RECORDING

BUSINESS
TRANSACTIO
NS
ACCY 101 – FUNDAMENTALS OF ACCOUNTING
NOTRE DAME OF MARBEL UNIVERSITY
ANGEL QUEEN M. SAMORAGA, CPA
LEARNING OBJECTIVES
■ Explain the accounting cycle
■ Discuss the importance of a journal
■ Prepare journal entries in proper form
■ Describe the general ledger and understand what purpose it
serves.
■ Post entries to the general ledger
■ Prepare and explain the use of a trial balance
■ Perform steps in locating and correcting errors
Source documents

■Identify and describe transactions and

events entering the accounting process.
■Original written evidences contain
information about the nature and the
amounts of the transactions.
■Used as bases for journal entries
ACCOUNTING CYCLE
STEP 1: ANALYZING TRANSACTIONS

■ Identify the transaction from source documents

■ Indicate the accounts – either assets, liabilities,
equity, income or expenses – are affected by the
transaction
■ Analyze whether the accounts affected were
increased or decreased
■ Analyze whether to debit or credit the affected
accounts.
STEP 2: JOURNALIZING TRANSACTIONS

What is a JOURNAL?
- chronological record
of the entity’s
transactions.
- called the book of
original entry
1.Simple Entry
2.Compound Entry
STEP 3: POSTING TRANSACTIONS

■ CHART OF ACCOUNTS
– Listing of all the accounts and their accounts
numbers in the ledger
– Arranged in the financial statement order

■ POSTING
– Transferring the amounts from the journal to
the appropriate accounts in the ledger.
STEP 3: POSTING TRANSACTIONS

What is a GENERAL LEDGER?

■“reference book” of the
accounting system
■Used to classify and
summarize transactions
and to prepare data for
basic financial statements.
■Each account has its own
record in the ledger
■Information are organized
per account.
Journal Entry:
Utilities Expense 3,000.00
Cash 3,000.00
Ledger:

Account Name: UTILITIES EXPENSE

DATE EXPLANATION Ref DEBIT CREDIT
2017  Payment for utility   3,000.00 
           
           

Account Name: CASH

DATE EXPLANATION Ref DEBIT CREDIT
2017  Payment for utility    3,000.00
           
           
Journal Entry:
Accounts Receivable 300,000.00
Service Revenue 300,000.00

Cash 150,000.00
Accounts Receivable 150,000.00

Ledger:
Account Name: ACCOUNTS RECEIVABLE
DATE EXPLANATION Ref DEBIT CREDIT
2017  Recognition of revenue   300,000.00 
     Collection      150,000.00
           

Account Name: SERVICE REVENUE

DATE EXPLANATION Ref DEBIT CREDIT
2017  Recognition of revenue    300,000.00
           

Account Name: CASH

DATE EXPLANATION Ref DEBIT CREDIT
2017 Collection   150,000
           
STEP 4: PREPARE TRIAL BALANCE

What is a TRIAL
BALANCE?
■A list of all accounts
with their respective
debit or credit balances
■It is prepared to verify
the equality of debits
and credits in the
ledger at the end of
each accounting
period.
 PROBLEM DISCUSSION
Engracio Lucinada, Attorney-at-Law, opened his office on Sept 1, 2015. The following transactions were completed during
the month:
SEPTEMBER 210,000.0
2Deposited P210,000 in the bank in the name of the business. Cash 0
Lucinda, 147,000.0
4Bought office equipment on account from Daraga Corpo., P147,000 Capital
Office Equipment 0 210,000.00
Law Library 57,000.00
5Invested his personal law library into the business, P57,000 RentAccounts
Expense
Lucinda, 7,600.00
Payable 147,000.00
5Paid office Rent for the month, P7,600 Capital
Cash
Office Supplies 8,850.00 57,000.00
7,600.00
7Bought office supplies for cash, P8,850 Cash 7,600.00
Prepaid Insurance 1,860.00
12Paid for the premium for a one-year fire insurance policy on the equipment and theCash
library P1,860 1,860.00
Cash 24,600.00
15Received professional fees for services rendered, P24,600 Telephone
Service Expense 2,280.00
16Received and paid bill for the use of a landline, P2,280 Revenue
Cash
Salaries Expense 9,600.00 24,600.00
2,280.00
20Paid salaries of two part-time legal researchers, P9,600 Car Cash
Rental Expense 2,880.00 9,600.00
22Paid car rental expense, P2,880 Cash 2,880.00
Cash 21,200.00
25Received professional fees for services rendered, P21,200 Service Revenue 21,200.00
Paid Daraga Corp. a portion of the amount owed for the acquisition of the officeAccounts
equipment recorded 15,000.00
Payable
27 earlier, P15,000 CashWithdrawals 20,750.00 15,000.00
Lucinda,
30Lucinada withdrew cash for personal use, P20,750 Cash 20,750.00
LOCATING ERRORS
- Inequalities in the trial balance would indicate
the presence of possible errors

■ ERROR IN POSTING A TRANSACTION TO THE LEDGER

■ ERROR IN DETERMINING THE CORRECT ACCOUNT
BALANCES
■ ERROR IN PREPARING THE TRIAL BALANCE