FundAcc Quickguide PDF

FUNDAMENTALS OF ACCOUNTING
FUNDAMENTALS OF
ACCOUNTING
(Using SAP B1)
FASTTRACK IT ACADEMY l GF King’s Court Bldg II., Chino Roces cor. Delarosa Sts., Makati City 1200, Philippines l Telephone Number: 63.2.759.4348 l www.fitacademy.ph
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QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

TABLE OF CONTENTS
TABLE OF CONTENTS .................................................................................................................................. 2

Chapter 1 .................................................................................................................................................... 5
Introduction to Fundamentals of Accounting ........................................... Error! Bookmark not defined.
Brief History of Accounting ................................................................... Error! Bookmark not defined.
Types of Business Organizations ........................................................... Error! Bookmark not defined.
Hybrid Business ..................................................................................... Error! Bookmark not defined.
Double Entry Bookkeeping .................................................................................................................. 5
Basic Accounting Principles ................................................................................................................. 5
Computerized Accounting System ...................................................................................................... 6
Accounting and SAP Business One ...................................................................................................... 8
SAP Business One Basic Navigation ..................................................................................................... 8
Menu Bar and Toolbar ........................................................................................................................ 9
Functions in a Form ........................................................................................................................... 14
Exercises: .......................................................................................................................................... 16
Chapter 2 .................................................................................................................................................. 18
Chart of Accounts ................................................................................................................................. 18
Chart of Accounts is a financial organizational tool that provides a complete listing of every account
in an accounting system. An account is a unique record for each type of asset, liability,
equity, revenue and expense. ........................................................................................................... 18
Exercises: .......................................................................................................................................... 22
Chapter 3 .................................................................................................................................................. 24
Subsidiary Ledgers ................................................................................................................................ 24
What is the purpose of control accounts? ........................................................................................ 24
What is the purpose of subsidiary ledgers? ....................................................................................... 24
Chapter 4 .................................................................................................................................................. 26
Accounting Cycle ................................................................................................................................... 36
Accounting Cycle of the System ........................................................................................................ 36
Chapter 5 .................................................................................................................................................. 38
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Journalizing ............................................................................................................................................... 38
Special Journals ......................................................................................... Error! Bookmark not defined.
Sales Journal ......................................................................................... Error! Bookmark not defined.
Cash Receipts Journal ........................................................................... Error! Bookmark not defined.
Purchases Journal ................................................................................. Error! Bookmark not defined.
Cash Disbursements Journal ................................................................. Error! Bookmark not defined.
General Journal ..................................................................................................................................... 38
Manual Journal Entry ........................................................................................................................ 38
Exercises: .......................................................................................................................................... 45
Chapter 6 .................................................................................................................................................. 47
Special Journals ..................................................................................................................................... 47
Purchase Journals ............................................................................................................................. 47
Procurement under SAP Business One ............................................................................................. 47
A/P Invoice ........................................................................................................................................ 48
Exercises: .......................................................................................................................................... 51
Chapter 7 .................................................................................................................................................. 52
Special Journal ...................................................................................................................................... 52
Disbursements Journal ...................................................................................................................... 52
Outgoing Payments in SAP Business One .......................................................................................... 52
Payment of Invoice from Suppliers ................................................................................................... 53
Payment of Expenses ........................................................................................................................ 54
Exercises: .......................................................................................................................................... 57
Chapter 8 .................................................................................................................................................. 58
Special Journal ...................................................................................................................................... 58
Sales Journal ..................................................................................................................................... 58
Credit Sales Transaction .................................................................................................................... 58
Cash Sales Transactions .................................................................................................................... 61
Exercises: .......................................................................................................................................... 63
Chapter 9 .................................................................................................................................................. 64
Special Journals ..................................................................................................................................... 64
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Cash Receipts Journal ............................................................................................................................... 64

Incoming Payments in SAP Business One .......................................................................................... 64
Exercises: .......................................................................................................................................... 67
Chapter 10 ................................................................................................................................................ 26
Perpetual Inventory System .................................................................................................................. 26
Advantages of Perpetual Inventory................................................................................................... 26
Inventory Status ................................................................................................................................ 27
Stock Movements ............................................................................................................................. 28
Purchase of Items ............................................................................................................................. 28
Exercises: .......................................................................................................................................... 31
Exercises: .......................................................................................................................................... 34
Chapter 11 ................................................................................................................................................ 68
General Ledger...................................................................................................................................... 68
Generating the General Ledger Report ............................................................................................. 68
Chapter 12 ................................................................................................................................................ 70
Trial Balance.......................................................................................................................................... 70
Generating the Trial Balance Report ................................................................................................. 70
Chapter 13 ................................................................................................................................................ 72
Adjustments .......................................................................................................................................... 72
Accruals ............................................................................................................................................. 72
Deferrals ........................................................................................................................................... 72
Chapter 14 ................................................................................................................................................ 74
Financial Statements ............................................................................................................................. 74
Chapter 15 ................................................................................................................................................ 75
Closing Entries....................................................................................................................................... 75
Chapter 16 ................................................................................................................................................ 77
Post-Closing Trial Balance ..................................................................................................................... 77
Generating the Trial Balance Report ................................................................................................. 77
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Chapter 1
Fundamentals of Accounting
Double Entry Bookkeeping
Double entry is the fundamental concept underlying present-day bookkeeping and accounting.
Double-entry accounting is based on the fact that every financial transaction has equal and opposite
effects in at least two different accounts. It is used to satisfy the equation Assets = Liabilities + Equity, in
which each entry is recorded to maintain the relationship.
The fundamental concept of double entry derives from the use of debit and credit to record
business transactions. The total debits always equal the total credits. Customarily, in bookkeeping and
accounting, the asset, expense and loss accounts are listed on the left side of a bookkeeping sheet, and
the liability, equity, revenue and gain accounts are listed on the right side, with the two sides maintaining
the same total balance. A debit to one or more accounts must be accompanied by a credit to at least one
account, equally increasing or decreasing the balance on each side. Other times, a debit to either side is
balanced out by an equal credit to the same side.
Basic Accounting Principles

A number of basic accounting principles have been developed through common usage. They
form the basis upon which modern accounting is based. The best-known of these principles are as
follows:
1. Accrual principle. This is the concept that accounting transactions should be recorded in
the accounting periods when they actually occur, rather than in the periods when there are
cash flows associated with them. This is the foundation of the accrual basis of
accounting. It is important for the construction of financial statements that show what
actually happened in an accounting period, rather than being artificially delayed or
accelerated by the associated cash flows.
2. Conservatism principle. This is the concept that you should record expenses and liabilities
as soon as possible, but to record revenues and assets only when you are sure that
they will occur. This introduces a conservative slant to the financial statements that may
yield lower reported profits, since revenue and asset recognition may be delayed for
some time. Conversely, this principle tends to encourage the recordation of losses earlier,
rather than later.
3. Cost principle. This is the concept that a business should only record its assets, liabilities,
and equity investments at their original purchase costs. This principle is becoming less
valid, as a host of accounting standards are heading in the direction of adjusting assets
and liabilities to their fair values.
4. Economic entity principle. This is the concept that the transactions of a business should be
kept separate from those of its owners and other businesses. This prevents intermingling
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of assets and liabilities among multiple entities, which can cause considerable
difficulties when t he financial statements of a fledgling business are first audited.
5. Full disclosure principle. This is the concept that you should include in or alongside the f
inancial statements of a business all of the information that may impact a reader's
understanding of those financial statements. The accounting standards have greatly
amplified upon this concept in specifying an enormous number of informational disclosures.
6. Going concern principle. This is the concept that a business will remain in operation for
the foreseeable future. This means that you would be justified in def erring the recognition
of some expenses, such as depreciation, until later periods. Otherwise, you would have to
recognize all expenses at once and not defer any of them.
7. Matching principle. This is the concept that, when you record revenue, you should
record all related expenses at the same time. Thus, you charge inventory to the cost of
goods sold at the same time that you record revenue from the sale of those inventory
items. This is a cornerstone of the accrual basis of accounting. The cash basis of accounting
does not use the matching the principle.
8. Materiality principle. This is the concept that you should record a transaction in the
accounting records if not doing so might have altered the decision making process of
someone reading the company's financial statements. This is quite a vague concept that is
difficult to quantify, which has led some of the more picayune controllers to record even the
smallest transactions.
9. Monetary unit principle. This is the concept that a business should only record transactions
that can be stated in terms of a unit of currency. Thus, it is easy enough to record the
purchase of a fixed asset, since it was bought for a specific price, whereas the value of
the quality control system of a business is not recorded. This concept keeps a business
from engaging in an excessive level of estimation in deriving the value of its assets and
liabilities.
10. Time period principle. This is the concept that a business should report the results of
its operations over a standard period of time. This may qualify as the most glaringly obvious
of all accounting principles, but is intended to create a standard set of comparable periods,
which is useful for trend analysis.
Computerized Accounting System

While some firms still do their bookkeeping by hand, most firms generally have too many
transactions to sustain a manual accounting system. The more complicated the financial activities of your
business are, the more likely it is that you'll need a computerized accounting system to ensure effective
financial reporting. Computerized accounting systems are software programs that are stored on a
company's computer, network server, or remotely accessed via the Internet.
Computerized accounting systems allow you to set up income and expense accounts, such as
rental or sales income, salaries, advertising expenses, and material costs. They also can be used to
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manage bank accounts, pay bills, and prepare budgets. Depending upon the program, some accounting
systems also allow you to prepare tax documents, handle payroll, and manage project costing. You can
generally customize the software to meet the needs of your business. It's important to make sure that
your staff are trained and understand how to use the system correctly so that your company can
successfully use your accounting program.
Special Features of Computerized Accounting
1. It leads to quick preparation of accounts and makes the accounting statements and records
available on time.
2. It ensures control over accounting work and records.
3. Errors and mistakes would be at minimum in computerized accounting.
4. Maintenance of uniform accounting statements and records is possible.
5. Easy access and reference of accounting information is possible.
6. Flexibility in maintaining accounts is possible.
7. It involves less clerical work and is very neat and more accurate.
8. It adapts to the current and future needs of the business.
9. It generates real-time comprehensive MIS reports and ensures access to complete and
critical information instantly
Advantages of Computerized Accounting
1. Better quality work
The accounts prepared with the use of computers are usually uniform, neat, accurate, and more
legible than manual job.
2. Lower Operating Costs
Computer is a labor and time saving devise. Hence, the volume of job handled with the help of
computers results in economy and lower operating costs.
3. Improved Efficiency
Computer brings speed and accuracy in preparing the records and accounts and thus, increases
the efficiency of employees.
4. Facilitates Better Control
From the management point of view, greater control is possible and more information may be
available with the use of computer in accounting. It ensures efficient performance in accounting
work.
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5. Greater Accuracy
Computerized accounting ensures accuracy in accounting records and statements. It prevents

clerical errors and omissions.
6. Relieve Monotony
Computerized accounting reduces the monotony of doing repetitive accounting jobs, which are
tiresome and time consuming.
7. Facilitates Standardization
Computerized accounting facilitates standardization of accounting routines and procedures.

Therefore, standardization in accounting is ensured.
8. Minimizing Mathematical Errors
While doing mathematics with computers, errors are virtually eliminated unless the data is
entered improperly in the first instance.
Accounting and SAP Business One

SAP software can help you become a best-run business – in fact it's the choice of more than
80,000 small businesses and midsize companies.
SAP software is:

 Affordable for small businesses and midsize companies
Every business is unique, which is why we offer a complete portfolio of business management
and business intelligence solutions designed to fit the way you do business – and your budget.
 Designed with your company in mind
SAP solutions for small and midsize companies are designed to be complete – offering the
breadth and depth of functionality you need to run your business; easy to use – enabling quick
adoption with little training; and flexible – they can scale and adapt as you grow your business.
Every solution we offer is based on best practices learned from more than 35 years of SAP's
experience working with best-run companies.
SAP Business One Basic Navigation

Logging into SAP Business One
1. Double click on the SAP Business One logo on your desktop.
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2. In the Login Window, choose ―Change Company‖.
3. The Choose Company window will pop up.
4. Enter and select the following information:
User ID manager
Password 1234
Company Name ABC Enterprise
Database Name ABC
5. Click OK.
Menu Bar and Toolbar

The SAP Business One menu bar displays at the top of the screen. The menu bar contains the
Windows standard menu (File, Edit, Window, Help), as well as the generic SAP Business One
functions.
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The toolbar displays under the menu bar. The toolbar is a collection of icon buttons that grant
you easy access to commonly-used functions. The functions represented by the buttons are also
available in the menu bar.
Main Menu
Navigation in SAP Business One is done using the Main Menu. It arranges the functions of the
individual applications in a tree structure. The company name and the name of the current user display
at the top left.
There are three tabs under the Main Menu:

1. Modules
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The Modules menu contains a list of all modules with their related options. The menu options:
 Are arranged in the same order as the menus in the Main Menu
 Cannot be modified
 May be inactive for unauthorized users
2. Drag and Relate
Drag and Relate is an interactive tool based on predefined system queries. You use it to
create reports and to display information about business processes. Its user-friendly interface
helps you find important information quickly and locate different objects or documents in SAP
Business One. For example, you can generate a report on all items or item groups, or all
purchase orders that you created for a particular vendor.
The Drag & Relate queries allow you to search for data both in reports and in the
master data, such as G/L accounts and business partners.
3. My menu
Use the My Menu tab in the Main Menu to customize a personal menu to include
windows, menu options, and queries you use most frequently
Password Maintenance
The users of SAP Business One are defined in the User-Setup window .The requirements for user
password can be managed by using the Change Password window.
a. To access the Change Password window, choose

Administration>Setup>General>Security>Change Password.
b. Take note of the Password and the minimum characters allowed by the system.
c. Type in your desired password in the password field.
d. Re-type the chosen password in the confirm tab and click OK.
Minimum Length
Length
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Customization-Display Parameters
The General Settings in the Administration module enables the user to define variables or set fonts
and place images as background in the Main SAP Business One window.
To define the language and how different variables (dates and numerical values) are displayed:
a. Go to Administration>System Initialization > General Setting.
b. Click on the Display tab and check the following settings:
Language : English (United States)
Time Format : 24H
Date Format : MM/DD/YY
c. Click UPDATE to save the settings. Click OK to exit the window.
To set the font you use for displaying texts in SAP Business One and to place your company logo or
other graphic as the background image in the main SAP Business One window:
a. Go to Administration>System Initialization > General Setting

b. Click on the Font & Bkdg tab and change the following settings:
Font : <any font>
Font size : <any size>
Background : <any picture file>
Image Display : <any option>
c. Click UPDATE to save the settings. Click OK to exit the window
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Functions in a Form
SAP Business One offers two input tools:
1. Selection list: Choose the icon left of the field to open a new window with a list of all possible
entries.
2. Dropdown list: Choose the icon to the right of the field to open a dropdown list with all possible
entries.
The link arrow is a very powerful tool. It allows you to open windows with related information.
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Exercises:
____________1. It is the method in which financial information is gathered, processed, and

summarized into financial statements and reports. Accounting
____________2. It provides reliable, integrated solution to streamline your financial operations. SAP
Business One
____________3. It is a feature of computerized accounting, adapts to the current and future needs of
the business, irrespective of its size or style. Scalability
____________4. Generates real-time, comprehensive MIS reports and ensures access to complete
and critical information, instantly. Quick decision making
____________5. Computerized accounting has the ability to handle huge volumes of transactions
without compromising on speed or efficiency. Power
____________6. Displays at the top of the screen and contains the Windows standard menu (File,
Edit, Window, Help) as well as generic SAP Business One functions. Menu Bar
____________7. It is a collection of icon buttons that grant you easy access to commonly-used
functions. Toolbar
____________8. It arranges the functions of the individual applications in a tree structure. Main
Menu
____________9. Choose this icon to open a new window with a list of all possible entries. Selection
list
____________10. Choose this icon to to open a dropdown list with all possible entries. Dropdown list
____________11. It allows you to open windows with related information. Link Arrow
____________12. You use it to create reports and to display information about business processes.
Drag and Relate
____________13. This is use to customize a personal menu to include windows, menu options, and
queries you use most frequently. My Menu
____________14. Contains the basic system settings for currency exchange rates, system setup, and
authorizations. Administration module
____________15. Handles all aspects of the sales process. Sales-AR module
____________16. Stores the master data for all your business partners. Business partners module
____________17. Manages all your accounting data and chart of accounts, general ledger, current
accounting posting, and reporting. Financials module
____________18. Let you manage all your vendor transactions. Purchasing-AP module
____________19. Handles full range of monetary transactions. Banking module
____________20. Manages your inventory, including warehouse stocks, price lists, etc. Inventory
module
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Print Preview 1. Selection list 9.
Find 2. Dropdown list 10.
First data 3. Link arrow 11.

record
Next record 4. Payment means 12.
Previous record 5. Print 13.
Last data 6. Form Setting 14.

record
Export to Excel 7. Transaction 15.

journal report
Add 8.
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Chapter 2
Chart of Accounts
Chart of Accounts is a financial organizational tool that provides a complete listing of every
account in an accounting system. An account is a unique record for each type of asset, liability,
equity, revenue and expense.
The chart of accounts consists of balance sheet accounts (assets, liabilities, and
stockholders’ equity) and income statement accounts (revenues, expenses, gains, losses). The chart
of accounts can be expanded and tailored to reflect the operations of the company.
Within the chart of accounts, you will find that the accounts are typically listed in the
following order:
Balance Sheet Income Statement

Assets Operating Revenues
Liabilities Operating Expenses
Owner’s Equity Non-Operating Revenues and Gains
Non-Operating Expenses and Losses
Within the categories of operating revenues and operating expenses, accounts might be further
organized by business function (such as producing, selling, administrative, financing) and/or by
company divisions, product lines, etc.
A company's organization chart can serve as the outline for its accounting chart of accounts.
For example, if a company divides its business into ten departments (production, marketing, human
resources, etc.), each department will likely be accountable for its own expenses (salaries, supplies,
phone, etc.). Each department will have its own phone expense account, its own salaries expense, etc.
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SAP CHART OF ACCOUNTS
The Chart of Accounts is organized by drawers and levels. The organization of the chart of
accounts follows GAAP (Generally Accepted Accounting Principles) in which there is a separate
drawer for accounts representing: Assets, Liabilities, Equity (Capital and Reserves), Revenues
(Turnover), Cost of Sales, Expenses (Operation Costs), Financing (Non-Operating Income and
Expenditure), and Other Revenues and Expenses (Taxation and Extraordinary Items). These drawers,
which have been defined by SAP and cannot be changed, organize your accounts by level in a logical
fashion appropriate to your financial accounting and reporting processes.
In the General Ledger, we distinguish between Balance Sheet Accounts and Income
Statement Accounts, also called Profit and Loss Accounts.
Balance Sheet Accounts
 The first 3 drawers: Assets, Liabilities, Equity (Capital and Reserves) hold the Balance
Sheet Accounts, such as the Sales Tax account and the Accounts Payable Account.
 The bookkeeping balance of these accounts is kept from one fiscal year to the next.
 The Balance Sheet Accounts – reflect the monitory value of the company - stock, assets, debt,
etc.
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Profit and Loss Accounts
 The last 5 drawers: Revenues (Turnover), Cost of Sales, Expenses (Operation Costs),
Financing (Non-Operating Income and Expenditure), and Other Revenues and Expenses
(Taxation and Extraordinary Items) hold the Profit and Loss Accounts, such as the Income
Accounts. Note that in some localizations, the lower drawers are not all profit and loss
account drawers.
 The bookkeeping balance of these accounts has to be cleared at the end of each fiscal year –
this is the Period End Closing process (will be discussed in Unit 4: Financial Periods Process).
 The Profit and Loss Accounts - reflect the changes in the company value, such as: sell stock –
cost of goods sold, increase revenues.
A chart of accounts arranges a company's general ledger accounts in a hierarchical structure. The
top level in the structure (level 1) consists of sections or groups for different type of accounts (assets,
liabilities, capital and reserves, turnover, and so on). The system displays the section as a cabinet
drawer (see figure). Each drawer has a section title, which you cannot change. The system displays
lower-level titles in blue and normal active accounts in black. Accounts that you have entered in the
G/L Account Determination (default accounts) are displayed in green. Levels 2 through 4 can contain
either active accounts or titles that combine several active accounts. Level 5 only contains active
accounts. Because only active accounts can be posted to in SAP Business One, it is a good practice to
have all your active accounts at the same level. In reports, a title account summarizes all the balances
of each active account below it.
Two functions for maintaining the chart of accounts:

1. Choose Financials > Chart of Accounts to:
 View the chart of accounts
 Change the properties of an account (To view and change some of the account
properties, choose the Accounts Details button)
 Add a new G/L account to an existing title (To add a new account, switch to Add mode
by clicking the Add button in the toolbar )
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2. Choose Financials >Edit Chart of Accounts to:

 Add a new title (To add new account, click Add Same-Level Acct or Add Sub-Level Acct)
 Delete an account (To delete an account, right-click on the account you would like
to delete > Advanced > Delete Account)
Note: You can only delete an account that has no postings
 Move title and accounts within the structure of the chart of accounts
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Exercises:
Add the following accounts:
G/L Account Name Level Title / Active

ASSETS
A240000 Office Furniture - NBV 3 Title
A241000 Office Furniture 4 Active
A242000 Accumulated Dep. - Furniture 4 Active
LIABILITIES
L600000 SSS Payable 2 Active
L700000 Philhealth Payable 2 Active
L800000 Pag-ibig Payable 2 Active
OPERATING COSTS
O130000 Depreciation – Furniture 2 Active
O140000 Representation 2 Active
O150000 Repairs & Maintenance 2 Active
O160000 Professional fee 2 Active
Results:
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Chapter 3
Subsidiary Ledgers
What is the purpose of control accounts?
The purpose of the control account is to keep the general ledger free of details, yet have the
correct balance for the financial statements. For example, the Accounts Receivable account in the
general ledger could be a control account. If it were a control account, the company would merely
update the account with a few amounts, such as total collections for the day, total sales on account for
the day, total returns and allowances for the day, etc.
What is the purpose of subsidiary ledgers?

A subsidiary ledger is a ledger designed for the storage of specific types of accounting
transactions. Once information has been recorded in a subsidiary ledger, it is periodically summarized
and posted to an account in the general ledger, which in turn is used to construct the financial
statements of a company.
By having the details of the accounts receivable activity in a subsidiary ledger, a company can
better control its financial information. For example, the credit manager and others in the credit
department of a company will have access to any and all of the credit sales information through the
subsidiary ledger without having access to any other account in the company‘s general ledger.
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In SAP Business One, outstanding balances of customers or vendors can be retrieved through
the Account Balance field. Once the navigation arrow is clicked, details of the debits and credits are
shown.
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Chapter 4
Perpetual Inventory System
Perpetual inventory is a method of accounting for inventory that records the sale or purchase of
inventory immediately through the use of computerized point-of-sale systems and enterprise asset
management software. Perpetual inventory provides a highly detailed view of changes in inventory with
immediate reporting of the amount of inventory in stock, and accurately reflects the level of goods on
hand.
A point-of-sale system drives changes in inventory levels because inventory is decreased, and
cost of sales, an expense account, is increased whenever a sale is made. Inventory reports are
accessed online at any time, which makes it easier to manage inventory levels and the cash needed to
purchase additional inventory. A periodic system requires management to stop doing business and
physically count the inventory before posting any accounting entries. Businesses that sell large dollar
items, such as car dealerships and jewelry stores, must frequently count inventory, but these firms also
maintain a point-of-sale system. The inventory counts are performed frequently to prevent theft
of assets, not to maintain inventory levels in the accounting system.
Sales returns have the effect of increasing stock on hand and purchase returns decrease the
stock on hand. W ithdrawals of inventory by the proprietor must also be accounted for, as this
will decrease the balance of stock. As inventory is always recorded at cost price, there is a need to have
access to information regarding the cost price of stock throughout the accounting period.
Advantages of Perpetual Inventory
1. There is greater control over stock because up-to-date information is available

throughout the accounting period. This means management is able to make better decisions
relating to inventory.
2. Slow moving and fast moving lines of inventory can be identified. A stock card is used to record
all movements of a particular item of inventory.
3. Re ordering of inventory is more efficient. Part of perpetual inventory involves keeping a
record of how many units of each type of stock are on hand at any time. When the number of
units reaches a certain level (known as the reorder point) an order can be dispatched to
the relevant supplier. This helps to avoid the problem of running out of stock.
4. Interim profit reports can be prepared without doing a stock take. Gross profit figures
can be calculated on a monthly/weekly even daily basis, and estimated net profit figures can
be calculated for each week or month.
5. The level of stock losses or gains can be measured. The perpetual method can identify the stock
actually sold and the goods which have been lost (due to theft and breakages).
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Inventory Status
You can also see the inventory status in the item master on the Inventory Data tab page.
 In Stock: The current stock level of the item.

 Committed: The item stock that is reserved for customers and for internal use is displayed here.
The stock that is reserved for internal use is the quantity of the item for that will be used for a
finished product based on the BOMs for existing production orders.
 Ordered: This field shows the quantity of the item ordered from the vendor. This figure
consists of the quantity ordered from external vendors plus the quantity that is being
produced and that will enter the warehouse by a certain date.
 Available: The available quantity of an item displays. This figure
comprises:
In Stock - Committed + Ordered
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Stock Movements
SAP Business One records goods receipts and goods issues in any warehouse and allows you to
track your stock transfers from one warehouse to another. By integrating individual item prices or
price lists, the application simultaneously updates inventory valuation. SAP Business One also fully
integrates inventory and accounting transactions. As a result, when stock levels are adjusted, inventory
accounts are immediately credited or debited, and applicable inventory variances are accounted for as
soon as a stock movement is posted.
Purchase of Items
Example:
On February 5, 20XX, ABC Enterprise purchased the following items from Goodyear:
1. IT001 – 10 pcs
2. IT002 – 10 pcs
3. IT003 – 10 pcs
4. IT004 – 10 pcs
Go to Purchasing A/P > A/P Invoice.

a. Click the vendor field. Click the selection list.
b. Choose Goodyear.
c. Type 02.05 (Feb 5, 20XX) in the Posting Date field.
d. Press tab. The system automatically assigns the due date field which is 30 days after the
posting and document dates. The reason for this is that during the creation of the subsidiary
ledger for Goodyear Choice, the payment term chosen was n/30.
e. In the Item/Service Type field, click the dropdown list and select Item.
f. In the first line of the table under the column Item No., choose IT001-IT004. In the quantity
column, type 10.
g. Document total is P26,835.20 since VAT is added.
h. Click Add or press Enter.
i. Click Yes when System Message prompts: You cannot change this document after you
have added it. Continue?
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Exercises:
Create the following purchases on account on February 10, 20XX:
ITEM No. Quantity

IT001 5
IT002 5
IT003 5
IT004 5
View the transaction journal report for February 10, 20XX and submit to your instructor.
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Sale of Items
Example:
On February 10, 20XX, Mariah Carey bought the following items:
IT001 --- 5 pcs

IT004 --- 5 pcs
a. Go to Sales A/R > A/R Invoice.

b. Click the customer field. Click the selection list.
c. Choose Mariah Carey
d. Type 02.10 (Feb 10, 20XX) in the Posting Date field.
e. Press tab. The system automatically assigns the due date field which is 30 days after the
posting and document dates. The reason for this is that during the creation of the
subsidiary ledger for Mariah Carey, the payment term chosen was n/30.
f. In the Item/Service Type field, click the dropdown list and select Item.
g. In the first line of the table under the column Item No., choose IT001 and IT004. In the
quantity column, type 5.
h. Press tab. Document Total is P 30,734.00 since VAT is added.
i. Click Add or press Enter.
j. Click Yes when System Message prompts: You cannot change this document after you
Page 32 / 81

Page 33 / 81

Exercises:
Create the following sales on account:
February 12, 20XX February 15, 20XX
Britney Houston bought the following: Whitney Spears bought the following:
IT002 5 pcs IT001 10 pcs
Page 34 / 81

IT003 5 pcs IT00 5 pcs
View the transaction journal report for February 12 – 15, 20XX and submit to your instructor.
Results:
Page 35 / 81

Chapter 5
Accounting Cycle
Accounting Cycle of the System
Page 36 / 81

Page 37 / 81

Chapter 6
Journalizing
In accounting and bookkeeping, a journal is a record of financial transactions in order by
date. A journal is often defined as the book of original entry. The definition was more appropriate
when transactions were written in a journal prior to manually posting them to the accounts in the
general ledger or subsidiary ledger. Manual systems usually had a variety of journals such as a sales
journal, purchases journal, cash receipts journal, cash disbursements journal, and a general journal.
With today's computerized bookkeeping and accounting, it is likely to find only a general journal
in which adjusting entries and unique financial transactions are entered. The recording and posting of
most transactions will occur automatically when sales and vendor invoice information is entered,
checks are written, etc. In other words, accounting software has eliminated the need to first record
routine transactions into a journal.
General Journal
The general journal is the master journal that all company transactions or journal entries are
recorded in. A typical general journal has at least five columns: one for the date, account titles, posting
reference, debit, and credit columns.
The majority of journal entries in SAP Business One come from one of the other modules; sales,
purchasing, payment, and inventory documents post transactions automatically to the G/L.
However, in GAAP accrual-based accounting, you sometimes need to make manual journal entries in
the G/L, such as depreciation entries, accrual entries, correcting entries, and the like —anything, in
other words, that would not come from one of the other SAP Business One modules. When a journal
entry is added manually, it is recorded immediately and cannot be deleted—only reversed.
The purpose of manual journal entries is to record transactions that are not automatically
initiated from a sub ledger or from another process within SAP Business One. For example, a manual
journal entry might be used to record a finance charge to a customer account or a service fee to a
bank account.
Manual Journal Entry

To post a manual journal entry, choose Financials >Journal Entry.
Page 38 / 81

The screen for entering journal entries manually is divided into three areas: document header
data, extended editing mode for an item, and the items table.
The three dates in the header default to the current system date but you can change them:
1. Posting Date. This date determines the posting period, and therefore the fiscal period for
financial reporting. You can post to an earlier or later date if the posting period is Unlocked
for posting.
2. Due Date. The date the transaction is due.
3. Document Date. The date used for tax reporting purposes.
You can use the Ref. 1 and Ref. 2 fields to enter references to associated actual documents.
To add a debit account and debit amount, in the table, click the first field under the column G/L
Account / BP. A selection list will appear. This list is the Chart of Accounts. For the debit amount, click
the field under the column Debit and enter the amount in figures. The system will just automatically
put in currency.
Page 39 / 81

Exercise:
On January 1, 20XX, Cersei Aquino invests P200,000 to start a business.
A112100 Cash in Bank - MBTC 200,000

C100000 Aquino, Capital 200,000
Note: The default of the system is that the list of account titles is sorted according to the account
codes. You cannot type account title in the Find field to search for an account title. To sort it according
to their account codes, double-click Account Name. You will notice that the small triangle is transferred
from the Account Number to the Account Name.
Page 40 / 81

Draft Journal Entry / Journal Voucher
To create, change, and post journal vouchers, choose Financials >Journal Vouchers
When the user is creating a journal voucher, it is used for storing several journal entry drafts.
You can change journal voucher as long as they have not been posted yet. Then, you can access the
journal voucher, make any necessary corrections, and post the entire journal voucher. You do not have
to post each journal entry individually. If you do want to post the journal entries individually,
however, you must create a separate journal voucher for each journal entry draft. You can save an
unbalanced journal vouchers as long as it is in the draft mode.
To add a Journal Voucher:
a. Go to Financials > Journal Vouchers
b. When the Journal Vouchers window appears, click Add Entry to New Voucher
c. Set the date
d. Click the first field under the column G/L Account / BP Name so that a selection list will appear
e. Click the selection list so that the Chart of Accounts will appear and choose or double -click
the account
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You can remove a journal voucher or delete an entry from a journal voucher, as long as they
have not been posted yet. Choose the Data menu or, right-click the journal voucher row.
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Reversal
Users can make input errors. As a result, the journal entry created may contain incorrect
information. To provide an audit of the correction, the user must first reverse the journal entry in
error, and then capture the document correctly.
To cancel manual journal entries, locate the journal entry you wish to cancel and choose Cancel
from the Data menu. Approve the system message, enter any necessary changes and then click Add. In
the Remarks field, you will see the word ―Reversal‖ followed by the number of the journal entry/entries
you cancelled.
Page 43 / 81

Transaction Journal Report
Transaction Journal Report displays a list of transactions according to a selected transaction type
To access, go to Financials > Financial Reports > Accounting > Transaction Journal Report
Page 44 / 81

Exercises:
Create the following entries in journal entry:
Date Particulars Amount

January 01, 20XX Ms. Aquino invested land for the Php 1,000,000
business
January 01, 20XX The owner invested additional cash on Php 100,000
hand
January 02, 20XX Bought machinery Php 10,000
January 02, 20XX Paid transportation Php 1,000
January 02, 20XX Paid taxes and business permit Php 4,000
January 03, 20XX Bought office supplies Php 2,000
January 03, 20XX The owner invested additional capital Php 200,000
View the transaction journal report for January 1 – 3, 20XX and submit to your instructor.
Results:
Page 45 / 81

Page 46 / 81

Page 47 / 81

Chapter 7
Special Journals
A special journal is any accounting journal in the general journal that is used to record and
post transactions of similar types. In other words, it‘s a place where similar transactions can be
recorded and organized, so bookkeepers and accountants can keep track of different business activities.
Although companies create special journals for other types of repetitive transactions, almost all
merchandising companies use special journals for sales, purchases, cash receipts, and cash
disbursements.
Purchase Journals
The purchases journal lists all credit purchases of merchandise. Entries in this journal usually
include the date of the entry, the name of the supplier, and the amount of the transaction. Some
companies include columns to identify the invoice date and credit terms, thereby making the purchases
journal a tool that helps the companies takes advantage of discounts just before they expire. The
purchases journal to the right has only one column for recording transaction amounts. Each entry
increases (debits) purchases and increases (credits) accounts payable.
Each day, individual entries are posted to the accounts payable subsidiary ledger accounts.
Creditor account numbers (or check marks if the creditor accounts are not numbered) are placed in the
purchases journal‘s reference column to indicate that the entries have been posted. At the end of the
accounting period, the column total is posted to purchases and accounts payable in the general ledger.
Procurement under SAP Business One
“The flow of information between purchasing, sales, and accounting is much smoother now. . . . With SAP
Business One, we have achieved major savings in terms of time and money.”
“With SAP Business One, you gain a detailed view of your vendors and support for an integrated,
centralized vendor data repository so you can make more effective purchasing decisions, identify
opportunities for cost savings, and better manage supplier relationships.”
“Master data management is a cornerstone of process integration in SAP Business One. Item and vendor
master records are maintained centrally in the system and integrated in all necessary business
transactions.”
Sunday Odubote, Financial Accountant
Cit Business Computers Limited
Thus, in SAP Business One, the document to use for credit purchase transaction is A/P Invoice.
Page 48 / 81

A/P Invoice
An A/P invoice is entered into SAP Business One when you receive an invoice from the vendor. It
will be used to trigger a payment to the vendor.
Data entry tip. Use the Document Date field in the A/P invoice header to enter the vendor‘s invoice
date. This is important for accounting and auditing reasons as the invoice date and the posting date may
differ. You may also wish to change the name of the Vendor Ref. No. field in the document header to
Vendor Invoice No. This field prints on the check and allows your vendor to tie the payment to their
invoice.
Accounting Impact of an A/P Invoice: The posted A/P invoice generates entries in the general ledger and
updates the vendor account with the amount owed to the vendor.
Inventory Impact: In those cases where a vendor‘s invoice arrives at the time the items are received, the
resulting A/P invoice also increases inventory quantities and values.
To access: Go to Purchasing A/P > A/P Invoice
Page 49 / 81

Example:
On January 5, 20XX, the enterprise bought two car suspension machine at Goodyear for P100,000 (vat
not yet included). Credit term is n/30. Expected life is five years with a salvage value of P10,000.
a. Click the vendor field. Click the selection list.

b. Choose Goodyear.
c. Type 01.05 (Jan 5, 20XX) in the Posting Date field.
posting and document dates. The reason for this is that during the creation of the
subsidiary ledger for Goodyear, the payment term chosen was n/30.
e. In the Item/Service Type field, change Item to Service by clicking the dropdown list.
f. In the first line of the table under the column G/L Account, choose office equipment. In the
column Total (LC) of the same line, type 100,000.
g. Press tab. Document total is now at P111,760 since VAT is added.
h. Click Add or press Enter
i. Click Yes when System Message prompts: You cannot change this document after you
Page 50 / 81

Page 51 / 81

Reversal of A/P Invoice
If a document is added in error, has become invalid, or has no concrete transactions associated
with it, you can cancel the document but still store it in the database.
a. To cancel a document, go to Purchasing A/P > A/P Invoice.

b. Change to find mode by clicking the Find icon in the Toolbar
c. Input the document no. and click Find or Enter
d. The document you would like to cancel will appear.
e. In the lower right side, click Copy to > A/P Credit Memo
f. Click Add in the A/P Credit Memo window and confirm the system message.
g. View the Journal Entry made by the A/P Credit Memo, it is the reversal of the entry made in the
A/P Invoice
Exercises:
Enter the following purchases on the account:

January 05, 20XX Bought oil and lubricants from Caltex Php 5,000
January 07, 20XX Bought machinery from Goodyear to be Php 70,000
used in servicing clients
January 07, 20XX Bought additional machinery from Php 45,000
Goodyear
January 08, 20XX Bought engine oil from Caltex P 2,000
Page 52 / 81

Chapter 8
Special Journal
Disbursements Journal
Cash disbursements occur in business when a company makes a payment. A number of
different transactions can incur a cash disbursement. Companies record these transactions, as every
disbursement results in a lower cash balance. Disbursements will either result in a use or exchange of
assets. Many companies report disbursements in a separate accounting journal.
Companies usually will maintain a cash disbursement journal as part of their general ledger.
Frequent cash disbursements can quickly fill the general journal, resulting in this subunit of the overall
accounting ledger. Only cash disbursements go in this journal. Companies that initially purchase goods
on credit will record the entry into the purchases journal. Once the payable is due, the company must
disburse cash. This entry is part of the cash disbursements journal.
Outgoing Payments in SAP Business One

Use this window to create a record each time the company issues a payment to a customer,
vendor or any account. The outgoing payment can be created for the following payment means:
a.
Cash
b.
Check
c.
Credit Card
d.
Bank Transfer
Once the outgoing payment is added, an appropriate journal entry is created. When creating an
outgoing payment to clear (fully or partially) a specific document or transaction, an internal
reconciliation automatically takes place.
To access, go to Banking > Outgoing Payments > Outgoing Payments.
Page 53 / 81

Payment of Invoice from Suppliers
On January 10, 20XX, the enterprise paid the amount due to Goodyear amounted to 111,760. Check
no. 001
a. In the Code field, click the Selection List and choose Goodyear.
b. Set the posting date, document date and due date as Jan. 10, 20XX.
c. Select the invoice you would pay.
d. In the Total Payment column input the amount to be paid.
e. Select the payment means by clicking the icon in the toolbar or right-click in the outgoing
payments window and choose the Payment Means
f. In the Payment Means window, set the due date as Jan 10 and click on Cash tab.
g. Click tab on the G/L account and then choose Cash in Bank – BDO from the list.
h. Right-click in the amount and choose Copy Balance Due.
Page 54 / 81

To retrieve the journal entry made in Outgoing Payment:
a. Still in Outgoing Payment window, click the Last Data Record icon in the toolbar.
b. To view the journal entry made, click the golden arrow after Transaction No.
Payment of Expenses
On January 10, 20XX, payment was made to the City Treasurer, amounting to P4,000 for licenses and
registration fees, with check no. 002.
a. From Vendor, click Account.

c. In the first line of the table, under the column GL Account, click the field so that a selection list
icon will appear.
d. Click the selection list so that a list of GL accounts will appear.
e. Choose Taxes and Licenses by double-clicking on it.
f. Type 4,000 (no currency) under the Net Amount field of the same line.
Page 55 / 81

g. Select the payment means by clicking the icon in the toolbar or right-click in the outgoing
Page 56 / 81

h. In the Payment Means window, set the due date as Jan 10.
i. Choose Cash tab.
j. Right click in the amount and choose Copy Balance Due.
k. Click OK.
l. Click Add.
m. A system message will appear: You cannot change this document after you have added
it Continue?
n. Click Add.
To retrieve the journal entry made in Outgoing Payment:
a. Still in Outgoing Payment window, click the Last Data Record icon in the toolbar.
Page 57 / 81

c. You will be led to the next screen

d. Click OK or Cancel to exit from the current screen
Reversal of Outgoing Payment
To cancel a document, go to Banking > Outgoing Payments > Outgoing Payment

a. Change to find mode by clicking the Find icon in the Toolbar
b. Input the document no. and click Find or Enter
c. The document you would like to cancel will appear.
d. Right-click on the document and select Cancel
e. Confirm the system message.
Exercises:
Enter the following payments from vendors/suppliers:
Date Particulars Payment Amount

Means
January 9, 20XX Paid Caltex for January 05 Cash P 4,470.40
transaction
January 10, 20XX Partially paid Goodyear for Cash P 50,000.00
machinery bought on January
07
January 12, 20XX Paid Caltex for the remaining Cash P 2,235.20
invoice
January 12, 20XX Paid Goodyear for remaining Cash P 28,232.00
balance of machinery bought
on January 07
Page 58 / 81

Chapter 9
Special Journal
Sales Journal
The sales journal lists all credit sales made to customers. Sales returns and cash sales are not
recorded in this journal. Entries in the sales journal typically include the date, invoice number,
customer name, and amount. Invoices are the source documents that provide this information. In its
most basic form, a sales journal has only one column for recording transaction amounts. Each entry
increases (debits) accounts receivable and increases (credits) sales.
Notice the dates and posting references applied to each entry in the illustration to the
right. Each day, individual sales journal entries are posted to the accounts receivable subsidiary ledger
accounts so that customer balances remain current. Customer account numbers (or check marks if
customer accounts are simply kept in alphabetical order) are placed in the sales journal's refer ence
column to indicate that the entries have been posted. At the end of the accounting period, the column
total is posted to the accounts receivable and sales accounts in the general ledger. Account numbers
are placed in parentheses below the column to indicate that the total has been posted.
Many companies use a multi-column (columnar) sales journal that provides separate columns
for specific sales accounts and for sales tax payable. Each line in a multi-column journal must contain
equal debits and credits. For example, the entries in the sales journal to the right appear below in a
multi-column sales journal that tracks hardware sales, plumbing sales, wire sales, and sales tax
payable. Individual entries are still posted daily to the accounts receivable subsidiary ledger accounts,
and each column total is posted at the end of the accounting period to the appropriate general ledger
account.
Credit Sales Transaction

In SAP Business One, the document to use for credit sales transaction is A/R Invoice.
To access: Go to Sales A/R > A/R Invoice
Page 59 / 81

Example:
On January 12, 20XX, the Enterprise render service to Mariah Carey amounting to P5,000.
a. Click the customer field. Click the selection list.

b. Choose Mariah Carey.
c. Type 01.12 (Jan 12, 20XX) in the Posting Date field.
posting and document dates. The reason for this is that during the creation of the subsidiary
ledger for Mariah Carey, the payment term chosen was n/30.
e. In the Item/Service Type field, change Item to Service by clicking the dropdown list.
f. In the first line of the table under the column G/L Account, choose service income (T2100). In
the column Total (LC) of the same line, type 5,000.
g. Press tab. Document total is now at P5,588 since VAT is added.
h. Click Add or press Enter.
Page 60 / 81

i. Click “ Yes” when System Message prompts: You cannot change this document after you
To view the journal entry made in AR Invoice:
a. AR Invoice must still be open.

b. Click the last data record icon in the toolbar.
c. Click the Accounting tab.
d. Click the golden or navigation arrow after Journal Remark.
e. You are led to Journal Entry of the Financials module.
f. Click OK or Cancel to exit.
Page 61 / 81

Page 62 / 81

Cash Sales Transactions

In SAP Business One, the document to use for cash sales transaction is A/R Invoice + Payment.
To access it, go to Sales A/R > A/R Invoice + Payment.
Example:
On January 12, 20XX, the Enterprise render service to walk-in customer amounted to P3,000. VAT not yet
included.
a. Type 01.12 (Jan 12, 20XX) in the Posting Date field.

b. Press tab.
c. In the Item/Service Type field, change Item to Service by clicking the dropdown list.
d. In the first line of the table under the column G/L Account, choose service income (R10000). In
the column Total (LC) of the same line, type 3,000.
e. Press tab. Document total is now at P3,360 since VAT is added.
f. Click Add or press Enter. Payment means window will open.

g. Click the Cash tab
h. In the G/L Account field, choose cash on Hand.
Page 63 / 81

i. In the Total field, right-click and choose Copy Balance Due.

j. Click OK and the screen for Payment Means will exit.
k. In the AR Invoice, click Add.
l. Click “ Yes” when System Message prompts: You cannot change this document after you
m. Click Cancel to exit
Page 64 / 81

Page 65 / 81

Exercises:
Enter the following sales on the account:

January 15, 20XX Rendered service to Britney Houston Php 3,000
January 15, 20XX Rendered service to Whitney Spears Php 5,000
January 16, 20XX Rendered service to Elvis Presley Php 2,000
January 16, 20XX Rendered service to Michael Jackson Php 7,000
January 17, 20XX Rendered service to Paul McCartney Php 4,000
Enter the following sales for walk-in customers:
Date Amount
January 18, 20XX Php 4,000
Page 66 / 81

Chapter 10
Special Journals
Cash Receipts Journal

A cash receipts journal is a special record used in accounting, usually by retailers. It involves
recording the details of sales in a specific manner. In turn, the cash receipts journal gathers together
the relevant information in a way that makes it easier to copy across, in aggregate, to
traditional double-entry accounts.
Incoming Payments in SAP Business One

Use this window to create a record each time your company receives a payment from a
customer, vendor or account. The incoming payment document can be created with the following
payment means:
a. Cash
b. Check
c. Credit Card
d. Bank Transfer
Once the incoming payment is added, an appropriate journal entry is created. When creating an
incoming payment to clear (fully or partially) a specific document or transaction, an internal
reconciliation automatically takes place.
To access, go to Banking > Incoming Payments > Incoming Payments.
Page 67 / 81

Example: On January 22, 20XX, Mariah Carey settled P 5,488.00 through cash
Partial Payment
a. In the Code field, click the Selection List and choose Mariah Carey.
c. Select the invoice to be paid.
d. In the Total Payment column, input the amount to be paid
e. Select the payment means by clicking the icon in the toolbar or right-click in the incoming
f. Click the Cash tab.

g. In the G/L Account field, choose cash on Hand.
h. In the Total field, right-click and choose Copy Balance Due.
i. Click OK and the screen for Payment Means will exit.
j. Click Add.
k. A system message will appear: You cannot change this document after you have added it
Continue?
Page 68 / 81

l. Click Add
To retrieve the journal entry made in Incoming Payment:
a. Still in Incoming Payment window, click the Last Data Record icon in the toolbar.
c. You will be led to the next screen.
Page 69 / 81

d. Click OK or Cancel to exit from the current screen
Exercises:
Enter the payment of the following customers:

January 21, 20XX Received from Britney Houston Php 3,352.80
January 22, 20XX Received from Whitney Spears Php 5,588.00
January 22, 20XX Received from Elvis Presley Php 2,235.20
January 23, 20XX Received from Michael Jackson Php 7,823.20
January 24, 20XX Received from Paul McCartney Php 4,470.40
View the transaction journal report for January 21 – 25, 20XX and submit to your instructor
Page 70 / 81

Chapter 11
General Ledger
This report enables you to generate a list of journal entries posted to the company database
according to various criteria.
Generating the General Ledger Report

a. Go to Financials > Financial Reports > Accounting > General Ledger
b. The General Ledger – Selection Criteria will appear.

c. Uncheck Business Partner since this would refer to Subsidiary Ledgers of all customers and
vendors.
d. The Accounts must be checked.
Page 71 / 81

e. Click x between # and Account.

f. Enter the desired posting date range.
g. Click OK.
Page 72 / 81

Chapter 12
Trial Balance
A trial balance is a book keeping or accounting report that lists the balances in each of an
organization's general ledger accounts. (Accounts with zero balances will likely be omitted.) The debit
balance amounts are listed in a column with the heading "Debit balances" and the credit balance
amounts are listed in another column with the heading "Credit balances." The total of each of these two
columns should be identical.
In a manual system a trial balance was commonly prepared by the bookkeeper in order to
discover whether math errors and/or some posting errors were made. Today, bookkeeping and
accounting software has eliminated those clerical errors. This means that the trial balance is less
important for bookkeeping purposes since it is almost certain that the total of the debit and credit
columns will be equal.
However, the trial balance continues to be useful for auditors and accountants who wish
to show 1) the general ledger account balances prior to their proposed adjustments, 2) their proposed
adjustments, and 3) all of the account balances after the proposed adjustments. These final balances
are known as the adjusted trial balance, and these amounts will be used in the organization's financial
statements.
Generating the Trial Balance Report

a. Go to Financials > Financial Reports > Financial > Trial Balance
Page 73 / 81

b. The Trial Balance – Selection Criteria will appear.

c. Uncheck Business Partner since this would refer to Subsidiary Ledgers of all customers
and vendors.
d. The Accounts must be checked. Click x between # and Account.
e. Enter the desired posting date range. Click OK.
f. The Trial Balance Report will be shown.
g. Change to desired level from Level 1 to Level 5.
h. You can also hide the titles by clicking ―Hide Titles‖ checkbox
i. Submit the generated Trial Balance Report to your instructor.
Page 74 / 81

Chapter 13
Adjustments
Adjusting entries are journal entries made at the end of an accounting cycle to update certain
revenue and expense accounts and to make sure you comply with the matching principle.
The matching principle states that expenses have to be matched to the accounting period in which
the revenue paying for them is earned. There are four main types of accounts that need to be adjusted:
prepaid expenses, accrued expenses, unearned revenues and accrued revenues.
The two major types of adjusting entries are:
a. Accruals are for revenues and expenses that are matched to dates before the transaction has
been recorded.
b. Deferrals are for revenues and expenses that are matched to dates after the transaction has
been recorded.
Accruals
Accruals are adjustments for 1) revenues that have been earned but are not yet recorded in
the accounts, and 2) expenses that have been incurred but are not yet recorded in the accounts. The
accruals need to be added via adjusting entries so that the financial statements report these amounts.
Some accrued items for which adjusting entries may be made include:
 Salaries
 Past-due expenses
 Income tax expenses
 Interest income
 Unbilled revenue
Deferrals
In accounting, this means to defer or to delay recognizing certain revenues or expenses on the
income statement until a later, more appropriate time. Revenues are deferred to a balance sheet
liability account until they are earned in a later period. When the revenues are earned they will
be moved from the balance sheet account to revenues on the income statement.
Some deferred items for which adjusting entries would be made include:
 Prepaid insurance
 Prepaid rent
 Office supplies
Page 75 / 81

 Depreciation
 Unearned Revenue
Completing the Adjusting of Entries
To prevent inadvertent omission of some adjusting entries, it is helpful to review the ones from
the previous accounting period since such transactions often recur. It also helps to talk to various
people in the company who might know about unbilled revenue or other items that might require
adjustments.
Page 76 / 81

Chapter 14
Financial Statements
Navigate the system for the list of journal entries made through the document Journal Entry.
a. Go to Financials > Financial Report > Financial > Balance Sheet/Profit and Loss Statement
b. When Balance Sheet/Profit and Loss Statement/Cash Flow Report

– Selection Criteria window appears, enter the desired range dates
c. Click OK
d. Submit the Balance Sheet and Profit or Loss Statement to your instructor
Page 77 / 81

Chapter 15
Closing Entries
To access:
a. Go to Administration> Utilities > Period End Closing.

b. When Period End Closing – Selection Criteria window appears Enter the following:
Period – 20XX
From 20XX-01
To 20XX-02
Retained Earnings Account – Aquino, Capital
Period-End Closing Account – Income Summary
c. Click Execute
d. In the period end closing windows, do the following:
 Due date and document date: February 28, 20XX
 Click APPROVED or click the check boxes (to close nominal accounts to Aquino, Capital)
 Click Execute
Page 78 / 81

To generate the journal entries made:
a. Go to Financials > Financial Report > Accounting > Transaction Journal Report.
b. When Transaction Journal Report – Selection Criteria window appears, choose Closing
Balance in the Original Journal field.
c. Enter the desired range dates: From 02.28.XX to 03.01.XX.
d. Click OK.
e. Submit the transaction journal report to your instructor.
Page 79 / 81

Chapter 16
Post-Closing Trial Balance
Generating the Trial Balance Report

a. Go to Financials > Financial Reports > Financial > Trial Balance.
b. The Trial Balance – Selection Criteria will appear.
c. Uncheck Business Partner since this would refer to Subsidiary Ledgers of all customers
and vendors.
d. The Accounts must be checked. Click x between # and Account.
e. Enter the desired posting date range.
f. Click Add Closing Balances checkbox. Click OK.
g. The Trial Balance Report will be shown. Change to desired level from Level 1 to Level 5.
h. Click Hide Titles checkbox.
Note: The profit and loss account balance must be zero.
i. Submit the generated Trial Balance Report to your instructor.
Page 80 / 81

**nothing follows**
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FUNDAMENTALS OF ACCOUNTING

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

TABLE OF CONTENTS .................................................................................................................................. 2

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Cash Receipts Journal ............................................................................................................................... 64

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Basic Accounting Principles

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Computerized Accounting System

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Special Features of Computerized Accounting

Advantages of Computerized Accounting

1. Better quality work

2. Lower Operating Costs

4. Facilitates Better Control

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Computerized accounting ensures accuracy in accounting records and statements. It prevents

Computerized accounting facilitates standardization of accounting routines and procedures.

8. Minimizing Mathematical Errors

Accounting and SAP Business One

SAP software is:

SAP Business One Basic Navigation

1. Double click on the SAP Business One logo on your desktop.

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

2. In the Login Window, choose ―Change Company‖.

3. The Choose Company window will pop up.

4. Enter and select the following information:

Menu Bar and Toolbar

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

There are three tabs under the Main Menu:

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

a. To access the Change Password window, choose

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

a. Go to Administration>System Initialization > General Setting

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

SAP Business One offers two input tools:

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

____________1. It is the method in which financial information is gathered, processed, and

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Print Preview 1. Selection list 9.

Find 2. Dropdown list 10.

First data 3. Link arrow 11.

Next record 4. Payment means 12.

Previous record 5. Print 13.

Last data 6. Form Setting 14.

Export to Excel 7. Transaction 15.

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Balance Sheet Income Statement

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

SAP CHART OF ACCOUNTS

Balance Sheet Accounts

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Profit and Loss Accounts

Two functions for maintaining the chart of accounts:

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

2. Choose Financials >Edit Chart of Accounts to:

QG - Fundamentals of Accounting - Professors printed on 9/13/2019 1:00 PM

Add the following accounts:

G/L Account Name Level Title / Active