SIMPLE
BOOK KEEPING
Presented by: Theriz Mocorro
What is Bookkeeping
bookkeeping refers to the recording of business
transactions in the books of the business. It is
based on the premise that business transactions
must be properly recorded.
The term transaction in this context refers to
events where there are exchanges of values that
are measurable in one common denominator.
bookkeeping involves the chronological writing or
recording of business transactions and events in the books
of accounts for the first time. Chronological recording
implies that the business transactions are written in the
book according to the order of their occurrence; hence the
first transaction will be recorded first.
The two books of accounts are the journal and the ledger.
The journal is the book of original entry, while the ledger is
the book of the final entry.
JOURNAL
is the book of original entry. It is where all
business transactions are chronologically
recorded for the first time. Most of the
two-column journals available in various
school and office supplies stores are in
the form of loose leaf or columnar pad. It
is advisable to use the latter.
Guidelines in Using the General Journal
Date Column Particulars Posting Reference
-shows the date of the occurrence It shows the account It is used when the entries are
of the transaction. The year and
debited and credited as posted, that is, until the
the month are not rewritten for
every entry unless they have well as a brief explanation amounts are transferred to the
changed, or a new page is needed. of the transaction. related ledger accounts.
Debit Column Credit Column
is the second money
is the first money column
column where the amount
where the amount of the
of the credit account is
debit account is entered .
entered .
procedures that must be observed when using the two-column general journal;
[Link] the Journal
On the top of the first page, write at the center
01 the caption "General Journal." In this simple
bookkeeping, the journal is labeled as such since it
is used to record all types of business transactions.
02 On the rightmost side, write the page
number of the journal.
On the succeeding pages, write only the page
03
number of the journal.
2. Writing the date
01 Fill up the data for the year, month, and day.
02 Write the year and the month on every
page.
If there are two or more transactions in one
03
day, do not repeat the day.
3. Writing the debit and credit account titles
The debit account title must be written first. The account
01 must be written adjacent to the line that divides the date
column and the particular column.
02 The credit account title must be indented
from the debit account title.
Abbreviation of the account title is not
03 allowed.
The explanation must be indented from the
04 credit account title.
There must be no blank space in recording the
05 succeeding transactions.
4. Writing the amount
The debit amount must be written in the first money column
01 in line with the debit account title.
The credit amount must be placed in the second money
02 column in line with the credit account title.
No peso sign must be placed in the debit and
03 credit money columns.
If there is no centavo, a dash sign is usually placed in
04 the centavo column instead of writing the two zeros.
No comma and period are used to indicate thousand pesos and
05 cents, respectively. The lines in the money columns are usually
colored to indicate specific meanings.
04 The amounts in the money columns are not summed up.
ACCOUNT TITLES
provides the description of the type and
nature of the business transactions.
5 ACCOUNTING ELEMENTS
Assets
Liabilities
Capital
Income
Expense
ASSETS ACCOUNT TITLES
Cash - It describes money, either in paper or in
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 on hand - It describes unused office or
store supplies.
ASSETS ACCOUNT TITLES
Unused factory supplies - It describes unutilized
manufacturing supplies.
Inventory - It describes unsold goods that are intended
for sale. The 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.
ASSETS ACCOUNT TITLES
Equipment - It describes tools and equipment like
calculators, computers, or any equipment directly
related to the production of goods.
Furniture and fixtures - It describes assets like
chairs, tables, and display cases.
LIABILITY ACCOUNT TITLES
Accounts payable - It describes the financial
obligations arising from goods purchased or services
received.
Notes payable - It describes the financial obligations
supported with notes.
Utilities payable - It describes the unpaid obligations
on light and water consumptions.
Salaries payable - It describes the unpaid salaries of
the workers.
CAPITAL ACCOUNT TITLES
Capital - It describes the original and
additional investment of the owner.
Drawing - It describes the temporary
withdrawal of capital by the owner.
INCOME ACCOUNT TITLES
Service income - It describes general
services rendered.
Rental income - It describes the income
arising from lease or rent of property.
Sales - It describes the sale of goods or
products to the consumers.
EXPENSE ACCOUNT TITLES
Salaries and wages - It describes the expenses on
payments or salaries.
Store supplies expense - It describes the expenses on
store supplies.
Taxes and licenses - It describes the expenses on
taxes, permits, fees, and licenses.
Utilities expense - It describes the expenses on light
and water.
Travelling expense - It describes the expenses on
transportation or fare of personnel.
BUSINESS DOCUMENTS
Basically support the existence of transactions. All entries
appearing in the general journal are fully supported with
business documents. Before any recording process takes place,
all the supporting documents must be arranged chronologically.
The most common types of business documents that support
transactions and events are as follows:
1. Purchase order - It is an official business document
issued by the buyer to the seller of goods.
2. Invoice - It is a commercial business document issued
by the seller to the buyer
3. Official receipt - It is a 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 shipped by the courier or forwarder.
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. expenses on light and water.
5.
SIMPLE BOOKKEEPING
provides the description of the type and
nature of the business transactions.
Remember the following fundamental concepts in bookkeeping:
Support all transactions with business documents.
Record the transactions using the two-column
journal.
Use the proper account title.
Observe the guidelines when using the two-column
journal.
ILLUSTRATION ON SIMPLE BOOKKEEPING
ILLUSTRATION ON SIMPLE BOOKKEEPING
Basic Accounting Equation that applies to all types of
transactions:
Value received (debit) = Value parted with (credit)
SIMPLE BOOKKEEPING
The journal entry appears to have two debit values,
while credit has only one value. This type of journal
entry is called a compound entry. In case there is
only one debit and one credit, the entry is called a
simple journal entry. In writing the credit, the
account title is indented. For the debit value, the
account title is written almost touching the line
separating the date and the Particulars columns.
December 2
Bought detergents and other materials needed for
washing of clothes, curtains, blankets, and related
items from Yvone Merchandising as reflected in the
cash invoice #2144 amounting to P 1,800.
December 2
December 5
Rendered various laundry services to walk-in
customers and issued several official receipts
amounting to P7,300
December 7
Paid the rent for the month of December 2016; The
Official Receipt No. 844 issued by the owner of the
property showed P3,000.
December 10
Issued Charge Invoice No. 0001 in the amount of
P38,000 to Izzy Hotel for various laundry services
provided.
December 15
Paid the salaries of the laundry workers for the first
half of December 2016; Voucher No. 005, as
supported by the payroll, showed total salaries of
P7,000.
December 21
Collected the account of Izzy Hotel; Issued Official
Receipt No. 10060 for the full payment received
from Izzy Hotel.
December 23
Paid the following invoices as supported by various
official receipts issued for the payment made:
Electric bill - P3,500
Business permit and licenses- P5,000
December 27
Rendered various laundry services to the following:
Walk in customers - Official receipts - P30,000
Angel Convention Center - Charge invoice, 30 day
received - 55,000
Princess Resort - Charge invoice; received - P 25,000
December 28
Bought the following from various suppliers:
Office furniture - Charge invoice # 2331 - P28,000
Laundry supplies - Charge invoice #3855 - 10,000
December 29
Received a 30-day, 12 percent promissory note from
Hyzel Apartment for various laundry services rendered
amounting to P 20,000.
December 30
Paid the salary of the workers for the second half of
December, 2016 as evidenced by the voucher duly
supported by the payroll, P9,000.
It can be observed that for every debit,
there is always a corresponding credit.
This recording system is referred to as
double-entry bookkeeping.
CLASSIFYING
refers to the grouping of similar business transactions
and events. It is the second mechanical phase of the
whole accounting process.
The process of transferring the same information from
the journal to the ledger is technically called posting.
The Posting Process
LEDGER
considered as the book of the final entry.
acts as an accounting tool that accumulates all the
necessary information prior to the preparation of the
financial statements
LEDGER
The ledger appears like a capital letter T. It has two
sides, namely the debit side and the credit side. Both
sides, however, consist of the same columns which are
as follows:
1. Date
2. Particulars
3. Folio or post reference
4. Amount
LEDGER
The following procedures should be observed in posting in the ledger:;
POSTING
Check the completeness and arrangement of the ledger. All the
accounts appearing on the chart of accounts must have a
ledger. A chart of account is a list of account titles adopted by a
STEP business to organize the recording process and segregate
accounting values into assets, liabilities, capital, income, and
01 expense. In case no chart of account is provided, all the account
titles used in journalizing must have a ledger. Arrange the ledger
in accordance with the listings appearing on the chart of
accounts. Otherwise, arrange the ledger in the following order:
assets, liabilities, capital, income, and expense.
The following procedures should be observed in posting in the ledger:;
POSTING
Label the different sections of the ledger
properly. The account title must be centered at
02 the top of the page. Indicate the page number
at the rightmost side in line with the account
title. Write the year and the month only once on
both the debit and credit sides.
The following procedures should be observed in posting in the ledger:;
POSTING
Start the posting process with the first debit entry found
in the journal. In posting the debit entry, observe the
following procedures:
a. Transfer the date first, followed by the amount.
03
b. Indicate in the folio column of the ledger the page
number of the journal.
c. Indicate in the folio column of the general journal the
page number of the ledger.
d. Make a brief explanation in the Particulars column of the
ledger. This is optional.
The following procedures should be observed in posting in the ledger:;
POSTING
04 Repeat all the procedures in Step 3 for the
credit entry.
Repeat Steps 3 and 4 in the next entry in the
05
journal until all entries are completely posted.
Remember that posting is usually made at the end
of the month after recording the last transaction.
ILLUSTRATIONS IN POSTING
shows the transfer of information
involving cash account in the
general journal to the ledger and the
cross-referencing procedure.
FOOTING THE ACCOUNT
Footing is the process of adding the
debit and the credit money
columns of the ledger and finding
their balances.
The following procedures should be observed in footing the ledger:
If an account has a debit balance, that is, the debit
total is higher than the credit total, the difference is
placed in the Particulars column of the debit side.
If the account has a credit balance, that is, the credit
total is bigger than the debit total, the difference is
placed in the Particulars column of the credit side.
If there is only one entry on any side of an account in
the ledger, no footing is done and the entry is simply
left open.
The following procedures should be observed in footing the ledger:
The following is a review of the bookkeeping procedures that have
already been discussed at this point:
Arrange and file in chronological order all the business
documents that serve as evidence of the transactions.
Record daily the business transactions in the two-column
general journal.
Transfer or post all the entries in the general journal to the
ledger at the end of the month without changing any
information.
After the posting process has been completed, foot or add the
amounts of the debit and credit in the ledger by observing the
principles of footing
TRIAL BALANCE
is the listing of the debit and credit balances of
accounts from the general ledger with the
following purposes:
1. To prove the equality of debit credit
2. To determine the nominal accounts to be closed
3. To serve as basis for making draft financial
statements
TWO MAJOR PARTS of Trial Balance
HEADING- normally has three lines
intended for the name of the
business, title, and the date of the
trial balance.
BODY- presents the different
account titles and their balances.
Once the trial balance is not in balance,
possible errors could have been committed in
the bookkeeping process, such as the following:
Erroneous recording in the journal
Erroneous posting to the ledger
Mathematical mistakes
Omission
THANK YOU !