QUARTER 2 LESSON 1 BOOK OF ACCOUNTS 1.pdf

FABM2

1. “Thinking Big, Acting Bold”

2. identify the uses of
the two books of
accounts (journal and
ledger) to record
business transactions.
explain and discuss
the use of types of
books of accounts to
record business
transactions.
appreciate the
importance of
journalizing and
posting in a
business.

3. ➢ is the process of identifying, recording, and
communicating economic events of an organization
to interested users.
➢uses a double entry mechanism in capturing
economic transactions.
➢This means that in every business transaction, at
least two accounts are affected and always be
kept in balance.

4. –
Journals and ledgers can be compared to a
personal diary because they are used to
record the day-to day transactions of the
business.
Each transaction a company makes
throughout the year is recorded in its
accounting system.

5. Accounting cycle
Accounting equation
Credit
Debit
General journal
General ledger
Normal balance
T-accounts

6. 1. The General Journal
and Special Journal
The process of recording
a transaction is called
journalizing the
transactions.
The simplest type of
journal is called the
general journal.

9. Cash Receipts
Journal
– is used to record
all cash that had
been received.
Sales Journal
(Sales on Account Journal)
– is used to record all
sales on credit (on
account)
Purchase Journal
(Purchase on Account Journal)
– is used to
record all purchases of
inventory on credit (or on
account)
Cash Disbursements
Journal
– is used to record all
transactions
involving cash
payments.

10. –
The journal is a chronological record
(day-by-day) of business
transactions. It
is called the book of original
because it is the accounting record
in which financial
transactions are first recorded.
The general ledger (commonly
referred by accounting
professionals as GL) is
a grouping of all accounts
used in the preparation of
financial statements.

11. –
❑ Companies initially record transactions
and events in chronological order (the
order in which they occur).
❑Thus, the journal is referred to as the
book of original entry.
❑For each transaction the journal shows
the debit and credit effects on specific
accounts.
❑ The ledger refers to the accounting book in which
the accounts and its related amounts as recorded
in the journal are posted to periodically.
❑The ledger is also called the “book of final entry”
because all the 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”

12. ➢A ledger is a means of accumulating in one place all the
information bout changes in an asset, liability, equity,
income, and expense accounts.
A sample of the general ledger is shown below:

13. ➢ A general ledger is often called a T-Account because of
its resemblance to the letter T. A T-Account is a
simplified form of general ledger.
➢A sample of a T-account is shown below:

15. Common Types of Subsidiary Ledgers:
Accounts Receivable Ledger
Contains details of amounts owed by each customer.
Control account: Accounts Receivable in the general ledger.
Accounts Payable Ledger
Contains details of amounts owed to each supplier.
Control account: Accounts Payable.
Inventory Ledger
Tracks details of inventory items (quantities, costs, movements).
Control account: Inventory.
Fixed Assets Ledger
Provides details on each fixed asset (purchase cost, depreciation, book value).
Control account: Property, Plant & Equipment.

16. ➢ A T-Account for each of the account titles
listed on the said chart is prepared to
determine the balance at the end of the
period of each account.
➢ Shown below is the Chart of Accounts

17. ➢ In order to determine the ending balance of
each account using the “T account”, the
beginning balance is plot in the appropriate
debit or credit side, then total debits and
credits are then determined.
➢If the account has a beginning balance on
the debit side, all the debits during the
period is added to the beginning then all the
credits are deducted.
➢There is a debit balance of the account if
the sum of the beginning balance and the
total debits exceeds the total credits.

24. SERVICE REVENUE
SALARIES EXPENSE

25. After posting to the ledger or to the
T-account, the Trial balance for the given
transaction is:
SERVICE REVENUE
SALARIES EXPENSE