate the recording of transactions in the
general journal, let us use the following
transactions as an example:
• June 1, 2022 Mr. Jack Ibagbaga invested
PHP300,000 in a Laundry business
• June 7, 2022 purchased Laundry Equipment for his
business amounting to PHP85,000 in cash
• June 10, 2022 started his operations and recorded a
sale for that day amounting to PHP35,000.
Special Journals
Cash Receipt Journal. This is a book of original entry
where all cash receipt transactions are recorded such
as cash investment, loans, cash sales, collections of
customers’ accounts and cash refund.
Special Journals
Cash Payment/Disbursement Journal. All cash
payments are recorded in this journal such as cash
purchases of merchandise and other assets,
payments of accounts and other liabilities, payments
of expenses, cash withdrawals of the owner and cash
refunds to customers.
Supplies 2,500

500
Special Journals
Sales Journal. Sales of merchandise are usually either
on cash or on account basis. Cash sales, for retailers
like the big department stores, are rung on cash
register tapes which are summarized in a cash
summary report and entered in the sales journal
based on the total amount.
Special Journals
Purchase Journal. Purchases of merchandise are
usually on cash or on account. These are supported
by invoices given by the suppliers. Any cash payment
is supported by a cash voucher.
Books of Accounts
Ledger
called the ‘book of final entry’ because all the
balances in the ledger are used in the preparation of
financial statements.
also referred to as the T account because the basic
form of a ledger is like the letter ‘T.
Posting is the process of transferring information
from the journal to the ledger.
Two Types of Ledgers
1. General Ledger
 A grouping of the entity’s accounts.
 called the “reference book” of the accounting
system and is used to classify and summarize
transactions, and to prepare data for basic financial
statements.
Two Types of Ledgers
2. Subsidiary Ledger
 individual customer’s account (in case of Accounts
Receivable Controlling Account).
 individual creditor’s account (in case of Accounts
Payable Controlling Account).
Sample of Accounts Receivable Ledger
 Two Main Subsidiary Ledgers
1. Accounts Receivable ledger- or customers ledger lists all
customers who has an obligation to pay to the company along with
their current balances. A summary of all current and outstanding
accounts receivable at the end of a period.
2. Accounts Payable ledger- an accounting ledger that shows how
much the company owe to its suppliers’ vendors and other financial
institutions. Shows the company’s current or outstanding balance.
The subsidiary ledger records all of the accounts payables that a
company owes.
T- Account
A ledger is often referred to as the T-Account because
it is often represented by letter T.
T Account is the visual structure used in double entry
bookkeeping that separates the debits and credits.
Usually, debits are listed to the left side of the T
Account while credits are listed on the right side of
the T Account.