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BOOKKEEPING NCIII

CORE COMPETENCY
 Journalize Transactions
 Post Transactions
 Prepare Trial Balance
 Prepare Financial Reports
 Review Internal Control
1ST UNIT OF COMPETENCY
JOURNALIZE
TRANSACTIONS
LEARNING OUTCOMES

Prepare Chart of Accounts


Analyze Documents
Prepare Journal Entry

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR
What KNOWLEDGE is
required in the study
of BOOKKEEPING?
ANALYTICAL
ABILITY
WHAT IS BOOKKEEPING???

Is the process of recording


systematically the business
transactions in a
chronological manner.
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
SYSTEMATICALLY…

Itfollows certain principles


and procedures…

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR
And, CHRONOLOGICAL…

The transactions are recorded


in the order of the date of
occurrence…
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
ACCOUNTING???
“Accounting is a service activity. Its
function is to provide quantitative
information, primarily financial in nature,
about economic entities, that is intended
to be useful in making economic
decisions.” PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR

-Financial Reporting Standards Council (FRSC)


ACCOUNTING???
“Is the art of recording, classifying and
summarising in a significant manner and
in terms of money; transactions and
events which are, in part at least, of a
financial character, and interpreting the
results thereof.“ PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR

-American Institute of Certified Public Accountants


ACCOUNTING???

“isthe process of identifying, measuring


and communicating economic information
to permit informed judgments and
decisions by users of the information.“

PREPARED BY: MARIA CORINA A. DALEON


-American Accounting Association BOOKKEEPING NC III INSTRUCTOR
ACCOUNTING???
 is the science of recording and classifying
business transactions and events, primarily of a
financial character, and the art of making
significant summaries, analysis and interpretations
of those transactions and events and
communicating the results to persons who must
make decisions or form judgment." PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR

-Smith and Ashburne


Thus, ACCOUNTING…
Communicating financial information to the
users for decision-making
Accounting - Language of Business
Two – Way Communication
BUSINESS USERS
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
ATTRIBUTES OF ACCOUNTING

• Identification of Financial Transactions and


Events
• Measuring the Identified Transactions
• Recording
• Classifying
• Summarizing
• Analysis & Interpretation PREPARED BY: MARIA CORINA A. DALEON

Communicating
BOOKKEEPING NC III INSTRUCTOR


IMPORTANCE…

“DIARY”
…which will record all
the activities for the day
and even for a year.
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
IMPORTANCE…

Book of accounts
…data that are financial in
character which are processed
and transformed into a report
form called “FS” PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Starting point…

Rule as a Bookkeeper
Generally Accepted Accounting
Principles
Basic Accounting Assumptions
Financial Statements
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Rule as a bookkeeper

• Recording
– this is the phase of accounting which
involves the routine and mechanical process
of writing down the business transactions
and events in the books of accounts in a
chronological manner called journalizing.
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Rule as a bookkeeper
• Classifying
- this is the phase of accounting which
involves sorting or grouping of similar
transaction and events into their respective
kind and classes.
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Rule as a bookkeeper

• Summarizing
– this is the phase of accounting which
involves the completion of financial statements
and the accounting requirements as well.
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Basic accounting functions…

• Interpreting
– this is phase of accounting which
involves the “analytical and interpretative
works”.
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
ACCOUNTING PROCESS
Financial Transactions
Communicating to the or Events
Users
Journal
1. Cash Book
2. Purchase Book Recording
Analysis and 3. Sales Book
Interpretation 4. Purchases Return
Book
5. Sales Return Book
6. Bills Payable Book
7. Bills Receivable Book
Summarizing 8. Journal Proper
Trial Balance
Income Statement Classifying (Posting
Balance Sheet. into Ledger)
The Accounting Cycle
 Accounting procedures are performed over a period of time.
 Procedures are performed in a definite order in the
accounting cycle.
 The accounting period is a period of time covered by the
income statement.
 Usually this is a twelve month period.
 The accounting cycle has sequential steps to be performed
again each year. PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Generally Accepted Accounting
Principles

- Are uniform set of accounting


rules, procedures, practices and
standards that are followed in
preparing the financial statements.

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR
Generally Accepted Accounting
Principles
Purpose…

- is to ensure that financial reporting


is transparent and consistent from
one organization to another.
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Basic Accounting Assumptions

Preparation…

Concepts or Assumptions

foundation
G A A P
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Basic Accounting Assumptions

1. Accounting Entity - An entity that is separate


and distinct from the owner or management.
(business entity or separate entity assumption)
2. Going Concern – continue to operate
3. Time – Period – indicate the date
4. Unit of Measure – monetary value
5. Accrual Basis Assumptions.
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Concepts & Principles
 The Business Entity Concept
 The Continuing Concern  The Cost Principle
Concept  The Consistency Principle
 The Principle of Conservatism  The Materiality Principle
 The Objectivity Principle  The Full Disclosure Principle
 The Time Period Concept
 The Revenue Recognition
Convention
 The Matching Principle
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
Learning Unit - 1
PREPARE CHART OF
ACCOUNTS
What is the CHART OF
ACCOUNTS?
 Itis the list of accounts used by a business.
 Each business entity has its unique chart of
accounts.
 Every chart of accounts has the same
numbered account categories:
– Assets, Liabilities, Owner’s Equity
– Revenues, Expenses
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
ABS CUT & LOOSE SALON
CHART OF ACCOUNTS
BALANCE SHEET ACCOUNT INCOME STATEMENT ACCOUNT
ASSETS INCOME
Page Account Account Title Page Account Account Title
No. No. No. No.
1 111 Cash in Bank 13 441 Service Income
2 112 Accounts Receivable
3 112-A Allowance for Bad Debts EXPENSES
4 113 Salon Supplies 14 551 Bad Debts
5 114 Salon Equipment 15 552 Depreciation Expense
6 114-A Accumulated Depreciation 16 553 Salaries Expense
17 554 Rent Expense
LIABILITIES 18 555 Utilities Expense
7 221 Accounts Payable 19 556 Salon Supplies Expense
8 222 Notes Payable 20 557 Taxes & Licenses Expense
9 223 Accrued Advertising 21 558 Advertising Expense
22 559 Interest Expense
OWNER’S EQUITY
10 331 Abs Ordinario, Capital
11 332 Abs Ordinario, Drawing PREPARED BY: MARIA CORINA A. DALEON
12 333 Income & Expense Summary BOOKKEEPING NC III INSTRUCTOR
FINANCIAL STATEMENTS…
Balance Sheet Accounts
 Assets
 Current Income Statement Accounts
 Noncurrent  Revenue
 Liabilities  Expenses
 Owner’s Equity
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
ASSETS ACCOUNT

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR
ASSET ACCOUNTS…
 CASH - usually refers to money in the form of liquid currency, such as
banknotes or coins
 ACCOUNTS RECEIVABLE - are amounts collectible from its customers. It
is the claim against a DEBTOR for an uncollected amount, generally
from a completed transaction of sales or services rendered
 INVENTORIES - are products on hand for sale to customers
 PROPERTY, PLANT & EQUIPMENT - are assets used in the production of
goods and services
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
ASSET ACCOUNTS…
 Cash
 Petty Cash Fund  Property and Equipment
 Accounts Receivable  Land
 Estimated Uncollectible Accounts  Building
 Notes Receivable  Equipment
 Advances to Employees  Furniture & Fixtures
 Inventories  Accumulated Depreciation
 Prepaid Expenses  Intangible Assets
 Supplies Inventory / Unused PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR

Supplies
LIABILITY ACCOUNT

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR
LIABILITY ACCOUNTS…

 ACCOUNTS PAYABLE - is the amount owed to a


CREDITOR for delivered goods or completed services
 NOTES PAYABLE - is the account title used to
record amounts to be paid for borrowed
money and evidenced by a promissory note.
This is also called Loans Payable

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR
LIABILITY ACCOUNTS…
 Accounts Payable
 Notes Payable
 Accrued Expenses
 Pre – collected or Unearned Income

 Notes Payable (long-term)


 Mortgage Payable
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
CAPITAL/EQUITY ACCOUNTS…

 CAPITAL – Owner’s initial or capital investments.


 DRAWING – Owner’s withdrawal

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR
CAPITAL/EQUITY ACCOUNTS…

 Owner’s Initial Capital


 Additional Capital
 Owner’s Withdrawal
 Net income / loss (Income and Expense
Summary
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
INCOME & EXPENSE ACCOUNT

 REVENUE - represents the inflow of assets (or decrease in liabilities)


due operating activities. This may include sales of products,
merchandise, and services; and earnings from INTEREST, DIVIDEND,
rents
 EXPENSES - represent the outflow of assets (or increases in liabilities)
due to a company’s operating activities

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR
INCOME ACCOUNTS…

 Service Income
 Professional Income
 Rental Income
 Interest Income
 Sales (merchandising)
PREPARED BY: MARIA CORINA A. DALEON
BOOKKEEPING NC III INSTRUCTOR
EXPENSES ACCOUNTS…
 Interest Expense  Depreciation Expense
 Rent Expense  Amortization Expense
 Repairs & Maintenance  Taxes and Licenses
 Stationery / Office  Insurance Expense
Supplies Expense  Utilities Expense
 Salaries Expense  Gas & Oil
 Uncollectible Accounts 
PREPARED BY: MARIA CORINA A. DALEON

Miscellaneous Expense
BOOKKEEPING NC III INSTRUCTOR
FINANCIAL STATEMENTS…

PREPARED BY: MARIA CORINA A. DALEON


BOOKKEEPING NC III INSTRUCTOR