Unit 2ND SEMESTER 4TH QUARTER

Module MODULE 9
Page|1
SUBJECT FUNDAMENTALS OF ACCOUNTING, BUSINESS Units: 3.0
AND MANAGEMENT (FA1)

INFORMATION SHEET Module 9

BOOKS OF ACCOUNTS

 There are two types of books of accounts: JOURNAL AND LEDGER

JOURNAL
 Companies initially record transaction 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 journal: GENERAL JOURNAL AND SPECIAL JOURNAL

GENERAL JOURNAL
o 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.

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
makes separate journal entries of each transactions. A complete entry consist of:
 The date of 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
Explanations”, 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 on the column headed “Account
Titles and Explanations”, 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.

PREPARED BY: APPROVED FOR IMPLEMENTATION:

2ND 4TH MODULE
LOREN AINA L. TRINIDAD MR. FERDINAND F. BELTRAN
SEMESTER QUARTER 9
Instructor President
 Unit 2ND SEMESTER 4TH QUARTER
Module MODULE 9
Page|2
SUBJECT FUNDAMENTALS OF ACCOUNTING, BUSINESS Units: 3.0
AND MANAGEMENT (FA1)

 The column is 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:
o September 1, 2015 Mr. Ben Mabait invested Php500,000 in a restaurant business
by opening an account with SuperBank.
o September 5, 2015 purchased kitchen appliances for his business amounting to
Php100,000 by the issuing a check.
o September 6, 2015 started his operations a made a sale for that day amounting to
Php20,000.
GENERAL JOURNAL
DATE ACCOUNT TITLE AND EXPLANATION REF DEBIT CREDIT
09/07/2015 Cash 500,000
B. Mabait, Capital 500,000
To record investment of Mr. Ben Mabait
09/05/2015 Kitchen Appliances 100,000
B. Mabait, Capital 100,000
To record purchase of kitchen appliances
09/06/2015 Cash 20,000
Sales 20,000
To record sales for the day

Example of compound entry:

o 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
paid later).
GENERAL JOURNAL
ACCOUNT TITLE AND
DATE EXPLANATION REF DEBIT CREDIT
09/07/2015 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
 In order to facilitate efficient and practical recording of similar and recurring transactions.

COMMONLY USED SPECIAL JOURNALS:

o CASH RECEIPTS JOURNAL – used to record all that has been received.
o CASH DISBURSEMENT JOURNAL – used to record all transactions involving cash
payments.
o SALES JOURNAL (SALES on ACCOUNT JOURNAL) – used to record all sales on
credit (on account).

PREPARED BY: APPROVED FOR IMPLEMENTATION:

2ND 4TH MODULE
LOREN AINA L. TRINIDAD MR. FERDINAND F. BELTRAN
SEMESTER QUARTER 9
Instructor President
 Unit 2ND SEMESTER 4TH QUARTER
Module MODULE 9
Page|3
SUBJECT FUNDAMENTALS OF ACCOUNTING, BUSINESS Units: 3.0
AND MANAGEMENT (FA1)

o PURCHASE JOURNAL (PURCHASE on ACCOUNT JOURNAL) – used to record all

purchases of inventory on credit (or on account)

 SAMPLE OF CASH RECEIPTS JOURNAL

Is used to record transaction involving receipt or collection of cash.
CASH RECEIPTS JOURNAL
DEBIT CREDIT CREDIT CREDIT
DATE DESCRIPTION (PARTICULARS) REF ACCOUNTS
CASH SALES SUNDRY
RECEIVABLE

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

o A brief explanation of the transaction is entered in the description column.
o 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.
o The debit cash column represents the amount of cash received for a particular
transaction.
o Mahor 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.
o The column sundry is used for various miscellaneous and less regular items, such
as capital investment, receipt of loan proceeds, among others.

 SAMPLE OF CASH DISBURSEMENT JOURNAL

The cash disbursement journal is the opposite of the cash receipts journal.
CASH DISBURSEMENT JOURNAL
CHECK or CREDIT DEBIT DEBIT DEBIT CREDIT
DESCRIPTION
DATE REF VOUCHER ACCOUNTS
(PARTICULARS) CASH SALARIES SUPPLIES SUNDRY
NUMBER PAYABLE

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

o A brief explanation of the transaction is entered in the description column.
o 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.
o The check or voucher number reprensent 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 may be used as the alternative for
this column.
o The debit cash column represents the amount of cash received for a particular
transaction.

PREPARED BY: APPROVED FOR IMPLEMENTATION:

2ND 4TH MODULE
LOREN AINA L. TRINIDAD MR. FERDINAND F. BELTRAN
SEMESTER QUARTER 9
Instructor President
 Unit 2ND SEMESTER 4TH QUARTER
Module MODULE 9
Page|4
SUBJECT FUNDAMENTALS OF ACCOUNTING, BUSINESS Units: 3.0
AND MANAGEMENT (FA1)

o 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.
o The column sundry is used for various miscellaneous and less regular items, such
as capital investment, receipt of loan proceeds, among others.

 SAMPLE OF SALES JOURNAL

Is used in recording several sales transactions on account.
SALES JOURNAL
CHARGE DEBIT CREDIT
INVOICE OR
DATE DESCRIPTION (CUSTOMER NAME) REF ACCOUNTS
SALES INVOICE SALES
RECEIVABLE
NO.

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

o A brief explanation of the transaction is entered in the description column or the
name of the customer.
o 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.
o 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.
o The debit accounts receivable column represents the amount of the sale
transaction indicated in the charge invoice.
o The credit sales column represents the amount of the sale transactions indicated
in the charge invoice.

 SAMPLE OF PURCHASE JOURNAL (PURCHASE on ACCOUNT JOURNAL)

Is used to record recurring transactions of purchased on account.
PURCHASE JOURNAL
CHARGE INVOICE DEBIT CREDIT
OR SALES
DATE DESCRIPTION (SUPPLIER'S NAME) REF ACCOUNTS
INVOICE NO. PURCHASES
PAYABLE
(from supplier)

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

o A brief explanation of the transaction is entered in the description column or the
name of the supplier.
o 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.

PREPARED BY: APPROVED FOR IMPLEMENTATION:

2ND 4TH MODULE
LOREN AINA L. TRINIDAD MR. FERDINAND F. BELTRAN
SEMESTER QUARTER 9
Instructor President
 Unit 2ND SEMESTER 4TH QUARTER
Module MODULE 9
Page|5
SUBJECT FUNDAMENTALS OF ACCOUNTING, BUSINESS Units: 3.0
AND MANAGEMENT (FA1)

o The charge invoice number or sales invoice number represents the identifying
numbr of the source of the document issued but he supplier when the items,
goods or merchandise were deliverd to the company when the purchase was
made.
o The debit pruchases column represents the amount of the goods purchases as
indicated in the charge invoice from the supplier.
o 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.

LEDGER
 Refers to the accounting book in which the accounts and other related amounts are
recorded in the hournal are poster periodically.
 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 of the basic form of a ledger like the
letter “T”.

 There are two types of ledger: GENERAL LEDGER and the SUBSIDIARY LEDGER.

GENERAL LEDGER
Commonly referred by accounting professionals as GL. Is a grouping of all accounts
used in preparation of the financial statement. The GL is a controlling account because it
summarizes all the activities that have taken place as recorded in its subsidiary ledger.

 SAMPLE OF GENERAL LEDGER

GENERAL LEDGER
ACCOUNT : CASH ACCOUNT NO.: 1000
DATE ITEM REF DEBIT CREDIT BALANCE

o The account portion refers to the account title fpr example: cash, accounts
receivable.
o The account number is an assigned number for each account title to facilitate
ease in recording and cross-referencing.
o The date column identifies when the transaction happened.
o The item represents the souce journal and the nature of the transactions.
o The reference indentifies the page number of the general our special journal
form which the information was taken.
o The debit and credit columns are used in recording the amount of transactions
from the general journal or special journal.
o 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.

PREPARED BY: APPROVED FOR IMPLEMENTATION:

2ND 4TH MODULE
LOREN AINA L. TRINIDAD MR. FERDINAND F. BELTRAN
SEMESTER QUARTER 9
Instructor President
 Unit 2ND SEMESTER 4TH QUARTER
Module MODULE 9
Page|6
SUBJECT FUNDAMENTALS OF ACCOUNTING, BUSINESS Units: 3.0
AND MANAGEMENT (FA1)

SUBSIDIARY LEDGER
Is a group of like accounts that contains the independent data of a specific general
ledger. Also, it is created or maintained if individualized data is needed for a specific general
ledger account. An example of subsidiary ledger is the individual record of various payables to
suppliers.

 SAMPLE OF SUBSIDIARY LEDGER

ACCOUNTS PAYABLE
SUBSIDIARY LEDGER
VENDOR/SUPPLIER: JOY FOOD CORPORATION VENDOR NO.: 201
ADDRESS: JOSE ST., SAMPALOC, MANILA
DATE ITEM REF DEBIT CREDIT BALANCE

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

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

REFERENCE:
Fundamentals of Accounting, Business, and Management 1 (by: Joselito Florendo, Carlsber Andres,
Arthur Barrido, Jr., Christopher Honorario)

PREPARED BY: APPROVED FOR IMPLEMENTATION:

2ND 4TH MODULE
LOREN AINA L. TRINIDAD MR. FERDINAND F. BELTRAN
SEMESTER QUARTER 9
Instructor President
 Unit 2ND SEMESTER 4TH QUARTER
Module MODULE 9
Page|7
SUBJECT FUNDAMENTALS OF ACCOUNTING, BUSINESS Units: 3.0
AND MANAGEMENT (FA1)

ASSESSMENT SHEET:
KINDLY WRITE YOUR NAME AND SECTION (NO NAME AND SECTION NO SCORE!).
YOU WILL ONLY SUBMIT THIS ANSWER SHEET NOT THE WHOLE MODULE.
NAME:
SECTION:
INSTRUCTION: MULTIPLE CHOICE (WRITE THE CORRECT LETTER ON THE BLANK). 2 PTS EACH

_______ 1. Invoice issued by the company.

A CASH RECEIPTS JOURNAL
B SALES JOURNAL
C PURCHASE JOURNAL
D CASH DISBURSEMMENT JOURNAL

_______ 2. Invoice form a supplier

A CASH RECEIPTS JOURNAL
B SALES JOURNAL
C PURCHASE JOURNAL
D CASH DISBURSEMMENT JOURNAL

_______ 3. Official Receipt issued by the company.

A CASH RECEIPTS JOURNAL
B SALES JOURNAL
C PURCHASE JOURNAL
D CASH DISBURSEMMENT JOURNAL

Official receipt from a supplier as proof of payment of

_______ 4. account
A CASH RECEIPTS JOURNAL
B SALES JOURNAL
C PURCHASE JOURNAL
D CASH DISBURSEMMENT JOURNAL

PREPARED BY: APPROVED FOR IMPLEMENTATION:

2ND 4TH MODULE
LOREN AINA L. TRINIDAD MR. FERDINAND F. BELTRAN
SEMESTER QUARTER 9
Instructor President