PROCESS OF
BOOKKEEPING
Content
1. Understanding the process of bookkeeping
2. Collecting information
3. Filing documentation
4. Recording
5. Reviewing
6. Reporting
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1. Understanding the process of bookkeeping
The process of bookkeeping is summary as below:
Collect
information
Voucher
Reporting
preparation
Reviewing Recording
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2. Collecting the information
What are information that we need before recording?
Sale invoice
official receipt
Purchase invoice
Payment to supplier
Understanding business type of company
Other financial transactions (loan, bank charge, etc.)
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Sale invoice
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3. Filing the documents
There need to prepare the appropriate voucher for those financial transactions.
Filing those finance voucher with sufficient the supporting documents.
Finance voucher are including:
Sale voucher
Receipt voucher
Purchase voucher
Payment voucher
General Journal voucher
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4. Recording
Before recording, there need to understanding the accounting cycle:
Analyses the
Recording
business General Ledger
(Journalize)
transactions
Financial
Trial Balance
Statements
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4. Recording (Cont.)
Before recording, there need to understanding the accounting cycle:
Recording
• Sale voucher
Analyses the business • Receipt voucher
General Ledger
transactions • Purchase voucher
• Payment voucher
• Journal voucher
Financial Statements
• Statement of financial position
• Statement of profit or losses
Trial Balance • Statement of changes in equity
• Statement of cash flows
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5. Recording – AR
A. Invoicing
Sale invoice
In the case that recognized revenue in point of time:
Debit Trade Receivables XXX
Credit Revenue XXX
In the case that recognized revenue over time:
Debit Trade Receivables XXX
Credit Unearned Revenue XXX
When service performed (Journal Voucher):
Debit Unearned Revenue XXX
Credit Revenue XXX
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4. Recording – AR
B. Collection
Receipt Voucher
Debit Collection XXX
Credit Trade receivables XXX
C. Banking
Banking Voucher
Debit Cash at Bank
XXX
Credit Collection
XXX
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4. Recording – AP
A. Purchase invoice
Purchase invoice
Debit Assets/Expense /Prepaid Expense XXX
Credit Accounts Payable XXX
Note:
If the purchase is related goods => Material or fixed assets.
If material => Cost of goods sold
If fixed assets => cost of fixed assets. (need to look at value of the items and nature of
the useful life, equipment, chiller machine, computer, aircon….)
Prepaid expense : Internet cover 1 year, insurance cover 1 year…
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4. Recording – AP
B. Payment to vendor
Payment voucher
Debit Accounts Payable XXX
Credit Bank XXX
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5. Recording – Journal Entry
General journal voucher: Month end adjustment
Depreciation Expense:
Debit Depreciation Expense XXX
Credit Accumulated Depreciation XXX
Prepaid Expense:
Debit Expenses XXX
Credit Prepayment XXX
Unearned Revenue:
Debit Unearned Revenue XXX
Credit Revenue XXX
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5. Recording – Journal Entry
General journal voucher: Month end adjustment
Bank Charge:
Debit Bank Charge Expense XXX
Credit Cash at Bank XXX
Received Loan:
Debit Cash at Bank XXX
Credit Loan XXX
Repayment Loan:
Debit Loan XXX
Credit Cash at Bank XXX
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6. Reviewing
There are various method for reviewing.
There is no standard way for reviewing from what we record.
We may review by:
Detail of transactions
Aggregate of the transactions
Compare from what we record with listing
Compare from current month to previous month
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6. Reviewing
Example - cash at bank account
We may check of the correctness of the cash at bank account with performing the
bank reconciliation
We may detect error of payment record with reviewing long outstanding check
We may detect error of receipt record with reviewing long deposit in transit
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6. Reviewing
Example – Accounts receivable
We may check of the correctness of the receivable account with performing the
balance movement which compare between ledger and sale listing and cash collection
We may detect error of receivables with long overdue debt
We may detect error of receivables with inappropriate write-off
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6. Reviewing
Example – Fixed assets
We may check of the correctness of the fixed assets account with performing
reconciliation with fixed assets registered.
We may detect error of the recording cost of fixed assets with checking the fixed
assets policy (e.g. amount to be recognized as fixed assets).
We may detect error of the recording depreciation with checking the fixed assets policy
(e.g. method of depreciation or useful life).
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6. Reviewing
Example – Accounts Payable
We may check of the correctness of the accounts payable with balance movement
during the period (additional payable and payment to supplier).
We may detect error of the recording with checking of the long outstanding payable
(AP Aging).
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7. Reporting
Once we complete the reviewing, there need to prepare the financial statements:
Statement of financial position
Statement of profit or loss
Statement of changes in equity
Statement of cash flows
Note statements
For Management Reports, there need to add the supporting schedule:
Bank Reconciliation Report
AR Listing/Aging Report
Prepayment Listing/Schedule
Deposits Listing/Schedule
Fixed Assets Schedule/Registered
AP Listing/Aging Report
Accrued Expenses Listing
Payroll listing and reconciliation
Other supporting schedule (Loan schedule/Interco Bal. Listing)
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