Fundamentals of Accountancy, Business and Management 1 Lesson: Book of Accounts

2. The learners…
• Illustrate the format of a general
journal and special journal
• Illustrate the format of a general
and subsidiary ledger

3. The learners demonstrate
an understanding of the two
major types of books of
accounts, namely, journal and
ledger.

4. The learners are able to
differentiate a journal from a
ledger and identify the types
of journals and ledger.

5. Good day! Welcome to another interesting week
of learning.
By the end of our topic, you should be able to:
1. identify the uses of the two books of accounts
(journal and ledger) to record business transactions,
2. illustrate the format of journals and ledgers, and
3. manifest accuracy in recording business
transactions using the two books of accounts.

6. Let us start your Pre-test. Read and
understand the following questions. Type
the letter of the correct answer in the chat
box.

7. 1. Which of the following is one of
the special journals?
A. Sales journal
B. Purchases journal
C. Cash receipts journal
D. Options A, B, and C

8. D. Options A, B, and C
Sales Journal, Purchases
Journal and Cash Receipts
Journal

9. 2. What transaction is recorded first in
the journal?
A. Most expensive entries
B. Latest entries
C. Earliest entries
D. Cheapest entries

10. C. Earliest Entries

11. 3. Which of the following is one of the activities
recorded in the cash disbursements journal?
A. Purchase of merchandise in cash
B. Remittance of SSS Premium and other
government dues
C. Payments of expenses and
obligations
D. Options A, B, and C

12. D. Options A, B, and C
- Purchase of merchandise in cash
- Remittance of SSS Premium and other
government dues
- Payments of expenses and obligations

13. 4. Which account list contains the names and
numbers of all the bookkeeping accounts
necessary for classifying income and expenses?
A. General journal
B. General ledger
C. Subsidiary ledger
D. Special journal

14. B. General ledger

15. 5. Which refers to the name for the list of
accounts used in the bookkeeping system?
A. None of these are correct
B. Subsidiary ledgers
C. Chart of accounts
D. Double-entry bookkeeping

16. C. Chart of Accounts

17. “Accounting is the process of identifying,
recording, and communicating economic events
of an organization to interested users.”
(Weygandt et.al).
From that definition, where do you think
we record the transactions that we have
identified? What are the tools that we use
to document these transactions? How
important are these records in
accounting?

18. Companies initially record transactions and events in
chronological order (the order in which they occur).
Thus, the general journal is referred to as the book of
srcinal entry. General journal records all transactions
that do not belong in any special journals. Examples
are purchases of office supplies, property and
equipment on account, investment of a proprietor
not involving cash, and return of merchandise
bought on account.
Numerology Analysis.

19. While the following are the special journals:
Sales journal records all merchandise sold on account.
An example is when goods are purchased by
customers on credit. Sales invoice or receipt is the
source document when recording transactions in
Revenue/Sales Journal.

20. Cash receipts journal records all cash
collections. Examples are sales of merchandise
in cash and collections from customer’s
accounts.

21. Purchases journal records all merchandise
bought on account. An example is
purchasing equipment on credit.

22. Cash disbursements journal records all cash
payments. An example is the purchase of raw
materials in making furniture through cash, purchase
of merchandise in cash, payments of expenses and
obligations, and remittance of SSS Premium and other
government dues.

23. In recording transactions in a journal, the journal
entry that was incurred the earliest should be
recorded first; the credit item should be indented
from the debit item and should be arranged in
chronological order.

24. The following are observed: (1) No peso sign will be written for
amounts reaching more thousands; (2) No comma will be
written for amounts reaching thousands; (3) No decimal point
will be written in amounts involving centavo. The following are
the components of a journal entry: (1) Transaction date; (2)
Titles of the accounts being debited and credited; (3)
Reference number; (4) Amount of the debit and credit; and
(5) Short narration of why the journal entry is being recorded.

25. General ledger and Subsidiary ledger Format
The general ledger includes the name of the account (e.g.,
cash and accounts receivable), account number, date of
transaction, explanation or details of the transaction, posting
reference or PR (e.g., reference to the general journal or
special journals), debit column, credit column, and a column
for balances for other types of general ledger forms.

26. All journal entries must similarly post to accounts in general
ledger. All you need to do is to pick the entries from the
general journal and post them in the general ledger per
account. Debits and credits are numbers recorded as follows:
Debits are recorded on the left side of a T account in a
ledger. Debits increase balances in asset accounts and
expense accounts and decrease balances in liability
accounts, revenue accounts, and capital accounts. Credits
are recorded on the right side of a T account in a ledger.

28. Credits increase balances in liability accounts, revenue
accounts, and capital accounts, and decrease balances in
asset accounts and expense accounts. Debit accounts are
asset and expense accounts that usually have debit
balances, i.e., the total debits usually exceed the total
credits in each debit account. Credit accounts are revenue
(income, gains) accounts and liability accounts that usually
have credit balances.

29. A subsidiary ledger is a group of similar accounts
whose combined balances equal the balance in a
specific general ledger account. The general ledger
account that summarizes the account balance of a
subsidiary ledger is called a control account or
master account. For example, an accounts
receivable subsidiary ledger (customers' subsidiary
ledger) includes a separate account for each
customer who makes credit purchases. A subsidiary
ledger stores specific types of accounting
transactions. See the example:

30. The subsidiary ledger includes the name of the
account (e.g., cash and accounts receivable),
the account number for a specific account with
the customer’s name on it (e.g. C. Daley-AR1, B.
Johnson-AR2, L. Jones-AR3), date of transaction,
posting reference (e.g., reference to the general
journal or special journals), debit column, credit
column, and a column for balances.

32. general ledgers provide a complete record of financial
transactions over the life of the company. It means that it
is a summary of all financial transactions of a company.
On the other hand, a subsidiary ledger is used as storage
of specific types of accounting transactions (especially for
large amounts of transactions).

33. Every transaction listed in
the subsidiary ledger is
periodically summarized
and posted to an account
in the general ledger
(control account), which in
turn is used to construct the
financial statements of a
company. Please take note
that subsidiary ledgers are
used only when there is a
large amount of transaction
information that would
clutter up the general
ledger.

34. ACTIVITY 1 – Post It!
To have a better understanding of the posting
process and to illustrate the format of ledger
accounts, we need to take a transaction.
Prepare a journal entry, and then transfer it to
the relevant ledger accounts.
On January 1, 2019, a company sold goods to
customers for cash P25,000.

35. Now, let us continue having fun with our
lesson. Lets answer this activity. Write
your answer in your accounting journal
and type your answer on the chat box
then after 5 minutes we will check your
answer.

36. Activity 2 - Uses of Journals and Ledger:
Write "J" if the statement refers to a use of the journal and "L" if it
refers to the use of a ledger.
1. It provides information about the financial health of business.
2. It ensures that double-entry bookkeeping system is observed
when recording transactions.
3. It provides a more reliable evidence of transactions.
4. It assists in tracking the flow of business transactions for a
given period of time.
5. It provides adequate explanation of each entry.
6. It assists management in monitoring business performance.
7. It provides a systematic record of transactions.
8. It presents necessary information about the transactions.
9. It provides information about the results of business
operations.
10. It shows detailed information about specific assets, liabilities,
and owner's equity of the business.

37. Activity 2 - Uses of Journals and Ledger:
Write "J" if the statement refers to a use of the journal and "L" if it
refers to the use of a ledger.
1. It provides information about the financial health of business.
2. It ensures that double-entry bookkeeping system is observed
when recording transactions.
3. It provides a more reliable evidence of transactions.
4. It assists in tracking the flow of business transactions for a
given period of time.
5. It provides adequate explanation of each entry.
6. It assists management in monitoring business performance.
7. It provides a systematic record of transactions.
8. It presents necessary information about the transactions.
9. It provides information about the results of business
operations.
10. It shows detailed information about specific assets, liabilities,
and owner's equity of the business.
ANSWER:
1. L
2. J
3. J
4. L
5. J
6. L
7. L
8. J
9. L
10. L

38. Activity - Format of Journals and Ledgers:
In your paper/notes, write the answers to the following
requirements. Put your answer on your portfolio.
1. Illustrate the format of a general journal being used by an
actual business. (Note: The data may be gathered either
personally or using the internet.)
2. Does the business use special journal? If yes, illustrate the
format/s of the special journal/s used.
3. Illustrate the format of a general ledger being used by an actual
business.
4. Does the business use subsidiary ledgers? If yes, illustrate the
format/s of the subsidiary ledger/s used.
5. Compare and contrast the formats that you had presented in
the requirements.

39. ACTIVITY 3 – Walk not
What is written in the post-reference
column of the journals to signify that
the amount has been posted?

40. After identifying the two
books of accounts,
compare and contrast
what you know about
journals and ledgers using
a Venn diagram. Answer it
in a short bond paper.

41. Now, let us go back to the unanswered questions
during the introduction of our topic. “Accounting is
the process of identifying, recording, and
communicating economic events of an organization
to interested users” (Weygandt et.al).
From that definition, where do you think we record
the transactions that we have identified? What are
the tools that we use to document these
transactions? How important are these records in
accounting? Answer these questions in your
accounting journal.

42. Exercise 7-1: Identification. Identify the term/s being described.
1. This refers to the specific leger account which is supported by
detailed information in the subsidiary ledger.
2. This a journal used to record all cash receipts from whatever source.
3. This is a journal used to record all other transactions which cannot
be recorded in a special journal.
4. This is also known as the book of original entry.
5. This shows information on which customer owes the business and
how much.
6. This is a journal used to record recurring transactions.
7. This is a journal used to record transactions involving payment of
cash for whatever purpose.
8. This is the basis for the account number in the general ledger.
9. This is also know as the book of final entry.
10.This is the order of recording transactions in a journal.

43. Learner’s Assessment Card.
In your accounting journal write your personal
insights about the lesson using the prompts
below.
I understand that ___________________.
I realize that ________________________.
I need to learn more about __________.