BOOK OF ACCOUNTS

The Bureau of Internal Revenue in the

Philippines requires that all business or
persons, required by law, to pay
internal revenue taxes shall keep
permanently-bound books of accounts
for registration or stamping. Books of
accounts are records in which all
accounts and transactions of a
business are maintained on a regular
basis.
This books of accounts are typically a
journal and a ledger or their
equivalents such as subsidiary ledgers
and simplified books of accounts.
 JOURNAL
A journal functions as a financial diary. It is
used to record chronologically all
transactions of a business as they occur.
Since it is the first evidence of a formally-
recorded transaction, it is commonly
referred to as the book of original entry.
 ADVANTAGES OF JOURNAL
1. It provides a systematic and chronological
record of transactions
2. It simplifies the ledger as some details in
the journal need not be written in the
ledger
3. It provides adequate explanation of each
entry and presents necessary information
about the transactions such as the account
debited and credited and related amounts
 ADVANTAGES OF JOURNAL

4. It ensures that the double-entry

bookkeeping system is observed when
recording transactions
5. It helps in solving misunderstanding in
business because it serves as proof and
legal evidence.
 2 types of journal
1. Special Journal = are journals used to
record recurring transactions.

2. General Journal = which looks like a

two column columnar notebook, is the
journal used to record all other business
transactions not recorded in the special
journal
 Ledger
Is a collective record of individual
accounts used by a business. It is used
to sort all entries in the journal in
chronological order and to group all
transactions that affect individual
accounts in order to facilitate the
preparation of financial statement.
 2 types of ledger
1. General ledger = is used to accumulate
and classify individual transactions

2. Subsidiary ledger = is used to

provide detailed information
about a specific ledger account.
 ADVANTAGES OF LEDGER
1. It provides detailed information about
revenues and expenses in one place
2. It provides detailed information about assets,
liabilities and owners equity of the business
3. It assists management in monitoring business
performance through information in individual
ledger accounts.
4. It serves as tool for auditors to track the flow
of business transactions for a given period of
time