ENTREPRENEURSHIP bank, Cash-on-hand, and Petty Cash (small

4th Quarter – 2nd Semester payments or purchases).

Course Outline #3 ▪ Cash Inflows and Cash Outflows are
similarly grouped into accounts such as Cash
BOOKKEEPING Sales, Transportation Expenses,
-as the systemic recording, organizing, and Communication Expenses, Raw Materials,
retrieving of all the financial transactions of a business Direct Materials, and Others.
or individual in a specific format. It should be done
daily to ensure correct, up-to-date, and REASONS FOR KEEPING BUSINESS RECORDS
comprehensive information on each transaction. 1. An article by Forbes showed that in the US, 80%
Every transaction must be recorded regardless of how of businesses fail in the first 18 months. Business
small the amount. records allow you to learn from both your mistakes
and successes so that your business will
Proper bookkeeping is the building block of all constantly improve.
financial reporting, which is essential in business 2. You cannot manage what you cannot see.
analysis and management. It allows for the easy Business Records allow you to monitor your
creation of various reports that will tell us the performance versus your targets and provide you
condition and history of a business and how to best clues as to what you need to improve on to achieve
guide it to the future. your targets.
3. There are many government regulations, such
Bookkeeping can be utilized in monitoring cash sakes as taxes, that require the business to keep
and expense transactions, but bookkeeping must be accurate financial records. As your business
also used to monitor receivables (e.g. credit sales) grows, so will the scrutiny of the government
and payables (e.g. bank debt). necessitate strong financial controls.
4. Entrepreneurship involves math, with financial
Chart of Accounts statements being the language of the business.
-is a financial tool that lists all the accounts for
a given accounting system. To better understand and TRANSACTION JOURNAL
analyze all financial transactions we will group and
categorize them into accounts. 1. Sales Journal – is a chronological list of all the sales
transactions for a business. Each page is broken down
You can think of each account as a bucket or box into columns that track vital information.
where we group each receipt. Each account is a
unique record for each type of: Example of Sales Journal:
▪ Asset (anything that has current or future Date Transaction
Description
Amount Doc.
No.
Toy’s
Sales
Clothes’
Sales
Others

economic value to a business. Business asset 4/7/2024

4/8/2024
Jeans
Toys
P500.00
P300.00
001
002 200
500

example: motor vehicles, buildings, 4/9/2024 Assorted Items P700.00 003 700
4/10/2024 Kiddie Stuff P300.00 004 300
machinery, equipment, cash, and accounts 4/11/2024 Cropped top shirt P200.00 005 200
receivable)
▪ Liability (debts or obligations a person or Sales journals represent a different type of
company owes to someone else. Example: information that must be gathered for all transactions.
Businesses sort their liabilities into two All Sales Journal must include the following:
categories: current and long-term. Current ✓ Date – indicates when the transaction took
liabilities are debts payable within one year, place.
while long-term liabilities are debts payable ✓ Transaction description – indicates what items
over a longer period. Sample accounts: were sold.
accounts payable, interest payable) ✓ Amount – indicates the total amount in Pesos
▪ Equity (the total value of your company's of the sales for that transaction.
assets, minus the sum of its liabilities. The ✓ Doc. No. – indicates the document number of
formula for getting the equity is Asset – the individual record of the transaction such
Liabilities = Owner’s Equity). as a sales invoice or an official receipt.
▪ Revenue (the value of all sales of goods and In addition, the business may put additional columns
services recognized by a company in a period. to gather information they deem necessary.
Revenue is also known as sales on the income ✓ Check No. – for businesses that accept check
statement. There is a profit when revenues payments
exceed expenses). ✓ Customer name – for businesses with few but
▪ Expenses (costs that businesses incur in very loyal customers
running their operations. Examples: wages, ✓ Payment Due date – for businesses that
salaries, maintenance, rent, and accept credit sales.
depreciation.)
▪ Cash Flow Statement it is common to have Each row in the Sales Journal is known as a Journal
one account for Cash. A business can have Entry and gives detailed information about one
multiple accounts for Cash such as Cash-in- transaction, the Sales Journal can be updated once
each transaction is concluded.
2. Expense Journal – is a chronological list of all the
expenses transactions for a business. Each page is
broken down into columns that track vital information.

Example of Expense Journal:

Date Transaction Amount Doc. Marketing Transportation Communication
Description No. Exp. Exp. Exp.
4/7/2024 Photocopy P100.00 001 100
of Fliers
4/8/2024 Gasoline P500.00 9876 500
4/9/2024 Prepaid Sim P150.00 2389 150
4/10/2024 Tricycle P20.00 002 20

Expense journals represent a different type of

information that must be gathered for all transactions.
All Sales Journal must include the following:
✓ Date – indicates when the transaction took
place.
✓ Transaction description – indicates what items
were bought.
✓ Amount – indicates the total amount in Pesos
of each expense.
✓ Doc. No. – indicates the document number of
the individual purchase such as a sales
invoice or an official receipt.
In addition, the business may put additional columns
to gather information they deem necessary.
✓ Check No. and Check Due date – for
businesses that purchase through check
payments
✓ Customer name – for businesses with few but
very loyal suppliers
✓ Payment Due date – for businesses that
purchase on terms, usually from their loyal
suppliers above.

FINANCIAL STATEMENTS
-are formal reports that tell the financial story
of a business: both its current condition and its
history. These reports show the financial results of the
various business transactions and are vital to the
proper management of any business.

Using these reports, we can generate a wealth of

information such as:
▪ Asses a business financial wealth.
▪ Understand the causes of the business profits
or losses.
▪ Determine if it has the necessary resources to
continue operations.
▪ Determine if it has excess resources that can
shared among investors.

The three basic Financial Statements are:

1. Cash Flow Statement that shows the current state
of cash and the history of all cash transactions.
2. Income Statement or Profit & Loss Statement
shows the history of the business profitability.
3. Balance Sheet shows the state of the business
assets, liabilities, and net worth of the business at
various points in time.