ACCOUNTING BOOKS

LESSON 1
JOURNALS
• It is a chronological record of all company’s
transactions listed by date and often referred to
as the Book of Original entry
Journalizing
• It is the process of recording transactions into
the journal
Types of Journals
1. General Journal
2. Special Journals
General Journal
• This is where all business transactions are
recorded in chronological order
• This is the most basic journal
Sample format:
GENERAL JOURNAL
Date 1 Account Titles and Explanation 2 Ref Debit Credit
3 4 5
2016
January 1 Cash 101 200,000.00
Shayne, Capital 301 200,000.00
Owner's investment of cash in the business
Special Journals
• Designed to record a particular type of
transaction efficiently and quickly
• Are used to record typical and similar types of
transactions
Examples:
1. Cash receipts journal
2. Cash disbursements journal
3. Sales journal
4. Purchases journal
Cash receipts journal
• used to record all cash that has been received
including cash sales or collection of cash
• The source document for this journal is the
OFFICIAL RECEIPTS issued by the business
Sample format:
CASH RECEIPTS JOURNAL
Account Dr. Sales Cr. Sales Cr. Accounts
Date Ref Dr. Cash Cr. Other Accounts
Credited Discount Revenue Receivable
Cash disbursement journal
• Used to record transactions involving cash
payments, the opposite of cash receipts
• The source documents are the check voucher or
cash voucher, cash receipts or official receipts
from suppliers or vendors
Sample format:
Sales journal
• Used to record several sales transactions on
account or on credit
• The source documents are the charge invoice or
sales invoice(for credit transactions) to various
customers or clients
Sample format:
Sales Journal
Description(Customer Debit Credit
Charge Invoice or
Date Name) or Account Ref Accounts Cost of Goods
Sales Invoice No. Sales Inventory
Debited Receivable Sold
Purchase journal
• Used to record recurring transactions of
purchases on account
• The source documents are the invoices from the
supplier of the company
Sample format:
Purchase Journal
Description(Supplier's Charge Invoice or Debit Credit
Date Name) or Account Sales Invoice Term Ref
Credited No.(from supplier) Purchases Inventory Accounts Payable
Simple Journal Entry
• An entry that involved two accounts only, one
debit and one credit
Compound Entry
• An entry that requires three or more accounts
SIMPLE ENTRY COMPOUND ENTRY
Land 300,000.00 Land 800,000.00
Cash 300,000.00 Cash 300,000.00
To record purchased of land by paying cash Notes Payable 500,000.00
To record purchase of land by issuing cash and
Land 500,000.00 promissory note
Notes Payable 500,000.00
To record purchased of land by issuing
promissory note
LEDGER
• The process of posting and it involves the
transferring of journal entries to the ledger accounts
to bring together the effect of the transactions to
the individual accounts of the company
• Is the grouping of all accounts of a company showing
its respective outstanding balances
• It is also called the book of final entry because all
balances in the ledger are used in the preparation of
financial statements
• This is also referred to as the T-Account because the
basic form of a ledger is like the letter T
Types of Ledger
1. General Ledger or GL
• Is a grouping of all accounts used in the preparation of
financial statements and shows all outstanding balances
• It is the controlling account because it summarizes all
the activities that have taken place as recorded in its
subsidiary ledger
2. Subsidiary Ledger or SL
• Is a group of accounts with a similar
characteristic (ex. Accounts receivable and
accounts payable)
• It is an additional record to the general ledger to
track the per-individual accounts of the
company’s customers, creditors
Relationship of General Ledger and Subsidiary
ledger
Two common Subsidiary Ledger:
1. Accounts Receivable Ledger
• Is used mainly to track the individual account
balances of the company’s customers
2. Accounts Payable Ledger
• Is used mainly to track the individual account
balances of the company’s creditors