Subject Teacher

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 At the end of the lesson, students should be able to:

1. define bookkeeping;
2. explain the tasks and responsibilities of
bookkeepers;
3. visualize the different books of accounts.

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Bookkeeping is the recording of financial transactions
and is part of the process of accounting in
business. It refers mainly to the record-keeping
aspects of financial accounting, and involves
preparing source documents for all transactions,
operations, and other events of a business. It involves
the recording, daily, of a company’s financial
transactions
Transactions include purchases, sales, receipts and
payments by an individual person or an organization or a
corporation. 10
Bookkeeper records the day-to-
day financial transactions of a
business such as sales,
purchases, receipts, and
payments.
Bookkeepers are individuals who
manage all financial data for
companies. 11
a. Maintaining records of financial transactions
b. Writing and posting journal entries to cash
receipt book, cash disbursement book and
ledger accounts
c. Preparing trial balance
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 Bookkeepers focus on recording
financial transactions while
Accountants, on the other hand, are
tasked with interpreting financial
information rather than gathering the
information.
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Bookkeeping is a direct record of
all purchases and sales the
business conducts, while
accounting is a subjective look at
what that data means for the
business.
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The world of accounting is run
by credits and debits.
 Three main Rules of Accounting
1. Debit the receiver and credit the giver
2. Debit what comes in and credit what goes out
3. Debit expenses and losses, credit income and
gains
A debit is an entry made on the left side of an
account. Debits increase an asset or expense account or
decrease equity, liability, or revenue accounts.

A credit is an entry made on the right side of an

account. Credits increase equity, liability, and revenue
accounts and decrease asset and expense accounts.
1. Assets
2. Liabilities
3. Equity / Capital
4. Drawings / Withdrawals
5. Revenue
6. Expenses
* An asset can be thought of as something that, in
the future, can generate cash flow, reduce
expenses or improve sales, regardless of whether
it's manufacturing equipment or a patent.
Examples of assets are :
Cash Inventory
Investments Office Equipment
Real Estate Machinery
Company-owned vehicles.
 Liabilities are legally binding obligations that are
payable to another person or entity. Settlement of
a liability can be accomplished through the
transfer of money, goods, or services. A liability is
increased in the accounting records with a credit
and decreased with a debit.
Capital refers to the financial resources that
businesses can use to fund their operations
like cash, machinery, equipment and other
resources. These are the assets that allow
the business to produce a product or service
to sell to customers.
Drawing in accounts is the record kept by a
business owner or accountant that shows
how much money has been withdrawn by
business owners. These are withdrawals
made for personal use rather than
company use.
 Revenue is the total amount of income
generated by the sale of goods or services
related to the company's primary operations.
Revenue, also known as gross sales, is often
referred to as the "top line" because it sits at the
top of the income statement. Income, or net
income, is a company's total earnings or profit.
 An expense in accounting is the money
spent, or costs incurred, by a business in
their effort to generate revenues.
Essentially, accounts expenses represent
the cost of doing business.
 ABC Corporation sells a product to a customer for
$10,000 in cash. This results in revenue of $10,000
and cash of $10,000. ABC must record an increase of
the cash (asset) account with a debit, and an increase
of the revenue account with a credit. The entry is:
Debit Credit
Cash 10,000
Revenue 10,000
ABC Corporation also buys a machine for $15,000 on
credit. This results in an addition to the Machinery
fixed assets account with a debit, and an increase in
the accounts payable (liability) account with a credit.
The entry is:

Debit Credit
Machinery - Fixed Assets 15,000
Accounts Payable 15,000
1. Journal
2. Cash Receipt
3. Cash Disbursement
4. Ledger
A Journal entry is used to record a business transaction
in the accounting records of a business. It contains
explanation of financial transaction.
example
 A Cash Receipts Journal is referred to as the main entry book used in an
accounting system to keep track of the sales of items when cash is
received, by crediting sales and debiting cash and transactions related to
receipts.

Say a customer buys $1,000 worth of merchandise from your business.

They pay 100 in cash and use store credit for the remaining 900. Your
journal entry would look like this:

Date Account Debit Credit

8/10/19 Cash Receipts 100
Accounts Receivable 900
Sales 1,000
The Cash Disbursement Journal is also known as the cash
payment journal. It records the payments of cash in detail.

examples of cash outflows:

• Payment of cash for cash purchases.

• Payment of cash for previous credit purchases (payment to accounts
payable or creditors
• Payment of cash for various expenses like rent, advertisement, carriage,
wages and salaries etc.
• Payment of cash for the purchase of a tangible or intangible asset.
• Cash refunds for goods returned by customers.
• Payment of cash for donations, charities
 Example of cash disbursement entry

Debit Credit
Machinery - Fixed Assets 15,000

Accounts Payable 15,000

 Ledger is a means for keeping record of a
company’s total financial accounts. Accounts
typically recorded in a general ledger include
assets, liabilities, equity, expenses, and
income or revenue.

The general ledger is used to prepare the financial

statements such as the income statement, balance
sheet, and cash flow statement.
 A bookkeeping worksheet in which the
balance of all ledgers are compiled into debit
and credit account. The general purpose of
producing a trial balance is to ensure the
entries in a company's bookkeeping system
are mathematically correct.

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 Video
Presentation
https://www.youtube.com/watch
?v=NVR-lBrNe8M (5.48 mins)

Simple bookkeeping para

sa business
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All financial transactions (daily) shall
be recorded in the book of accounts Book of Accounts
(with explanation)

Company’s receipt/invoice)

(must be supported by
receipt /proof of payment)

Summary of Transactions for the month

(for Income Statement and Balance Sheet)
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