Books of Accounts

BOOKS OF ACCOUNTS
2 Major Types of Books of Accounts

 Journal  Ledger
• Is the book of accounts in • Refers to the accounting book in
which transactions are which the accounts and their related
originally recorded in a amounts are recorded in the journal
chronological order are posted periodically.
• Is referred to as the book of • Is also called the book of final entry
original entry because all the balances in the
• An entry made in the journal ledger are used in the preparation of
is known as Journal Entry. financial statements.
• The process of recording a • Is also referred to as the T-Account
transaction in journal is because the basic form of a ledger is
known as “Journalizing” like the letter “T”.
2 Types of Journals
 General Journal  Special Journal
• Is the most basic • are designed as a
journal. simple way to
• Has spaces for record the most
dates, account frequently occurring
titles and transactions.
explanations,
references and two
amount columns.
General Journal
Account Title and

Date Ref Debit Credit
Explanation
Journalizing Process
 Thedate of the transaction which is entered in the date
column.
 The debit account title which is entered first at the
extreme left margin of the column headed” Account Title
and Explanation” and the amount of the debit is recorded
in the debit column.
 Thecredit account title which is indented and entered on
the next line in the column headed” Account Title and
Explanation” and the amount of the credit is recorded in
the credit column.
Journalizing Process
A brief explanation of the transaction which
appears on the line below the credit account title.
The column titled Ref. 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 as an example:
September 1, 2021 Mr. Ben

Mabait invested ₱ 500,000 in a
restaurant business by opening
an account with Super Bank.
General Journal
Account Title and

Explanation
Sept. 1,
2021 Cash in Bank 500,000
Mabait, Capital 500,000
To record initial
investment
#
September 5, 2021 purchased
kitchen appliances for his
business amounting to ₱ 100,000
by issuing a check.
General Journal
Account Title and

Explanation
Sept. 5,
2021 Kitchen Appliances 100,000
Cash 100,000
To record purchase of
kitchen appliances
#
September 6, 2021 started his
operations and made a sales for
that day amounting to P 20,000.
General Journal
Account Title and

Explanation
Sept. 6,
2021 Cash 20,000
Sales 20,000
To record sales for the

day
#
Simple Entry Method
Entries involve only two accounts, one
debit and one credit.
September 7, 2021 Mr. Mabait
purchased a motorcycle costing
₱80,000. He pays ₱30,000 cash
and agrees to pay the remaining
₱50,000 on account.
General Journal
Date Account Title and Explanation Ref Debit Credit
Sept. 7,
Transportation Equipment 80,000
2021
Cash 30,000
Accounts Payable 50,000
To record purchase of
motorcycle by paying cash
and the balance on
account
#
Compound Entry Method
An entry that requires three or more
accounts
The following are the commonly used special journals:
• Cash Receipts Journal – used to record all

cash that has been received
• Cash Disbursements Journal – used to record
all transactions involving cash payments
• Sales Journal – used to record all sales on
credit
• Purchase Journal – used to record all
purchases of inventory on credit
Cash Receipts Journal
Debit Credit Credit Credit

Date Particulars Ref
Cash Sales A/R Sundry
Cash Disbursements Journal
Check
Or Credit Debit Debit Debit Credit
Date Particulars Ref
Voucher Cash A/P Salaries Supplies Sundry
#
Sales Journal
Charge
Invoice
Debit Credit
Date Customer Name Ref or Sales
A/R Sales
Invoice
No.
Purchase Journal
Charge
Invoice Credit
Debit
Date Supplier Name Ref or Sales Accounts
Purchases
Invoice Payable
No.
2 Kinds of Ledgers
 General Ledger  Subsidiary Ledger
• is a grouping of all • is a group of like
accounts used in the
accounts that contains
preparation of
financial statements. the independent date of
• is a controlling account
a specific general ledger.
because it summarizes • is created or maintained
all the activities that if individualized data is
have taken place as needed for a specific
recorded in its
general ledger account.
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
Identify what special journal that is applicable for
the following transactions:
Collected ₱10,000 from a customer in
payment of his account.
Bought 100 pieces of mugs to be sold
in the store amounting to ₱1,500 on
account.
Sold five pieces of mugs to X, ₱320
cash.
Sold two pieces of mugs to Y,
₱112 cash
Purchased office supplies for
cash, ₱500.
Paid ₱20,000 monthly rental.
Paid salary of staff, ₱15,000
Sold 100 pieces of mugs to
Unicup, Inc. ₱5,600 on account.
Sold 500 pieces of mugs to
Bugsmore Corp. for ₱15,300
payable one month after delivery.
Purchase on account 1,000 pieces
of mugs for ₱12,400.
Thank you !

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BOOKS OF ACCOUNTS

2 Major Types of Books of Accounts

Account Title and

The column titled Ref. is left blank when the

September 1, 2021 Mr. Ben

Account Title and

Mabait, Capital 500,000

Account Title and

Account Title and

To record sales for the

• Cash Receipts Journal – used to record all

Debit Credit Credit Credit

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