Fabm1 q3 mod5 booksofaccounts final PDF

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Fundamentals ofAccountancy, Businessand Management 1Quarter 3 – Module 5:Books of AccountsFundamentals of Accountancy, Business and Management 1 – Grade 11 Alternative Delivery Mode Quarter 3 – Module 5: Books of Accounts First Edition, 2020Republic Act 8293, section 176 states that: No copyright sh...

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Fundamentals of Accountancy, Business and Management 1 Quarter 3 – Module 5: Books of Accounts

Fundamentals of Accountancy, Business and Management 1 – Grade 11 Alternative Delivery Mode Quarter 3 – Module 5: Books of Accounts First Edition, 2020 Republic Act 8293, section 176 states that: No copyright shall subsist in any work of the Government of the Philippines. However, prior approval of the government agency or office wherein the work is created shall be necessary for exploitation of such work for profit. Such agency or office may, among other things, impose as a condition the payment of royalties. Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names, trademarks, etc.) included in this module are owned by their respective copyright holders. Every effort has been exerted to locate and seek permission to use these materials from their respective copyright owners. The publisher and authors do not represent nor claim ownership over them. Published by the Department of Education Secretary: Leonor Magtolis Briones Undersecretary: Diosdado M. San Antonio

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Fundamentals of Accountancy, Business and Management 1 Quarter 3 – Module 5: Books of Accounts

Introductory Message This Self-Learning Module (SLM) is prepared so that you, our dear learners, can continue your studies and learn while at home. Activities, questions, directions, exercises, and discussions are carefully stated for you to understand each lesson. Each SLM is composed of different parts. Each part shall guide you step-bystep as you discover and understand the lesson prepared for you. Pre-tests are provided to measure your prior knowledge on lessons in each SLM. This will tell you if you need to proceed on completing this module or if you need to ask your facilitator or your teacher’s assistance for better understanding of the lesson. At the end of each module, you need to answer the post-test to selfcheck your learning. Answer keys are provided for each activity and test. We trust that you will be honest in using these. In addition to the material in the main text, Notes to the Teacher are also provided to our facilitators and parents for strategies and reminders on how they can best help you on your home-based learning. Please use this module with care. Do not put unnecessary marks on any part of this SLM. Use a separate sheet of paper in answering the exercises and tests. And read the instructions carefully before performing each task. If you have any questions in using this SLM or any difficulty in answering the tasks in this module, do not hesitate to consult your teacher or facilitator. Thank you.

What I Need to Know

This module was designed and written so that you will be able to differentiate journal from ledger and identify their types (ABM_FABM11-IIIf-23-24). Specifically, you are expected to: a. illustrate the format of general and special journals and b. illustrate the format of general and subsidiary ledger.

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What I Know

Directions: Match Column A with Column B. Write your answers on a separate sheet of paper.

1.

A It is the most basic journal.

B A. Purchase Journal

2.

It is used to record all purchases.

B. General Journal

3.

It is used for various miscellaneous.

C. Sundry Column

4.

It is the opposite of cash receipt journal.

D. Journalizing Process

5.

It is the process entering transaction data in the journal.

E. Cash Disbursement Journal

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Lesson

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Books of Accounts Books are essential to all of us. They are a common source of information and an integral tool for learning. In every field of study, there is a specialized book to be used.

Books can also be used for documenting or recording important data, such as in the field of business, particularly in accounting. Accountants use general journal and ledger and other special journals for different business transactions. These are like books where you can find mostly financial information and records of transactions which can be used as reference in decision-making for the success of one’s business management. The general journal is the “book of original entry” where you can find the initial record of the transactions of a firm while the ledger contains the total or balance of each account.

What’s In

Directions: Identify what is described in each number. Choose your answer from the box. Write your answers on a separate paper. Chart of Accounts Liabilities Owner's Equity Assets Capital

Notes Payable Non-Current Asset Notes Receivable Prepaid Expenses Cash

____________ 1. These are the debt of the company payable in money, goods, or services. ____________ 2. It is the list of all the accounts of the company that is being used by the firm to their financial records.

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____________ 3. These are the resources owned by the owner. ____________ 4. It is the claim of the owner on the business. ____________ 5. It is the most liquid asset. ____________ 6. It is a written note from the customer to pay his account on a given time and date. ____________ 7. Land and building are examples of these assets. ____________ 8. These are debts that are supported with a written note or promise. ____________ 9. These are the resources or assets that have been invested in the business. ____________ 10. These are the bills paid in advance.

Notes to the Teacher This module prepares students to differentiate a journal from a ledger and identify their types.

What’s New Directions: Read each statement below carefully. Write T if you think the statement is true and F if the statement is false. Write your answers on a separate sheet of paper. ____________ 1. The general ledger is the most basic journal. ____________ 2. In recording, you are entering data transaction in the journal. ____________ 3. All entries involve only two accounts: one debit and one credit. ____________

4. Accounting is the process of communicating economic events.

identifying,

recording,

and

____________ 5. Cash Disbursement Journal is used to record all cash that have been received.

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____________ 6. Cash Receipts Journal is used to record all transactions involving cash payments. ____________ 7. Sales Journal is used to record all sales on credit. ____________ 8. Purchase Journal is used to record all purchases of inventory on credit. ____________ 9. A general ledger is a group of accounts containing the independent data of a specific general ledger. ____________ 10. General Journals are books of original entry.

What Is It

According to Weygandt (2005), “Accounting is the process of identifying, recording, and as well as communicating economic events of an organization to different interested users.” These three parts of the process are expounded in the Teaching Guide for Senior High School, Fundamentals of Accountancy, Business and Management 1. It explains where we record the identified transactions and what tools to document these transactions. It also highlights how important these records are in accounting.

Process of Accounting Recording transactions and events in chronological order is the best thing that a company can do. They are listed in the journal which is known as the “book of original entry ”. It clearly shows the debit and credit effects on specific accounts in every transaction. The general and the special journal are the main types of accounting journal.

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General Journal The general journal is the most basic journal. It is composed of spaces for dates, account titles and explanations, references, and two columns for the amount.

Here are its significant contributions 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 easily compared. The figure below is an example of a general journal of JST Restaurant: Date

Account Title and Explanation

Ref.

Debit

Credit

2020 June 1

Php 50,000.00

Cash Dantes, Capital Initial investment

Php 50,000.00

As you can see, it includes columns for the date of the transaction, the title of the accounts to be debited and credited, the reference, the amount of each debit and credit, and explanation of the transaction. Journalizing Process Entering transaction data in the journal is known as “journalizing”. Businesses make separate journal entries for each transaction. The Date, Account Title and Explanation, P.R., Debit and Credit. • The date of the transaction is entered in the Date column. • The debit account title or the account to be debited is entered at the extreme left margin of the Account Titles and Explanation column, and the amount of debit to be recorded is written in the Debit column. • The credit account title or the account to be credited is entered in the next row in the column of Account Titles and Explanation. The amount of the credit is recorded in the Credit column. • A short explanation of the transaction appears on the line below the credit account title (a space is left between journal entries to separate individual journal entries and to make the reading of the journal easy). • The column titled P.R. known as posting reference is left blank when the journal entry is made. (This column will be used when the journal entries are transferred to the ledger accounts.) Using the following transactions, we are going to illustrate the recording of transactions of Mr. Ven Dela Rosa in the general journal.

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• October 1, 2019 – He invested Php 300,000.00 in a restaurant business by opening an account in Velez Bank. • October 3, 2019 – He purchased kitchen appliances for his business amounting to Php150,000.00 on cash basis. • October 14, 2019 – He started his operations and made sales for that day amounting to Php 50,000.00. Analyze the table. Account Title and Explanation

Date

P.R

Debit

Credit

10/01/19

Cash Php 300,000.00 V. Dela Rosa, Capital Php 300,000.00 To record initial investment 10/03/19 Kitchen Appliances 150,000.00 Cash 150,000.00 To record purchase of kitchen appliances 10/14/19 Cash 50,000.00 Sales 50,000.00 To record sales In simple entry, there are only two accounts: one debit and one credit. If the transactions require more than two accounts in journalizing, it is called the “compound entry”. All of the transactions in the example above are simple entries. Here is an example of a compound entry. Read and analyze. On October 28, 2019, Mr. Dela Rosa purchased a motorcycle which costs Php 110,000.00. He paid Php 80,000.00 cash and agreed to pay the remaining Php 30,000.00 within the month. The compound entry is as follows: Date 10/28/19

Account Title and Explanation Motorcycle Vehicle Cash Accounts Payable To record purchase of motorcycle by paying cash and the balance on account

P.R

Debit Php 110,000.00

Credit Php 80,000.00 Php 30,000.00

Special Journals Some businesses encounter voluminous quantities of similar and recurring transactions which may create congestion if these transactions are recorded repeatedly in a single day or a month in the general journal. We use different special journals and these are the following: 7

• Cash Receipts Journal This is used to record all the cash that has been received. • Cash Disbursements Journal This is used to record all the transactions involving cash payments. • Sales Journal or the Sales on Account Journal This is used to record all sales on credit or on account. • Purchase Journal or the Purchase on Account Journal This is used to record all purchases of inventory on credit or on account. Date

Description (Particulars)

Ref.

Debit Cash

Credit Sales

Credit Accounts Receivable

Credit Sundry

• Cash Receipts Journal This is used to record transactions involving receipt or collection of cash. • The date of the transaction is written in the date column. • A brief explanation of the transaction is entered in the Description column. • A column entitled P.R. for (Posting Reference) is left blank when the journal entry is made because it will be used later when the journal entries are transferred to the ledger accounts. • The amount of cash received for a particular transaction is placed in the Debit Cash column, and • The major categories of receipts ( cash sales and collections of account receivables ) are put in separated columns because these transactions are frequent and repetitive items. 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 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. The table below is a cash disbursement journal of JST Restaurant: Date

Description (Particulars)

P.R.

Check or Voucher No.

Credit Cash

Debit Accounts Payable

101

Php 30,000.00

Php 30,000.00

2020 July 1

Paid employees

8

Debit Salaries

Debit Supplies

Credit Sundry

The date of the transaction is written in the Date column. • A brief explanation of the transaction is written in the Description column. • The column titled P.R. known as (Posting Reference) is left blank when the journal entry is made. We will use this column later if the journal entries are transferred to the ledger accounts. • When it comes to related cash payment, the check or voucher number represents the identifying number of the check issued. There were times that a check or cash voucher accompanies the disbursement. We can also use the voucher number as an alternative for this column. • The amount of cash received for a particular transaction is entered in the Debit Cash column. • Major categories of receipts (cash sales, and collection of accounts receivable) are provided with separate columns because these transactions are frequent and 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 The Sales Journal or Sales on Account Journal is 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. An example of Sales Journal of JST Restaurant is shown below:

Date

Description (Customer's Name)

P.R.

Sales Invoice No.

Debit Accounts Receivable

Credit Sales

010

Php 20,000.00

Php 20,000.00

2020 August

Masikap Express

• The date of the transaction is entered in the Date column of JST Restaurant sales journal. • A brief explanation of the transaction is entered in the description column or the name of the customer of JST Restaurant sales journal. • The column titled P.R. or (Posting Reference) is left blank when the journal entry of JST Restaurant is made. This column is used later when the journal entries of JST Restaurant are transferred to the ledger accounts. • The Charge Invoice Number or Sales Invoice Number of JST Restaurant 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 JST Restaurant sales journal represents the amount of the sale transactions indicated in the charge invoice. • The Credit Sales column of JST Restaurant sales journal represents the amount of the sale transactions indicated in the charge invoice. 9

• The source document for JST Restaurant’s journal is the Charge Invoice issued by the business. Purchase Journal/Purchases on Account Journal We usually record repeating transactions of purchases made on account through the Purchase Journal or the Purchases on Account Journal. The purchase journal’s source documents are the invoices from the supplier of the said company. An example of a Purchase Journal of JST Restaurant is shown below: Date

Description (Supplier's Name)

P.R.

Sales Invoice No. (from supplier)

Debit Purchases

Credit Accounts Payable

002011

Php 40,000.00

Php 40,000.00

2020 Oct. 1

Freeway Express

• The date of the transaction of JST Restaurant is entered in the Date column. • A brief explanation of the transaction of JST Restaurant is entered in the description column or the name of the supplier. • The column titled P.R. stands for posting reference which is left blank when the journal entry of JST Restaurant is made. This column is used later when the journal entries of JST Restaurant are transferred to the ledger accounts. • The Charge Invoice Number or Sales Invoice Number of JST Restaurant represents the identifying number of the source document issued by the supplier when the items, goods or merchandise were delivered to JST Restaurant when the purchase was made. • The Debit Purchases column on the purchase journal of JST Restaurant represents the amount of the goods purchased as indicated in the charge invoice from the supplier. • The Credit Accounts Payable column in the JST Restaurant 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 JST Restaurant. • The charge invoice from the supplier or vendor is the source document for this journal.

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An accounting book in which the accounts and their related amounts as recorded in the journal w...