Document no.

INTERNATIONAL SCHOOL OF ASIA AND THE PACIFIC ISAP-QMS-DCO-ILG (AE 13)

Effective Date:
TITLE: FINANCIAL ACCOUNTING AND REPORTING September 2020
Revision No. 00

RELATE TO PRACTICE
FINANCIAL ACCOUNTING AND REPORTING
MODULE NO._____
LESSON NO. _____
WORK SHEET
Name: Bangayan, Dexter A. Course, Year & Section: BSAc 1B
Date Accomplished: December 31, 2020 Score:_________ Percentage:_________

Why does a small store use single entry system while department store uses double
entry system?
A single-entry accounting system is a type of accounting in which each financial activity of a
business is reported as a single entry in a log. This method does not require formal training and is
typically used by new small businesses because of its simplicity and cost-effectiveness. Small
business or store uses a single-entry system because it is very easy to operate, very little needs to
be recorded (meaning, a lot of time saved). Businesses do not require special software or complex
systems to build a single-entry spreadsheet framework. They do not need staff with an accounting
experience, nor do they need to contact a trained accountant or accountant for their services. This
is because there is no need for a single-entry system to self-balance. A business is unlikely to
become overdrawn on its bank account, since the balance is continually updated. At a glance, a
small business owner can see their balance at any time.
The method of double-entry accounting refers to the practice of documenting transactions
in two separate accounts: credit and debit. These two elements have a somewhat different impact
on business accounts. Debits decrease income and liabilities, while increasing expenses and asset
accounts. Department Stores and companies uses double entry system because both the personal
and impersonal accounts are maintained under the double entry system, both the effects of the
transactions are recorded. It assures arithmetical accuracy of the books of accounts, for every
debit, there is a corresponding and equal credit. This is arrived by preparing a trial balance
periodically or at the end of the financial year. Prevents and minimizes frauds. Frauds can be even
detected early. Errors can be checked and rectified easily. The outstanding balances of receivables
and payables are determined easily since the personal accounts are maintained. Businesses can
compare the financial position of the current year with that of the past year/s. Helps to justify the
standing of business on the valuation date in comparison with the previous years' purchase, sales,
and stocks, incomes and expenses with that of the current year figures. The calculated net
operating results can be ascertained by preparing the trading and profit and loss for the year
ended and the financial position can be ascertained by the preparation of the balance sheet.
Government can easily decide on the tax to be calculated on the businesses net earnings.
Outsiders and stakeholders like suppliers, banks, holders of equity take a proper decision regarding
grant of credit or loans or subscribing for the shares.
SELF REFLECTION
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 Document no.
INTERNATIONAL SCHOOL OF ASIA AND THE PACIFIC ISAP-QMS-DCO-ILG (AE 13)
Effective Date:
TITLE: FINANCIAL ACCOUNTING AND REPORTING September 2020
Revision No. 00

FINANCIAL ACCOUNTING AND REPORTING

MODULE NO._____
LESSON NO. _____
WORK SHEET

Name: Bangayan, Dexter A. Course, Year & Section: BSAc 1B

Date Accomplished: December 31, 2020 Score:_________ Percentage:_________

1. What is Journal? Discuss.

 A journal is a chronological record of financial transactions listed by date. Traditionally, a
journal has been defined as the book of original entry. The entries in an accounting journal
are used to create the general ledger which is then used to create the financial statements
of a business. The journal is the primary and basic book for recording daily transactions.
Recording accurate entries into the journal show the correct financial status of the business
to not only people internally but also to external users.

2. What is Ledger? Discuss.

 A ledger is also known as the principal book, is a set of accounts in which the financial
information in the journals is summarized and posted. The ledger holds financial information
needed to make the financial statements. A ledger has been defined as the book of
secondary entry. It is used for making the trial balance and final accounts.
 There are two kinds of a ledger: General ledger and Subsidiary ledger
General Ledger represents the record-keeping system for a company's financial data with
debit and credit account records validated by a trial balance. The general ledger provides a
record of each financial transaction that takes place during the life of an operating
company.
Subsidiary Ledger stores the details for a general ledger control account. Once
information has been recorded in a subsidiary ledger, it is periodically summarized and
posted to a control account in the general ledger, which in turn is used to construct the
financial statements of a company. Examples of subsidiary ledgers are: Accounts payable
ledger, Accounts receivable ledger, Fixed assets ledger, Inventory ledger and Purchases
ledger

3. What is Special Journal? Discuss.

 Special journals are all accounting journals except for the general journal. These journals
are used to record specific types of larger information that would otherwise be recorded in
and overwhelm the general ledger. The total amounts in these journals are periodically
transferred to the general ledger in summary form. Transactions are recorded in these
journals in chronological order, making it easier to research transactions.
 Common examples of special journals are:

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INTERNATIONAL SCHOOL OF ASIA AND THE PACIFIC ISAP-QMS-DCO-ILG (AE 13)
Effective Date:
TITLE: FINANCIAL ACCOUNTING AND REPORTING September 2020
Revision No. 00

Sales Journal – used to record all sales on credit. This means the customer has not paid
but we will receive payment in the future.
Purchases Journal – used to record all purchases on credit. This means purchases we
have not paid for but will pay for in the future.
Cash Receipts Journal – used to record all receipts of cash for any reason. Anytime
money comes into the company, the cash receipts journal should be used.
Cash Disbursement Journal – used to record all payments of cash regardless of the
reason. Anytime cash leaves the company, it should be recorded in the cash disbursement
journal.

4. What is double-entry system? Discuss.

 Double-entry accounting is a bookkeeping method that keeps a company's accounts
balanced, showing a true financial picture of the company's finances. This method relies on
the use of the accounting equation Assets = Liabilities + Equity. Credits to one account
must equal debits to another to keep the equation in balance. Accountants use debit and
credit entries to record transactions to each account, and each of the accounts in this
equation show on a company's balance sheet.
 Double-entry system makes use of the following concepts:
Duality – views each transaction as having a two-fold effect on values. A value received
and a value parted with and each transaction is recorded using at least two accounts.
Equilibrium – requires each transaction to be recorded in terms of equal debit and credits.

5. What is the normal balance of Asset, Liabilities, Equity, Income, and Expenses?
 Asset accounts have normal balances on the debit side.
 Liability accounts have normal balances on the credit side.
 Equity accounts have normal balances on the credit side.
 Income accounts have normal balances on the credit side.
 Expense accounts have normal balances on the debit side.

6. What is contra account and adjunct account? Discuss.

 Contra account is used in a general ledger to reduce the value of a related account when
the two are netted together. A contra account's natural balance is the opposite of the
associated account. If a debit is the natural balance recorded in the related account, the
contra account records a credit.
 Adjunct account is an account in financial reporting that increases the book value of a
liability account. An adjunct account is a valuation account from which credit balances are
added to another account. The concept of an adjunct account can be contrasted with the
concept of a contra account, which decreases the amount of a liability account through a
debit entry.

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 Document no.
INTERNATIONAL SCHOOL OF ASIA AND THE PACIFIC ISAP-QMS-DCO-ILG (AE 13)
Effective Date:
TITLE: FINANCIAL ACCOUNTING AND REPORTING September 2020
Revision No. 00

ACTIVITY
FINANCIAL ACCOUNTING AND REPORTING
MODULE NO._____
LESSON NO. _____
WORK SHEET

Name: Bangayan, Dexter A. Course, Year & Section: BSAc 1B

Date Accomplished: December 31, 2020 Score:_________ Percentage:_________

What is the difference of Double-entry system and single-entry system, for you which
is better to use, why?’

Businesses have to keep a detailed accounting of their financial transactions. This process is
known as bookkeeping. The survival of the business depends on the owner’s ability to establish
good accounting practices.

The single-entry system is a method of recording financial transactions in an organization

where only a single entry is filed after an operation which can be either a debit or a credit
concerning the nature of the transaction. The single-entry system is a simple method that does not
requires skills and knowledge to implement. Single entry system cannot be used to prepare trial
balance and profit and loss account which means that it cannot help show the financial position of
the country. The double entry system is a method bookkeeping where for every debit entry there
is a corresponding credit entry, and for every credit entry, there is a similar debit entry. Double-
entry method of bookkeeping is a sophisticated method that requires skills and expertise to
accomplish and useful when making a trial balance and statement of financial situation for the
enterprise. Single-entry system is type of bookkeeping that is not for large, complex companies
unlike the double entry system. Double entry bookkeeping is way better to use because most
businesses, even most small businesses, use it for their accounting needs. An example of a double-
entry transaction would be if the company wants to pay off a creditor. The cash account would be
reduced by the amount the company owes the creditor. That would be the debit. Then, the
double-entry reduces the amount the business now owes to the creditor account as it has received
the amount of the credit the business is extending. That is the credit. Other advantages that
double-entry bookkeeping has over single-entry bookkeeping are that the owner can accurately
calculate profit and loss in complex organizations, financial statements can be prepared directly
from the books, and errors or fraud are easy to detect that’s why double entry system is better to
use than the singe-entry system.

SELF CHECK
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 Document no.
INTERNATIONAL SCHOOL OF ASIA AND THE PACIFIC ISAP-QMS-DCO-ILG (AE 13)
Effective Date:
TITLE: FINANCIAL ACCOUNTING AND REPORTING September 2020
Revision No. 00

FINANCIAL ACCOUNTING AND REPORTING

MODULE NO._____
LESSON NO. _____
WORK SHEET

Name: Bangayan, Dexter A. Course, Year & Section: BSAc 1B

Date Accomplished: December 31, 2020 Score:_________ Percentage:_________

1. D
2. B
3. D
4. C
5. A
6. A
7. A
8. C
9. A
10. B
11. D
12. A
13. C
14. B
15. D
16. C
17. C
18. A
19. D
20. A
21. A
22. B
23. A
24. C
25. B
“Call upon me in the day of trouble; I will deliver you, and you shall glorify me.”
(Psalms 50:15)

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