Fundamentals

of Accountancy,
Business &
Management 1
Learner’s Activity
Sheets
Quarter 1 – Module 6
Books of Accounts
 Republic of the Philippines
DEPARTMENT OF EDUCATION
Region Office No. VIII
Northern Samar Division
 POLANGI NATIONAL HIGH SCHOOL
Polangi, Catarman Northern Samar

Name: ___________________________________________ Score: _____________________

Grade Level & Section: _____________________ Parent Signature: ____________

FUNDAMENTALS OF ACCOUNTANCY,
BUSINESS AND MANAGEMENT 1

Content Standard:
The learners demonstrate an understanding of the two major types of books of
accounts, namely, journal and ledger

Performance Standard:
The learners are able to differentiate a journal from a ledger and identify the types of
journals and ledgers

Most Essential Learning Competencies:

 Illustrate the format of a general and special journals
 Illustrate the format of a general and subsidiary ledger

Less
on Books of Accounts
5
The two major types of books of accounts are journal and ledger.

Journal
Companies initially record transactions and events in chronological order (the
order in which they occur). Thus, the journal is referred to as the book of original
entry. For each transaction the journal shows the debit and credit effects on specific
accounts.
There are two types of journals, the general journal and the special journal.

GENERAL JOURNAL
The general journal is the most basic journal. Typically, a general journal has spaces
for dates, account titles and explanations, references, and two amount columns.

The journal makes several significant contributions to the recording process:

• It discloses in one place the complete effects of a transaction.
• It provides a chronological record of transactions.
• It helps to prevent or locate errors because the debit and credit amounts for each
entry can be easily compared.
Shown below is an example of a general journal
General Journal
Date Account Title and Explanation Ref Debit Credit

Journalizing process
Entering transaction data in the journal is known as journalizing. Companies make
separate journal entries for each transaction. A complete entry consists of:
• 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.
• 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.
• The column titled Ref. (which stands for Reference)which is left blank when the
journal entry is made. This column is used later when the journal entries are
transferred to the ledger accounts.

To illustrate the recording of transactions in the general journal, let us use the
following transactions as an example:
• September 1, 2015 Mr. Ben Mabait invested PHP500,000 in a restaurant business by
opening an account with SuperBank.
• September 5, 2015 purchased kitchen appliances for his business amounting to
PHP100,000 by issuing a check.
• September 6, 2015 started his operations a made a sales for that day amounting to
PHP20,000.

We will now record the above transactions in the general journal.

General Journal
Date Account Title and Explanation Re Debit Credit
f
9/1/15 Cash 500,000
B. Mabait, Capital 500,000
To record investment of Mr. Ben Mabait
9/5/15 Kitchen Appliances 100,000
Cash 100,000
To record purchase of kitchen appliances
9/6/15 Cash 20,000
Sales 20,000
To record sales for the day
Some entries involve only two accounts, one debit and one credit. An entry like these
is considered a simple entry. Some transactions, however, require more than two
accounts in journalizing. An entry that requires three or more accounts is a compound
entry. All of the transactions in the above examples are simple entries. An example of
a compound entry is the following:
On September 7, 2015, Mr. Mabait purchased a motorcycle costing PHP80,000. He
pays PHP30,000 cash and agrees to pay the remaining PHP50,000 on account (to be
paid later). The compound entry is as follows:
General Journal
Date Account Title and Explanation Ref Debit Credit
9/7/15 Transportation Equipment 80,000
Cash 30,000
Accounts Payable 50,000
To record purchase of motorcycle by
paying cash and the balance on
account

SPECIAL JOURNALS
Some businesses encounter voluminous quantities of similar and recurring
transactions which may create congestion if these transactions are recorded
repeatedly in a single day or a month in the general journal. Take the case of our
example above, if Mr. Mabait will record the sales per day using the Official Receipt or
Cash Sales Invoice issued, it would be unnecessary and impractical to credit “sales”
account repeatedly. In order to facilitate efficient and practical recording of similar
and recurring transactions, a special journal is used.
The following are the commonly used special journals:
• Cash Receipts Journal – used to record all cash that has been received
• Cash Disbursements Journal – used to record all transactions involving cash
payments • Sales Journal (Sales on Account Journal) – used to record all sales on
credit (on account)
• Purchase Journal (Purchase on Account Journal) – used to record all purchases of
inventory on credit (or on account)

Cash Receipts Journal is used to record transaction involving receipt or collection of

cash. The following illustrate the format of a cash receipts journal:

Cash Receipts Journal

Date Description (Particulars) REF Debi Credit Credit Credit
t
Cash Sales Account Sundry
Receivabl
e

 The date of the transaction is entered in the date column.

• A brief explanation of the transaction is entered in the description column.
• The column titled Ref. (which stands for Reference) which is left blank when the
journal entry is made. This column is used later when the journal entries are
transferred to the ledger accounts.
• The Debit Cash column represents the amount of cash received for a particular
transaction.
• Major categories of receipts, such as cash sales and collection of accounts
receivable are provided with separate columns. These transactions are frequent and
repetitive items, therefore a separate column is provided.
• The column sundry is used for various miscellaneous and less regular items, such as
capital investment, receipt of loan proceeds, among others.

The source document for this journal is the Official Receipts or Cash Receipts issued
by the business.

Cash Disbursements Journal (CDJ)

The cash disbursements journal is the opposite of the cash receipts journal. It is the
journal where all cash payments are recorded. An example of a cash disbursement
journal is shown below:
Cash Disbursements Journal
Credit Debit Debit Debit Credit
Check or
Dat Description Account
REF Voucher
e (Particulars Number Cash s Salaries Supplies Sundry
Payable

• The date of the transaction is entered in the date column.

• A brief explanation of the transaction is entered in the description column.
• The column titled Ref. (which stands for Reference) which is left blank when the
journal entry is made. This column is used later when the journal entries are
transferred to the ledger accounts.

• The Check or Voucher number represents the identifying number of the check
issued for the related cash payment. Most of the time, a check or cash voucher
accompanies the disbursement. The voucher number may be used as the alternative
for this column.
• The Debit Cash column represents the amount of cash received for a particular
transaction.
• Major categories of receipts, such cash sales and collection of accounts receivable
are provided with separate columns. These transactions are frequent and repetitive
items, therefore a separate column is provided.
• The column sundry is used for various miscellaneous and less regular items, such as
capital investment, receipt of loan proceeds, among others.

The source documents used to update this journal are the check voucher or cash
voucher, cash receipts or official receipts from suppliers or vendors.
Sales Journal (Sales on Account Journal)
The Sales Journal or Sales on Account Journal is used in recording several sales
transactions on account. The source document for this journal is the charge invoice or
sales invoice (for credit transactions) to various customers or clients. An example of a
sales journal is shown below:

Sales Journal
Dat Description (Customer Name) REF Charge Debit Credit
e Invoice or Accounts Sales
Sales Invoice Receivabl
No. e

• The date of the transaction is entered in the date column.

• A brief explanation of the transaction is entered in the description column or the
name of the customer.
• The column titled Ref. (which stands for Reference) which is left blank when the
journal entry is made. This column is used later when the journal entries are
transferred to the ledger accounts.
• The Charge Invoice Number or Sales Invoice Number represents the identifying
number of the source document issued to the customer when the sale was made.
• The Debit Accounts Receivable column represents the amount of the sale
transactions indicated in the charge invoice.
• The Credit Sales column represents the amount of the sale transactions indicated in
the charge invoice.

The source document for this journal is the Charge Invoice issued by the business.

Purchase Journal (Purchases on Account Journal)

The Purchase journal or the Purchases on Account Journal is used to record recurring
transactions of purchases on account. The source documents for purchase journal are
the invoices from the supplier of the company. An example of a Purchase Journal is
shown below:
Purchase Journal
Charge Debit Credit
Invoice or
Dat Account
Description (Supplier’s Name) REF Sales Invoice
e Purchases s
No. (from
Payable
supplier)

• The date of the transaction is entered in the date column.

• A brief explanation of the transaction is entered in the description column or the
name of the supplier
• The column titled Ref. (which stands for Reference) which is left blank when the
journal entry is made. This column is used later when the journal entries are
transferred to the ledger accounts.
• The Charge Invoice Number or Sales Invoice Number represents the identifying
number of the source document issued by the supplier when the items, goods or
merchandise were delivered to the company when the purchase was made.
• The Debit Purchases column represents the amount of the goods purchases as
indicated in the charge invoice from the supplier
• The Credit Accounts Payable column represents the amount of the goods or items
purchased on credit from the supplier. The amount is indicated in the charge invoice
issued by the supplier.

The source document for this journal is the charge invoice from the supplier or
vendor.

Ledger
The ledger refers to the accounting book in which the accounts and their related
amounts as recorded in the journal are posted periodically. The ledger is also called
the ‘book of final entry’ because all the balances in the ledger are used in the
preparation of financial statements. This is also referred to as the T-Account because
the basic form of a ledger is like the letter ‘T’.

There are two kinds of ledgers, namely; the general ledger and the subsidiary ledgers.

GENERAL LEDGER
The general ledger (commonly referred by accounting professionals as GL) is a
grouping of all accounts used in the preparation of financial statements. The GL is a
controlling account because it summarizes all the activities that have taken place as
recorded in its subsidiary ledger. The format of a general ledger is shown below:
General Ledger
Account: Cash Account No.: 1000
Date Item Ref Debit Credit Balance

• The account portion refers to the account title for example: cash, accounts
receivable.
• The account number is an assigned number for each account title to facilitate ease
in recording and cross-referencing.
• The Date column identifies when the transaction happened.
• The item represents the source journal and the nature of the transactions
• The Reference identifies the page number of the general our special journal from
which the information was taken.
• The Debit and Credit columns are used in recording the amount of transactions from
the general journal or special journal.
• The Balance Column represents the running balance of the Account after
considering the debit and credit amounts. If the running balance amount is positive,
the account has a debit balance whereas if it has a negative running balance, the
accounts has a credit balance.

SUBSIDIARY LEDGER
A subsidiary ledger is a group of like accounts that contains the independent data of a
specific general ledger. A subsidiary ledger is created or maintained if individualized
data is needed for a specific general ledger account. An example of a subsidiary
ledger is the individual record of various payables to suppliers. The total amount of
these subsidiary ledgers should equal the balance in the Accounts Payable general
ledger.

An example of a subsidiary ledgers are shown below:

Accounts Payable
Subsidiary Ledger
Vendor/Supplier: Joy Food Corporation Vendor No.: 201
Address: Jose St., Sampaloc, Manila
Date Item Ref Debit Credit Balance

The upper portion indicates the name and address of the vendor or supplier.
• The vendor number is an assigned number for each vendor as reference in keeping
the records of a supplier.
• The Date column identifies when the transaction happened.
• The description column describes the nature of transaction.
• The Reference identifies the page number of the general our special journal from
which the information was taken.
• The Debit and Credit columns reflect the various effects of every transaction to the
record of the supplier or vendor.
• The Balance column provides the running balance of every supplier.

Take note that the total running balance for all subsidiary ledgers should equal the
Accounts payable general ledger.

Activity No. 1 – Identify what special journal that is applicable for the
following transactions:
_______________1. Collected PHP10,000 from a customer in payment of his account.
_______________2. Bought 100 pieces of mugs to be sold in the store amounting to
PHP1,500 on account.
_______________3. Sold five pieces of mugs to X, PHP320 cash.
_______________4. Sold two pieces of mugs to Y, PHP112 cash
_______________5. Purchased office supplies for cash, PHP500.
_______________6. Paid PHP20,000 monthly rental.
_______________7. Paid salary of staff, PHP15,000
_______________8. Sold 100 pieces of mugs to Unicup, Inc., PHP5,600 on account.
_______________9. Sold 500 pieces of mugs to Bugsmore Corp. for PHP15,300 payable
one month after delivery.
_______________10. Purchase on account 1,000 pieces of mugs for PHP12,400
Activity No. 2 Assessment
1. Enumerate all special journals
_______________
_______________
_______________
_______________

2. What are the advantages of using a special journal?

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3. Identify the appropriate special journal to be used for every source document listed
below:
 Official Receipt issued by the company _______________________
 Charge Invoice issued by the company ______________________ _
 Charge invoice from a supplier _______________________
 Official receipt from a supplier as proof of payment of account
____________________

Reflections…

How important are the journals and ledgers in accounting?

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Thank you and God bless!!!

PREPARED BY:
CARESSA B. ACIBAR
Subject-Teacher