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CBLM on Bookkeeping NC III Date Developed: July 2018 Document No.Journalize TransactionsDeveloped by: Issued by: AVM FOUNDATION INC. Page 1 of 97 Revision No.COMPETENCY BASED LEARNING MATERIALSSector:HEALTH, SOCIAL, AND OTHER COMMUNITY DEVELOPMENT SERVICESQualification: BOOKKEEPING NC IIIUnit of com...

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COMPETENCY BASED LEARNING MATERIALS

Sector: HEALTH, SOCIAL, AND OTHER COMMUNITY DEVELOPMENT SERVICES Qualification: BOOKKEEPING NC III Unit of competency: Journalize Transactions Module title: Journalizing Transactions

Angelita V. Del Mundo Foundation (AVM Foundation) Inc.

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 1 of 97

HOW TO USE THIS COMPETENCY BASED LEARNING MATERIAL Welcome to the Module Journalizing Transactions. This module contains training materials and activities for you to complete. The unit of competency “Journalize Transactions” contains knowledge, skills and attitudes required for a Bookkeeping NC III. It is one of the specialized modules at National Certificate level (NC III). You are required to go through a series of learning activities in order to complete each learning outcome of the module. In each learning outcome there are Information Sheets, Job Sheets. Follow these activities on your own and answer the self-check, perform the procedural checklist at the end of each learning outcome. You may remove a blank answer sheet at the end of each module (or get one from your facilitator/trainer) to write your answer for each self-check. If you have questions, don’t hesitate to ask your facilitator for assistance. Recognition of Prior Learning (RPL) You may already have some of the most of the knowledge and skills covered in this learner’s guide because you have: 

Been working for some time

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Already have completed training in this area.

If you can demonstrate to your trainer that you are already competent in a particular skill or skills, talk to him/her about having them formally recognized so you don’t have to do the same training again. If you have a qualification or Certificate of Competency from previous training, show it to your trainer. If the skill you acquired is still current and relevant to the unit/s of competency they may become part of the evidence you may present to RPL. If you are not sure about the currency of your skills, discuss with your trainer. This module was prepared to help you achieve the required competency, in Journalizing Transactions. This will be the source of information for you to acquire knowledge and skill into this particular trade independently and at your own pace, with minimum supervision or help from your instructor. 

Talk to your trainer and agree on how you will both organize the Training of this unit. Read through the module carefully. It is divided into sections, which cover all the skills and knowledge you need to successfully complete this module.



Work through all the information and complete the activities in each section. Read information sheets and job sheets and complete the self-

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 2 of 97

check and perform the procedural checklist. Suggested references are included to supplement the materials in this module. 

Most probably your trainer will also be your supervisor or manager. He/she is there to support you and show you the correct way to do things.

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Your trainer will tell you about the important things you need to consider when you are completing activities and it is important that you listen and take notes.

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You will be given plenty of opportunity to ask questions and practice on the job. Make sure you practice your new skills during regular work shifts. This way you will improve both your speed and memory and also your confidence.

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Talk to more experience workmates and ask for their guidance.

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Use the self-check questions at the end of each section to test your own progress.

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When you are ready, ask your trainer to watch you perform the activities outline in this module.

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As you work through the activities, ask for written feedback on your progress. Your trainer keeps feedback/pre assessment reports for this reason. When you have successfully completed each element, ask your trainer to mark on the reports that you are ready for assessment.

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When you have completed this module (or several modules), and feel confident that you have had sufficient practice, your trainer will arrange an appointment with registered assessor to assess you. The result of your assessment will be recorded in your Competency Achievement Record.

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 3 of 97

LIST OF COMPETENCIES No. 1 2 3 4

5

Units of Competencies Journalize Transactions Post Transactions Prepare Trial Balance Prepare Financial Reports Review Internal Control System

Module Title

Code

Journalizing Transactions

HCS412301

Posting Transactions

HCS412302

Preparing Trial Balance

HCS412303

Preparing Financial Reports

HCS412304

Reviewing Internal Control System

HCS412305

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 4 of 97

MODULE CONTENT

UNIT OF COMPETENCY

: Journalize Transactions

MODULE TITLE

: Journalizing Transactions

MODULE DESCRIPTOR

: This module covers the knowledge, skills and attitudes required in logging/recording business transactions in an accounting journal

NOMINAL DURATION

: 120 hours

CERTIFICATE LEVEL

: National Certificate Level III

PREREQUISITE

:

LEARNING OUTCOME

:

Upon completion of this module, the trainee/students MUST be able to: 1. Prepare chart of accounts 2. Analyze documents 3. Prepare journal entry

ASSESSMENT CRITERIA:



Nature of business is determined based on client information.

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List of asset, liability, equity, income, and expense account titles are prepared in accordance with industry practices.

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Accounting manual is prepared in accordance with industry practice.

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Documents are gathered, checked and verified in accordance with verification and validation processes.



Account titles are selected in accordance with standard selection processes. CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 5 of 97



Journals are prepared in accordance with industry practice and generally accepted accounting principles/Philippine Financial Reporting Standards for transactions and events.

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Debit account titles are determined in accordance with chart of accounts.

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Credit account titles are determined in accordance with chart of accounts.

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Explanation to journal entry is prepared in accordance with the nature of transaction.

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Journal entries are prepared with 100% accuracy.

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 6 of 97

INFORMATION SHEET 1.2-1 TYPES OF BUSINESS DOCUMENTS Learning Objective: After reading this INFORMATION SHEET, you must be able to: 1. Identify the different Types of Business Documents and its use.

BUSINESS TRANSACTIONS A business transaction is an activity or event that can be measured in terms of money and which affects the financial position or operations of the business entity. A business transaction has an effect on any of the accounting elements – assets, liabilities, capital, income, and expense. Transactions may be classified as exchange and non-exchange . Exchange transactions involve physical exchange such as purchasing, selling, collection of receivables, and payment of accounts. Non-exchange transactions are events that do not involve physical exchanges but where changes in monetary values are determinable, e.g. wear and tear of equipment, fire loss, typhoon loss, etc. To qualify as an accountable/recordable business transaction, the activity or event must: 1. Be a transaction involving the business entity The separate entity concept or accounting entity assumption clearly establishes a distinction between transactions of the business and those of its owner/s. If Mr. Bright, owner of Bright Productions, buys a car for personal use using his own money, it will not be reflected in the books of the company. Why? Because it does not have anything to do with the business. Now if the company purchases a delivery truck, then that would be a business transaction of the company. If Mr. Grim invests P20,000 into the company, would that be recorded in the books of the business? Ask this: Does it have anything to do with the company? Yes. Then, that would be a recordable business transaction.

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 7 of 97

In any case, always remember that a business is treated as an individual entity, separate and distinct from its owners.

2. Be of a financial character (in a certain amount of money) Transactions must involve monetary values, meaning a certain amount of money must be assigned to the elements or accounts affected. For example, Bright Productions renders video coverage services and expects to collect P10,000 after 10 days. In this case, it's explicit. The income and receivable can be measured reliably at the P10,000. Fire, typhoon and other losses may be estimated and assigned with monetary values. The mere request (order) of a customer is not a recordable business transaction. There should be an actual sale or performance of service first to give the company a right over the income or revenue. 3. Have a dual or "two-fold" effect on the accounting elements Every transaction has a dual or two-fold effect. For every value received, there is a value given; or for every debit, there is a credit. This is the concept of double-entry accounting. For example, Bright Productions purchased tables and chairs for P6,000. The company received tables and chairs thereby increasing its assets (increase in Office Equipment). In return, the company paid cash; thus, there is an equal decrease in assets (decrease in Cash). For more illustration and examples, check out the lesson about the Accounting Equation here. 4. Be supported by a source document As part of good accounting and internal control practice, business transactions must be supported by source documents. The source documents serve as bases in recording transactions in the journal. Examples of source documents are: Official Receipt issued whenever cash is received, Sales Invoice for sales transactions and Cash Voucher for payment in cash, Statement of Account from suppliers, Vendor's Invoice, Promissory Notes, and other business documents. The first step in the accounting process is actually to prepare the source document and determine the effects of the business transaction to the accounts of CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 8 of 97

the company. After which, the accountant records the transaction through a journal entry. SOURCE DOCUMENTS Source documents are the physical basis upon which business transactions are recorded. Source documents are typically retained for use as evidence when auditors later review a company's financial statements, and need to verify that transactions have, in fact, occurred. They usually contain the following information:  A description of a business transaction  The date of the transaction  A specific amount of money  An authorizing signature Many source documents are also stamped to indicate an approval, or on which to write down the current date or the accounts to be used to record the underlying transaction. The source document is essential to the bookkeeping and accounting process as it is the evidence that a financial transaction occurred. If a company is audited, source documents back up the accounting journals and general ledger as an indisputable audit trail. Keeping a source document for a business is just like keeping receipts for tax-deductible items for your personal taxes. If your taxes are audited, they provide the proof that you've made those purchases. The same is true for your business, but in business, you don't keep receipts only for tax deductible expenses. You keep original documents for every financial transaction. The source document should be recorded in the appropriate accounting journal as soon as possible after the transaction. After recording, all source documents should be filed away in some sort of system where they can be retrieved if and when they are needed. In certain instances, it may even be important to provide the chain of custody to be able to determine that the source document in question remained in your control.

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 9 of 97

Here are some of the most common source documents: a. Invoices These are documents listing goods or services provided, as well as their prices. Suppliers normally send an invoice together with goods (or once services have been delivered) so as to indicate the amount of payment required to be paid to them. In addition, invoices often indicate how soon the payment is to be made, the business banking details, etc. Invoices thus normally relate to credit transactions.

b. Receipts These are documents confirming that cash or goods have been received. Receipts thus normally relate to payment that has been made by cash or through a debit or credit card.

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 10 of 97

c. Deposit Slip These are documents serving as proof that cash has been deposited in a bank account.

d. Checks This is the part of the cheque (or check in the U.S.) kept by the drawer (writer) of the cheque as a record of the transaction.

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 11 of 97

Each check would have a counterfoil on the same page of the checkbook. The image above shows the check on the right, which would be torn out, while the counterfoil on the left is the stub that would remain in the checkbook. Some checkbooks don't have counterfoils. Instead they have separate pages at the back of the checkbook (behind all the checks) where you can hand-write the details of checks you have issued including the check number, the value and who/what they were for.

e. Other source documents related to business transactions that appear in the financial records;       



Bank statement. This contains a number of adjustments to a company's book balance of cash on hand that the company should reference to bring its records into alignment with those of the bank. Cash register tape. This can be used as evidence of cash sales, which supports the recordation of a sale transaction. Credit card receipt. This can be used as evidence for a disbursement of funds from petty cash. Lockbox check images. These images support the recordation of cash receipts from customers. Packing slip. This describes the items shipped to a customer, and so supports the recordation of a sale transaction. Sales order. This document, when coupled with a bill of lading and/or packing list, can be used to invoice a customer, which in turn generates a sale transaction. Supplier invoice. This is a source document that supports the issuance of a cash, check, or electronic payment to a supplier. A supplier invoice also supports the recordation of an expense, inventory item, or fixed asset. Time card. This supports the issuance of a paycheck or electronic payment to an employee. If employee hours are being billed to customers, then it also supports the creation of customer invoices.

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 12 of 97

Self-Check 1.2-1 1. A source document is: a. The origin of the information that is recorded into the accounting books b. The origin of the information that is taken from the accounting books c. Not the origin of information that is recorded into the accounting book 2. Credit notes are issued when... a. The seller delivers goods to the purchaser b. Goods are returned to the seller by the purchaser c. There is not enough money in the bank 3. Who gets the document? a. The business issuing the document b. The business receiving the document c. Usually both businesses involved in the transaction 4. There are many different types of documents. a. True b. False c. None 5. There are many different types of documents. a. The bookkeeper’s name, the amount, a transaction date, a reference number. b. A transaction date, the amount, a description of the transaction, the document shape c. The amount, the names of both businesses, a date, a description of the transaction 6. The document issued with a sale is... a. Recorded by the seller as a purchase invoice b. Recorded by the seller as a check c. Recorded by the seller as a sales invoice 7. What should be done with the source documents? a. They should be filed away and kept for at least 5 years b. Shredded for privacy as soon as possible c. Given to the bank

CBLM on Bookkeeping NC III

Date Developed: July 2018 Developed by:

Journalize Transactions Ms. Sweetzel A. Precinio

Document No. Issued by: AVM FOUNDATION INC.

Revision No.

Page 13 of 97

8. Accounting source documents are commonly called: a. The Money b. The books c. The Paperwork 9. Bills can only be paid by internet banking. a. True b. False c. Neither 10. What is payee? a. Person making the payment b. Person or business being paid c. Supplier

CBLM on Bookkeeping NC III

Date Developed: July...