ACC PLUS

Chapter 5: Journalizing transactions

LO:

1. What is a source document? How can learning its content help know what the business
received and parted with of value? Why would knowing this lead to the journalizing process?

What are source documents?

The first step in the accounting cycle is to identify the transactions/events,
specifically those that are accountable, or have financial bearing in the business. These
can be sales invoices, receipts, purchase orders, cash vouchers or anything that is of
monetary value. Then we analyze “what value did the business receive and what value
did it part with?” next we measure these assumptions using the Filipino peso as our
stable monetary unit of measurement regardless of its change in purchasing power.
2. What are the books of accounts? And what is the difference between the general journal and
the general ledger?

What is the difference between cash and accrual basis when recording income and
expenses?

What do they affect? Cash basis assumption Accrual basis of

assumption
Income Income is only recorded Income is recorded when
when you actually receive the payment is earned
the cash even if you haven’t
received it yet
Expenses Expenses is only recorded Expenses are recorded
when it is actually paid when you are billed even
though you haven’t paid
for it yet.
What is their It cannot be used as a It is a more accurate
representation? basis for the financial concept to apply since it
statement because it does shows a more meaningful
not recognize the accounts representation of the
receivable, financial statements.

It is a comparison of CASH
RECIPTS and CASH
DISBURSEMENT.
 What is the difference between single entry and double entry system for
bookkeeping?

Single entry bookkeeping Double entry bookkeeping

What are its affects?
system
Is primarily used in small
businesses
Records transactions that
only deal with cash and
personal accounts as well.
system
Is a two-fold system
Knows what the business
has received and what it
has parted value with.

3. Why are the charts same with the accounts within the general ledger?

What are the books of accounts?

The books of accounts are records of transactions kept by the business in order
for the accountants to communicate information about the business through financial
statements. There are two books of accounts , namely , the books of original entry and
the books of final entry.
 What is the book of original entry?

This is where financial transactions are recorded for the first time, it is made up
of the general journal and the specific journal.

o What is a general journal?

o What is a special journal?
 What is the book of final entry?
This is where transactions that where recorded in the journal are
transferred for final recording.
o What is a general ledger?
It’s skeletal form is that of a T-account, though its purpose is to
determine the amount of balances of an item or account in a thorough
manner.
o What is a subsidiary ledger?
4. How does the journalizing process work? What are its procedures?

What is the recording process?

 What is recording?
It is the first phase of accounting, wherein you write down
transactions that affect the business in what is called the journal.
 What is journalizing?

It is when you record business transactions in the journal.

o What is a journal entry?

 It is the entry/record made in the journal.
 What is a simple journal entry?
It is when one record has a debit and credit entry on both sides.
 What is a compound journal entry?
It is when a record has two or more debits and credit
transactions on both sides.

What are the procedures in filling-up a general journal?

1. First fill in the date column

2. Next, fill in the particulars column
Specifically:
 Enter the debit balance first (the value that the business received) next enter
the credit value (the value that the business parted with).
 If it is a compound journal entry, then group the debited amounts estimating to
at least 2 or 3 columns per debit/credit transaction, then leave a space (indent)
to distinguish the credit transaction from the debit transaction.
 Then indent another space for the explanation. State a brief but concise
explanation about the nature of the transaction.
3.

What is an opening entry?

The first date that an owner starts his/her business, it can also mean the
beginning balances for the next annual accounting period.

What is a chart of accounts?

Are a list of accounts/account titles to guide the bookkeeper in knowing what

account titles do the transactions affect.

How to correct an erroneous entry?

 Chapter 5

Journalizing transactions

What is a journal?
A journal is where you put your transactions in. it shows which accounts are
affected by the transaction. Mainly, it states what value the business receive and what
value did it part with, debit or credit value respectively.

There are 2 kinds of books of accounts:

Book of original entries- Are where you first jot down or record the
transactions that affect the accounts of your business, these are called journal entries.
There are 2 types of journals namely, the general journal and the specialized journal.

Book of final entries- Are where you transfer what you recorded in your
journals into what is known as a ledger. There are 2 types of ledgers, namely the general
ledger and the subsidiary ledger. The structure of a general ledger is that of a T-account.

Procedure for journalizing transactions:

1. Know what events/transactions that conspire affect the business

economically, specifically:
 Did the transaction effect the assets, liabilities and
equity within the business?
 Is it measurable? Are its values measurable in terms of
peso?
2. Next is find out the question what value did the business received in
the transaction and what value did it part with as well, in terms of the
accounts affected by the transaction.
3. Debit the value received by the business and credit the value that the
business parted with in the transaction.
4. When an accounts balance is debit , we call that a debit value,
conversely , we call it a credit value when its balance leans more to the
credit column.
Purchase order- evidence of our purchase

Invoice- issued receipt from the store we bought

Charge invoice- paid on credit/account

Cash invoice- paid with cash

general journal - is where transactions are recorded for the first time
Good afternoon Sir Servidad, I have a few questions that I’ve been meaning to get your
clarifications on, thank you and Godbless daan Sir sap ag reply :

1.) What is the difference in terms of purpose between journal and Ledger ?specifically:
a. Does journal only record the transactions that have occurred within the
business ? Unlike a ledger wherein as the books says its most basic format
takes the form of that of a T-account ?
b. Unlike a journal , the purpose of a general ledger is to find out the balance
of the individual accounts affected by the individual values that where also
affected by the transactions that it was under.
c. Journal does not show any balance it only states what transactions occur
within a given day of the business w/in that month /period
2.) Unsaon pag check sir if , kintahay , gipangita sa problem is ang total asets ,
liabilities , expenses etc. ? gamiton ba ang accounting equation para e double check
if sakto ban a nga mga values imong gi kuha for that particular nga gipangayo sa
problem?
3.) Sir regarding sa problem sa long quiz , sa last part ,aho cyang gi expanded
accounting equation sir, then if ahong e take in for account ang total owners equity
ingani ang result : 1,297,221+1,105,210 = 1,406,556+2,272,316
Wherein : total expenses+total assets= total liabilities+ total owner’s equity
But inig add up tanan tanan ang answer is : 2402431= 3678872 , dili cya equal
sir ? unsay explanation ani sir ?

4.) What is the purpose of the cash basis assumption sir if ang gi state sa libro is dili cya
feasible to use in the financial statements since dili accurate ang iyang depiction,
and if so naa cyay use when should we apply this concept sir in terms of accounting
, like what transactions would this assumption apply to ?