Etech

• Bookkeeping


  • It is systematic because it follows procedures and principles
  • It is chronological because the transactions are recorded in order of the date of occurrence
• Bookkeeper


  • The person who is in-charge to record, maintain and update business records from all sorts of financial transactions using account title
  • The bookkeeper uses the Book of Accounts to record the business transactions
• Book of Accounts


  The book of accounts is composed of the Journal and Ledger
• Journal


  Referred to as the book of original entry
• Ledger


  Referred to as the book of final entry
• General Journal


  The most basic journal which provides columns for date, account titles and explanations, folio or references and a separate column for debit and credit entries
• General Ledger


  • A group of all accounts that can be found in the chart of accounts
  • These accounts will be reflected in the trial balance as a summary of all financial activities that have taken place as recorded in the general journal and subsidiary ledgers
• Subsidiary Ledger


  • A group of accounts directly associated with the general ledger
  • This record is created to maintain individual accounts for customers and vendors whose cash is not being used as a medium of exchange when purchasing or selling merchandise
• Accounts Receivable Ledger


  • A sub-ledger which records all credit sales made by a business
  • It is useful for segregating into one location a record of all amounts invoiced to customers
  • It records a customer's accounts in the business
• Accounts Payable Ledger


  • Contains the detail for all invoices received from suppliers
  • This ledger is used as a subsidiary ledger, from which summary-level information is periodically posted to the general ledger
  • Having a separate accounts payable ledger keeps a large amount of detailed payables transactions from cluttering up the general ledger
• Debit


  • The left-hand side entry also known in accounting as "Value Received"
  • When cash or non-cash items are received, the said cash or non-cash items must be recorded in the debit column
  • This means that the debit balance has increased
• Credit


  • The right-hand side entry also known in accounting as "Value Parted With"
  • When cash or non-cash items are given, the said cash or non-cash items must be recorded in the credit column
  • This means that the credit balance has increased
• Determining account balances

  1. Add all the debit side to generate total debit

  2. Add all the credit side to generate total credit

  3. Subtract total debit to the total credit

  4. Determine the balance of each account
• 1. T - Account


  • The most convenient and fastest way of posting journal entries to the ledger
  • It is divided into two sides, the left-hand side is called the debit side and the right-hand side is called the credit side
• Asset


  The first account of the five major accounts which refers to resources with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit
• Liability


  The second account of the five major accounts which refers to something a person or company owes, usually a sum of money
• Owner's Equity


  • The third account of the five major accounts which refers to as shareholders' equity (or owner's equity for privately held companies)
  • Owner's equity is a degree of residual ownership in a firm or asset after subtracting all liabilities associated with that asset
• Revenue


  The fourth account of the five major accounts which refers to money brought into a company by its business activities
• Expense


  The fifth and last account of the five major accounts which refers to the cost of operations that a company incurs to generate revenue
• Trial Balance


  A list of all ledger accounts with closed or final balances on a certain period arranged according to the assets, liabilities, capital, revenue and expense