MODULE 4

BOOKKEEPING
• is the recording of financial transactions, and is part of the process of
accounting in business. Transactions include purchases, sales, receipts,
and payments by an individual person or an
organization/corporation. There are several standard methods of
bookkeeping, including the single entry and double-entry bookkeeping
systems. While these may be viewed as "real" bookkeeping, any process
for recording financial transactions is a bookkeeping process
 BOOKKEEPING

• involves the chronological writing or

recording of business transactions
and events in the books of accounts
for the first time
 TRANSACTION

• is a business event that

has a monetary impact on
an entity's financial
statements and is
recorded as an entry in its
accounting records
 ACCOUNT TITLES
• provide the description of the type and nature of the business
transactions. The account titles are grouped into five
categories technically referred to as the accounting elements
Examples of Account Tiles
 FIVE ELEMENTS OF FINANCIAL
STATEMENTS:
• 1. ASSETS
• 2. LIABILITIES
• 3. EQUITY
• 4. REVENUES
• 5. EXPENSES
 1. ASSETS

• resources with economic

value that an individual,
corporation, or country
owns or controls with the
expectation that it will
provide a future benefit.
 2. LIABILITIES

• are obligations of the

company; they are
amounts owed to
creditors for a past
transaction and they
usually have the word
"payable" in their account
title.
 3. EQUITIES
• In corporate finance, equity (more
commonly referred to as
shareholders' equity) refers to the
amount of capital contributed by
the owners. Put another way,
equity is the difference between a
company's total assets and total
liabilities
 4. REVENUES

• the total amount of

income generated by
the sale of goods or
services related to the
company’s primary
operations.
 4. REVENUES

• the total amount of

income generated by
the sale of goods or
services related to the
company’s primary
operations.
 5. EXPENSES

• s the cost of operations

that a company incurs
to generate revenue.
As the popular saying
goes, “it costs money
to make money.”
ASSET ACCOUNT TITLES
 CASH

• it describes money,
either in paper or
coins
 ACCOUNTS RECEIVABLE

• it describes
collectibles from
customers who made
sales transactions on
credit
 NOTES RECEIVABLE

• it describes
collectibles that are
supported with
promissory notes.
 SUPPLIES

• it describes
unused office or
store supplies
 INVENTORY

• unsold goods that

are intended for
sale
 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.
 EQUIPMENT

• it describes tools and

equipment like
calculators, computers, or
any equipment directly
related to the production
of goods.
 FURNITURE AND FIXTURES

• assets like
chairs, tables,
and display
cases.
LIABILITY
 ACCOUNTS PAYABLE

• it describes financial
obligations arising
from goods
purchased or
services rendered.
 NOTES PAYABLE

• it describes the
financial
obligations
supported with
notes
 UTILITIES PAYABLE

• it describes the
unpaid obligations
on light and water
consumptions
 SALARIES PAYABLE

•describes the
unpaid salaries
of the workers
CAPITAL ACCOUNTS
Capital and Drawing
 CAPITAL

• describes the
original and
additional
investment of the
owner
 DRAWING

• describes the
temporary
withdrawal of
capital by the
owner.
INCOME ACCOUNT TITLES
 SERVICE INCOME

•general
services
rendered by
the company to
its customers
 RENTAL INCOME

•the income
arising from
lease or rent or
property
 SALES

•the sale of
goods or
products to the
consumers
Expense Account Titles
 1. Salaries and wages

•the expenses
on payments
or salaries
 2. Store supplies expense

•the expenses
on store
supplies
 3. Taxes and licenses

•the expenses
on taxes,
permits, fees,
and licenses
 4. Utilities expense

•the expenses
on light and
water
 5. Travelling expense

•expenses on
transportation
or fare of
personnel.
BUSINESS DOCUMENTS
 1. Purchase Order

• an official business
document issued
by the buyer to the
seller of goods
 2. Invoice

• commercial
business document
issued by the
seller to the buyer
 3. Official receipt

• 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
 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.
Fundamental concepts of simple bookkeeping:

• 1. Support all transactions with business documents.

• 2. Record the transactions using the two-column journal.
• 3. Use the proper account title.
• 4. Observe the guidelines when using the two-column
journal.