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• Journal

  • A chronological record of the entity's transaction
  • It is the "book of original entry" where you can find the initial record of the transactions of a firm
  • It shows all the effects of a business transaction in terms of debit and credit
  • For each transaction, the journal shows the debit and credit effects on specific accounts

  
• Two Kinds of Journal


  • General Journal
  • Specific/Special Journal
• General Journal

  • It is the most basic journal
  • It is composed of spaces for dates, account titles and explanations, references, and two columns for the amount
• Significant Contributions of General Journal in the Recording Process


  • It imparts the complete effects of a transaction in one place
  • It presents a chronological record of transactions
  • It helps to avoid or notice errors in a way that the debit and the credit amounts for each entry can be compared
• Example of a General Journal


  • *it can be of a loose-leaf or book-bound form*
• Parts of a General Journal


  • Date Column
  • Particulars
  • Folio
  • Debit Column
  • Credit Column

  
• Journalizing

  This is a process of entering the transaction data in the journal. Businesses make separate journal entries for each transaction. The Date, Account Title and Explanation (Particulars), P.R. (Posting Reference), Debit, and Credit.
• Example transaction (simple entry)


  • October 1, 2019 –Vince Dela Rosa invested Php 30,000 in a restaurant business by opening an account in Velez Bank
  • October 3, 2019 – He purchased kitchen appliances for his business amounting to Php 150,000 on a cash basis
  • October 14, 2019 – He started his operations and made sales for that day amounting to Php 50,000
• Example transaction (compound entry)


  • On October 28, 2019, Mr. Dela Rosa purchased a motorcycle that cost Php 110,000. He paid Php 80,000 in cash and agreed to pay the remaining Php 30,000 within the month.
• Special Journals


  • Cash Receipts Journal
  • Cash Disbursements Journal (CDJ)
  • Sales Journal/Sales on Account Journal
  • Purchase Journal/Purchase on Account Journal
• Cash Receipts Journal


  • This is used to record transactions involving receipt or collection of cash
  • The Sundry Column is used for various miscellaneous and less regular items such as capital investment and receipt loan proceeds
  • The Official Receipts or Cash Receipts issued by the business is the source of document for this journal

  
• Cash Disbursements Journal (CDJ)


  • The cash disbursements journal is the opposite of the cash receipts journal. We record all cash payments in the journal.
  • When it comes to related cash payment, the check or voucher number represents the identifying number of the check issued.
  • Major categories of receipts (cash, sales, and collection of accounts receivable are frequent repetitive items.
  • For various miscellaneous and less regular items (capital investment, receipt of loan proceeds), the Sundry column is used.
  • In updating the journal, the source documents are the check voucher or cash voucher, cash receipts or official receipts from suppliers or vendors.
• Sales Journal/Sales on Account Journal


  • Used in recording several sales transactions on account. For credit transactions with various customers or clients, the source document for this journal is the charge invoice or sales invoice.
  • The charge invoice number or sales invoice number of the company's sales journal represents the identifying number of the source document issued to the customer when the sale was made.
  • The debit accounts receivable column of the company's sales journal represents the amount of the sale transactions indicated in the charge invoice.
  • The credit sales column of the company's sales journal represents the amount of the sale transactions indicated in the charge invoice.
  • The source document for the company's journal is the charge invoice issued by the business.

  
• Purchase Journal/Purchase on Account Journal


  • We usually record repeating transactions of purchases made on account through the purchase journal or the purchase on account journal.
  • The purchase journal's source documents are the invoices from the supplier of the said company.
  • The debit purchases column on the purchase journal of the company represents the amount of the goods purchased as indicated in the charge invoice from the supplier.
  • The credit accounts payable column in the company purchase journal represents the amount of the goods or items purchased on credit from the supplier.
  • The amount is indicated in the charge invoice issued by the supplier of the company.
  • The charge invoice from the supplier or vendor is the source document for this journal.

  
• Ledger


  • Refers to the accounting book in which the accounts and their related amounts as recorded in the journal are posted periodically.
  • Contains the total balance of each account
  • Also called the "Book of Final Entry" since it is in this book where transactions in the journal are transferred for final recording
  • It is also referred to as the T-Account because the basic form of a ledger is like the letter "T".

  
• Two Kinds of Ledger


  • General Ledger
  • Subsidiary Ledger
• General Ledger


  • (Commonly referred to by accounting professionals as GL) is a grouping of all accounts used in the preparation of financial statements.
  • The GL is a controlling account because it summarizes all the activities that have taken place as recorded in its subsidiary ledger
  • The balance column represents the running balance of the account after considering the debit and credit amounts. If the running balance is positive, the account has a debit balance whereas, if it is a negative running balance, the account has a credit balance.
• Subsidiary Ledger


  • Is a group of similar accounts that consists of an independent data of specific general ledger. It is officially created or maintained if individualized data is needed for a specific general ledger amount.
  • Individual record of various payables to suppliers is the best example of a subsidiary ledger. When we total the amount of all subsidiary ledgers, it should equal the balance in the accounts payable of the general ledger.
  • The vendor number indicates the name and address of the vendor or supplier
  • The debit and credit columns reflect the various effects of every transaction to the record of the supplier or vendor.
  • The balance column provides the running balance of every supplier.

  
• Effect on Major Accounts


  • Assets
  • Liabilities
  • Owner's Equity
• Accounting Recording


  It involves the routine and mechanical process of writing down the business transactions and events in the book of accounts in a chronological manner called "Journalizing".

  
• Accounting Classifying


  It involves sorting or grouping of similar transactions and events into their respective kind and classes. This is actually the process of transferring the entries from journal to the ledger called "Posting".
• Accounting Summarizing


  It involves the completion of the financial statements and the accounting requirements as well. This starts from striking a trial balance, plotting down of adjusting entries in the worksheet and the preparations of closing entries, post closing trial balance and reversing entries.
• Accounting Cycle


  • Documentation
  • Journalization
  • Posting to Ledger
  • Trial Balance
• Debit


  Derived from the Latin word Debere, meaning left.
• Credit


  Derived from the Latin word Credere, meaning right.
• Debit & Credit Rules


  • Asset-increase,debit; decrease, credit
  • Liability-increase, credit; decrease debit
  • Equity- increase, credit; decrease, debit
  • Income-increase, credit; decrease, debit
  • Expense-increase, debit; decrease, credit.
• ALICE Method


  • A (Asset)-debit
  • L (Liability)-credit
  • I (Income) -credit
  • C (Capital)-credit
  • E (Expense)-debit
• When making a t-account or ledger in a ledger paper, provide particulars/items (short explanation of the transaction, ex: purchased equipment on account.)

  
• The normal balance of accounts is the same with the rules of debit and credit, where: Asset-debit, Liability-credit, Income-credit, Capital-credit, Expense-debit
• When making a Trial Balance, the account titles must be in order. Asset, Liability, Equity/Capital, Income, and Expense respectively.