BASIC FINANCIAL ACCOUNTING AND REPORTING

Recording Business Transactions

by Win Ballada (2022)

The last step is optional and occurs at the

beginning of the next period.
Source documents identify and
describe transactions and events entering
the accounting process. Some of the more THE GENERAL JOURNAL
common source documents are: (the book of original entry)

● Sales invoices Office equipment xx

● Cash register tapes Cash xx
● Official receipts Accounts Payable xx
● Bank deposit slips
● Bank statements
● Checks Cash Office Accounts
● Purchase orders equipment Payable
● Timecards
● Statement of account xx xx xx

Accounting Cycle refers to a series of

sequential steps or procedures performed
to accomplish the accounting process.
Step 1: Identification of events to be
recorded
Step 2: Transactions are recorded in the
journal
Step 3 : Journal entries are posted to the
ledger
Step 4: Preparation of a trial balance
Step 5:Preparation of the worksheet
including the adjusting entries
Step 6: Preparation of the financial
statements
Step 7: Adjusting journal entries are
journalized and posted
Step 8: Closing journal entries are
journalized and posted
Step 9: Preparation of a post-closing trial
balance
Step 10: Reversing journal entries are
journalized and posted
Posting - transferring the amounts from
the general journal to appropriate
accounts in the ledger.
The Ledger - A grouping of accounts.
Used to classify and summarize
transactions and to prepare date for basic
financial statements.
TRIAL BALANCE
● Assets
● Liabilities
● Owner’s Equity
● Revenues
● Expenses
Listing of all ledger accounts, in order,
with their respective debit or credit
balances.
The Journal is the chronological record
of the entity’s transactions. It is called the
book of the original entry. The general
journal is the simplest journal.

The cycle is repeated each accounting

period. The first three steps in the
accounting cycle are accomplished during
the period. The fourth to the ninth steps
generally occur at the end of the period.
JOURNAL FORMAT

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BASIC FINANCIAL ACCOUNTING AND REPORTING
Recording Business Transactions
by Win Ballada (2022)

SIMPLE AND COMPOUND ENTRY

In simple entry - only two accounts are
affected – one account is debited and the
other is credited while the entry is referred
as a compound entry if a transaction
requires the use of more than two
accounts.

RULES OF DOUBLE ENTRY SYSTEM

● two or more accounts are

affected by each transaction
● the sum of the debits for every
transaction equals the sum of
the credit.
● the equality of the accounting
equation is always maintained.