PILAR COLLEGE OF ZAMBOANGA CITY, INC.

R.T. LIM BOULEVARD, ZAMBOANGA CITY

BASIC EDUCATION DEPARTMENT

PAASCU Accredited Level III
A.Y. 2020-2021

SENIOR HIGH SCHOOL

GRADE 11

LEARNING
MODULE in
FUNDAMENTALS OF ACCOUNTANCY,
BUSINESS & MANAGEMENT (ABM) 2
Unit Topic:
Lesson 5 : Books of Accounts, Banking Transactions and
Taxation

Jade A. Salvador
NAME: ______________________________________________
11 - Our Lady of Mt. Carmel
SECTION: ___________________________________________

MRS. ROWENA L. ESTERO

TEACHER
Subject Area: Fundamentals of Accountancy, Business & Management 2 Quarter: SECOND
Unit Topic: Books of Accounts, Banking Transactions and Taxation Time Allotment: 180 minutes

Lesson 5: Accounting Books, Banking Transactions

and Taxation

INTRODUCTION

Accounting records are the records of a firm's financial transactions and current financial position.
Accounting records are necessary for tax purposes, legal accountability and adequate financial oversight. \

Banking fundamentals are concepts and principles relating to the practice of banking. Banking is an
industry that deals with credit facilities, storage for cash, investments, and other financial transactions. The
banking industry is one of the key drivers of most economies because it channels funds to borrowers with
productive investments.

In this lesson, the main focus for discussion is the accounting books, banking transactions and taxation.

OBJECTIVES: 10. Describe the nature of a bank

Students will be able to:
1. Differentiate the journal from the general ledger
2. Determine the normal balance of an account
3. Prepare journal entries to record basic business
transaction
4. Determine balances of accounts using the t-
account.
5. Identify the types of bank accounts normally
maintained by a business.
6. Differentiate a savings account from a current or
checking account.
7. Prepare bank deposit and withdrawal slips.
8. Identify and prepare checks.
9. Identify and understand the contents of a bank
statement.
Motivation
reconciliation statement.
11. Identify common reconciling items and
describe each of them.
12. Analyze the effects of the identified
reconciling items
13. Define income and business taxation and
its principles and processes.
14. Explain the principles and purposes of
taxation.
15. Prepare the list of sources of gross income
from compensation and gross income from
business, and the corresponding personal
and additional deductions.
16. Distinguish individual from business
taxation.
17. 5. Explain the procedure in the
computation of gross taxable income
and tax due. 6. Prepare the BIR forms.

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 DISCUSSION

Definition of Terms
Journal A chronological listing of the firm’s transaction, including the amounts, accounts that
are affected, and in which direction the accounts are affected.
Ledger The accounting book in which the accounts and their related amounts are recorded in
the journal are posted periodically. This book is called the “book of final entry”
because the balance of accounts in the ledger is used to prepare financial statements. A
ledger is sometimes called the “modified T-account”.

What is a Normal Account Balance?

A normal balance is the expectation that a particular type of account will have either a debit or a
credit balance based on its classification within the chart of accounts. It is possible for an account
expected to have a normal balance as a debit to actually have a credit balance, and vice versa, but
these situations should be in the minority. The normal balance for each account type is noted in the
following table.

Account Type Normal Debit Balance Normal Credit Balance

Asset Yes
Contra Asset Yes
Liability Yes
Contra Liability Yes
Equity Yes
Contra Equity Yes
Revenue Yes
Contra Revenue Yes
Expense Yes
Gain Yes
Loss Yes

What are Journal Entries in Accounting?

In an accounting career, journal entries are by far one of the most important skills to master. Without
proper journal entries, companies’ financial statements would be inaccurate and a complete mess.

An easy way to understand journal entries is to think of Isaac Newton’s third law of motion, which
states that for every action, there is an equal and opposite reaction. So, whenever a transaction occurs
within a company, there must be at least two accounts affected in opposite ways.

For example, if a company bought a car, its assets would go up by the value of the car. However,
there needs to be an additional account that changes (i.e., the equal and opposite reaction). The other
account affected is the company’s cash going down because they used the cash to purchase the car.

Finally, just like how the size of the forces on the first object must equal that of the second object, the
debits and credits of every journal entry must be equal.

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 DISCUSSION Example of Journal Entries and
T=Account Balance

JOURNAL ENTRIES
Date Account Title PR Debit Credit

May 01 Rent Expense P 4,500.-

Cash P 4,500.-
To record rent paid for the month

02 Office Equipment 8,000.-

Accounts Payable 8,000.-
To record purchase of equipment on
account

08 Supplies 400.-
Cash 400.-
To record purchase of supplies

10 Advertising Expense 770.-

Cash 770.-
To record payment of advertising

15 Cash 8,900.-
Accounts Receivable 8,900.-
To record receipt of cash from
customers

20 Accounts Payable 1,500.-

Cash 1,500.-
To record payment of accounts

24 Owner’s Drawing 7,000.-

Cash 7,000.-
To record withdrawal of owner

29 Utilities Expense 520.-

Cash 520.-
To record payment of telephone bill

30 Accounts Receivable 18,000.-

Professional Fees 18,000.-
To records fees billed to customers

31 Repairs and Maintenance 650.-

Cash 650.-
To record repairs of office equipment

31 Utilities Expense 1,100.-

Cash 1,100.-
To record payment of electricity bill

CASH
5/15 P 8,900 5/01 P4,500
5/08 400
5/10 770
5/20 1,500
5/24 7,000
5/29 520
5/31 650
5/31 1,100
Total P 8,900 P16,440
Balance P 7,540
=======

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 DISCUSSION
Bank Accounts

A bank account is a financial account with a banking institution, recording the financial transactions
between the customer and the bank and the resulting financial position of the customer with the bank
Types of Bank Accounts
1. positive or debit balance 2. negative or credit balance
Other types:
Automatic transfer service account Individual Savings Account
Joint account Low-cost account
Money market account Numbered bank account
Negotiable Order of Withdrawal account Nostro and vostro accounts
Overdraft Free Account Personal account
Savings account Time deposit / certificate of deposit
Transactional account Tax-Exempt Special Savings Account
Transaction deposit

Savings Account Current or Checking Account

A kind of deposit which is Current accounts or checking accounts are generally non-bearing deposits,
evidenced by a passbook wherein deposit slips are used when cash deposits are made and checks are
and which is required to be issued when withdrawals are made.
presented when deposits and
withdrawals are made.
 Standard Current Accounts – cheque-books, cash and debit cards,
Types of Current or overdraft facilities and monthly or quarterly bank statements, often with
Checking accounts internet access and telephone banking facilities
include:  Accounts with Extras – such as travel insurance, roadside assistance,
for a small monthly fee. Can include medical support for a larger
monthly fee.
 Simple Cash Accounts – no cheque-books or internet or overdraft
facilities
 Accounts for High Earners – come with personally tailored options
and a high level of personal support from the bank
 Children’s Accounts – usually combined with savings accounts
 Young People’s Accounts
 Student Accounts – usually interest free overdrafts and free gift or cash
incentives for joining. Check out Studentbanker.co.uk for lots of great
help and advice about student banking.
 Graduate Accounts – usually good interest rates on overdrafts, loans
and mortgages
 Foreign Currency Accounts – for those needing frequent transactions
in a currency other than sterling
 Euro Accounts – same as the above except with the Euro
 Special Accounts – which cater for particular religious beliefs so that
normal banking conveniences can be accessed without offending certain
religious practices

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 DISCUSSION

Examples of Bank Deposit and Withdrawal Slips

Deposit Slip
Passbook

Withdrawal Slip

Parts of a check

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 DISCUSSION

BANK RECONCILIATION STATEMENT

Nature of a bank reconciliation statement
Bank reconciliation is the process of comparing the bank's statement of your checking account with your
own records. This function is essentially the same whether performed for business accounts or personal
ones.
If you've reconciled properly, you should know your account balance to the penny.
When you open up and maintain a bank account, it sometimes is difficult to keep up with all the banking
terms that your financial institution throws at you. "Reconciliation" is a good one to know; it involves
keeping track of your money.
Reconciliation, also known as reconciliation of accounts and reconciling or balancing your checkbook, is a
set of mathematical procedures. These procedures guarantee that the amount shown on your checkbook
register matches the amount the bank says you have in your account.

Purpose of a bank reconciliation statement

Bank reconciliation statements reconcile the bank's records with your company's general ledger. This
reconciliation should be completed monthly to check for errors or unauthorized withdrawals. Bank
reconciliation statements are an important part of the financial auditing process that every business must
do.
Reconciling Items and Procedures used in Bank Reconciliation
1. Deposits in Transit
Deposits in transit are deposits that you have made and recorded in your ledger but that do not yet appear
on the bank's statement. Compare the statement with your ledger and record all of the deposits in transit on
the bank reconciliation form, usually located on the back of the bank statement.

2. Outstanding Checks
Outstanding checks are those that you have issued and recorded in your ledger but do not appear on the
bank statement. Compare your ledger with the bank statement and record any outstanding checks on the
bank reconciliation.

3. Bank Charges or Credits

Your bank may charge monthly fees for services such as for having the checking account, processing wire
transfers, overdrafts and others. Interest-bearing accounts will earn interest every month as long as
minimum balances are maintained. Compare these charges and credits to your ledger. If you have not
already recorded them, do so now.

4. Bank Errors
Occasionally, the bank will make errors. Wires might be duplicated or checks from someone else's
account might be hitting your account. Bank reconciliations statements give the detailed transaction
history to help you find those errors to have the bank correct them.
5. Bank Fees
Bank reconciliation statements will list all bank fees that were charged to your account. You will need to
enter those bank fees into your general ledger to reconcile the statement. It is always a good idea to check
the fees to make sure your bank account is not being overcharged in error.

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 DISCUSSION Taxation

Taxation is the process or means by which the sovereign, through its lawmaking body, raises income to
defray the necessary expenses of government. Taxation is one of the inherent powers of the government
over the people. The primary purpose of taxation is to accumulate funds for the functioning of the
government machineries.
The basic principles of a sound tax system are financial adequacy, equality or theoretical justice and
administrative feasibility.
Generally, taxation involves the ability to pay principle of taxation and benefit principle of taxation.

Double taxation occurs when additional taxes are laid on the same subject by the same taxing jurisdiction
during the same taxing period and for the same purpose.

Taxation is based on the premises that a government cannot continue to exist and operate without financial
means.
Tax Laws refers to the rules constituting the law applicable to taxation. In the Philippines, these rules
include the Bureau of Internal Revenue Code and other statutes, regulations, the Constitution and
common-law court decisions. Tax law also refers to the area of legal study regarding these rules.

Taxes are enhanced contributions from persons and properties levied by the lawmaking body of the state.
Income Tax is a tax on a person's income, emoluments, profits arising from property, practice of
profession, conduct of trade or business or on the pertinent items of gross income specified in the Tax
Code of 1997 less the deductions and/or personal and additional exemptions, if any, authorized for such
types of income, by the Tax Code or other special laws.
Basic personal exemptions are arbitrary amounts allowed as deductions from gross income of the
individual taxpayers.
Additional personal exemptions are mandatory deductions allowed to qualified dependent children of
the individual taxpayers.
The Internal Revenue Code defines taxable income as: Gross income minus deductions allowed (other
than the standard deduction). In the case of the individual who does not elect to itemize his deductions for
the taxable year... the term taxable income means adjusted gross income, minus the standard deduction
and the deductions for personal exemptions provided in section 151.
In relation to taxes, the money owed to the government when required tax amount totals a greater number
than total tax payments previously made.
Income tax return is a document filed with the Internal Revenue Service or the state tax board reporting
all income, profits and losses of the business and other deductions as well as details about the taxpayer’s
tax refund or tax liability.
Tax returns often are set up in a worksheet format, where the income figures used to calculate the tax
liability are written into the documents themselves. Tax returns must be filed every year for an individual
or business that received income during the year, whether through regular income (wages), interest,
dividends, capital gains, or other profits.
A return of excess taxes paid during a given tax year; this is more accurately known as a "tax refund".
Form 1700 is the Annual Income Tax Return Form for Individuals Earning Purely Compensation Income
(Including Non-Business/Non-Profession Income).
This return is filed annually by every resident citizen deriving compensation income from all sources, or
resident alien and non-resident citizen with respect to compensation income from within the Philippines.
The return is filed on or before April 15 of each year covering income for the preceding taxable year.

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 PILAR COLLEGE OF ZAMBOANGA CITY, INC.
R.T. LIM BOULEVARD, ZAMBOANGA CITY

BASIC EDUCATION DEPARTMENT

PAASCU Accredited Level III
A.Y. 2020-2021

SENIOR HIGH SCHOOL

GRADE 11

RETURN THIS
MODULE 5
FUNDAMENTALS OF ACCOUNTANCY,
BUSINESS & MANAGEMENT (ABM) 2
Unit Topic:
Lesson 5: Books of Accounts, Banking Transactions and
Taxation

Lesson’s knowledge Check (Activity 1)

Activities 2 to 5
Assessment Page

Name: Jade A. Salvador Date Returned:

Section: 11 - Our Lady Of Mt. Carmel

MRS. ROWENA L. ESTERO

TEACHER
 Kindly answer the lesson’s knowledge check, activities 1 to 5 and the assessment part with all
honesty and sincerity. You may write your answers in the indicated spaces of the activity.
.

KNOWLEDGE CHECK

ACTIVITY 1: SURVEY SAYS!

Read the following questions and write your answer on the space provided for.
1. What do I understand about Books of accounts? In what aspect og my life will I be able to relate the
topic of books of accounts with?

Books of accounts define as location of all business transactions that are being
recorded. In relation to daily life activities, this topic reflects on daily transactions
you have done that is being recorded to personal journal or diary.

2. Integration No. 2 (Social Integration) How will I be able to use my knowledge on books of accounts
to help myself and the other members of my community?

Through the knowledge on books of accounts, it is

to help myself and the other members of
I my community by the application of
good communication of others in transacting to any bank accounts.

3. Integration No. 1: (ICV) What is taxation? What values am I expected to learn and develop in the
process of studying the topic of taxation? Why?
Taxation is the process or means by which the sovereign, through its lawmaking body, raises
income to defray the necessary expenses of government. Values to learn about taxation are the
sense of giving and receiving. Paying taxes will benefit the government and the constituents
means that it generate revenues to pay for the expenditures of government at all levels
4. Why is the preparation of bank reconciliation statement important in business? What benefit will it
brings in the management of cash of the business?
Bank reconciliation is the process of comparing the bank's statement of your checking account
with your own records. If you've reconciled properly, you should know your account balance to the
penny. Bank reconciliation statements are an important part of the financial auditing process that
every business must do.
5. Integration No. 3 (Lesson Across Discipline - Economics) Why is taxation important to the
economy of a country

Taxation is essential as it results to effective funding in different institutes and securities

in the country. It will lead to have contribution to our GDP. Having an effective tax
systems in the country, it will contribute to business activities and employment.

Short Essay Rubric:

Standard Excellent Very Good Good Fair

 Explains the topic with correct description and
provides related examples. 5 4 3 2
 Content shows connection of the concept and explains
sensible decision about the topic that can help achieve
the goal.

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 ACTIVITIES

ACTIVITY 2: Matching Type!

Directions: Match the description/meaning in Column A with the terms in Column B. Write only the
letter of the correct answer on the space provided before each number.
Column A Column B

B 1. Amounts deducted by the bank from the depositor’s

______ a. Current Account
balance representing the compensation charged by the
bank for its services to the depositor b. Commissions Charged by Bank

G 2. Mistakes in recording of transactions committed by

______
either the bank or the depositor c. Blank Check

E 3. A machine that dispenses cash and sometimes takes

______ d. Mobile Banking
deposits without the need for a human bank teller

D 4. The use of one’s mobile phone to do banking

______ e. ATM
transactions
f. Saving Account
A 5. A non-interest bearing deposit which uses deposit
______
slips for cash deposits and checks for withdrawals g. Errors in Recording

h. Endorsement

ACTIVITY 3: TRUE OR FALSE!

Directions: Write letter T if the statement is true and F if it is false on the space provided before
the number.

T
______1. The power of taxation is inherent in sovereignty being essential to the existence of every
Government. Hence, even if not mentioned in the Constitution, the State can still exercise
the power.

T
______2. The power of taxation is essentially a legislative function. Even in the absence of
any constitutional provision, taxation power falls to Congress as part of the general
power of lawmaking.

F 3. There are three kinds of double taxation – direct, indirect and imperfect.
______

T 4. One of the essential characteristics of a tax is that it is an enforced contribution.

______

T 5. Income tax is an excise tax.

______

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 ACTIVITIES

ACTIVITY 4: Multiple Choice!

Directions: Choose the best answer. Write the CAPITAL LETTER of your choice on the space
provided before each number. (STRICTLY NO ERASURES)
C
_______ 1. Which of the following refers to the process or means by which the sovereign, through its
lawmaking body, raises income to defray the necessary expenses of the government?
A. Police power C. Taxation
B. Eminent Domain D. Treaties
B
_______ 2. Which of the following is NOT among the nature of taxation?
A. It is a means by which the government raises income
B. The government solely benefits from it
C. The citizenry benefits from it
D. It is inherent in sovereignty
B 3. Which of the following is NOT among the basic principles of a sound tax system?
_______
A. fiscal adequacy C. theoretical justice
B. collection of tax D. administrative feasibility
A
_______ 4. Which of the following refers to the proportional contribution by persons and property levied by
the lawmaking body of the State by virtue of its sovereignty for the support of the government
and all public needs?
A. taxes B. special assessment C. license fees D. toll fees
A
_______ 5. Which of the following is NOT a source of tax laws?
A. Supreme Court Decisions C. Revenue Regulations by the Department of Finance
B. Treaties or International agreements D. Barangay resolutions

ACTIVITY 5: THINK ABOUT IT!

Directions: Answer the questions in two or three complete sentences. Write your answers inside the
box provided below
1. Integration No. 4 (Faith/ Biblical Reflection: Romans 13:6). How will you relate the bible verse with the lesson on
taxes: “For because of this you also pay taxes, f or the authorities are ministers of God, attending to this very thing”

Christians are called to do this because we believe that God is the one who has put
every human authority in their position. Context of this and other passages makes it
clear that Christians are obligated to disobey government when—and only
when—compelled to disobey God (Acts 5:27–29). As a general rule, believers are
commanded to cooperate with their government authorities.

2. What comparison can you make with the government during the time of Jesus Christ with the government that we have at
present?

Human governance, in general, works to restrain and punish those who commit
wrong. Governments act on behalf of God. Christians must contribute to the job that
God is accomplishing by paying taxes. Furthermore, Christians give respect and
honor to the authority that God has established. Acts 5:27–29, for example,
distinguishes between "submission" and "obedience."
Short Essay Rubric:
Standard Excellent Very Good Good Fair
Content shows connection of the concept and explains sensible 5 4 3 2
decision about the topic that can help achieve the goal.

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 SUMMARY

In this lesson, you learned the meaning of the different terms associated with books of
accounts, bank accounts and taxation. You also learned about the nature of each topic
discussed and its policies and procedures in relation to business.

ASSESSMENT

Directions: Identify the three (3) inherent powers of the state and explain briefly each in 2 or3
sentences.

Taxation1. It___________________________________________________________________
involves the abilitity of actors in the economy with their financial means towards government. Taxation can be
describe as a process of contributing finances that will benefit the country's constituents and the government.
___________________________________________________________________.
Police
2. Police power is being the most active power of the government. Police power is an inherent power that promotes
___________________________________________________________________
Power usually exercised in the form of mere regulation or restriction in the use of liberty or property for the promotion of the
____________________________________________________________________.
general welfare.
Eminent 3. The
____________________________________________________________________
power of eminent domain have the general welfare for their object. It is the conversion of private property into
domain
____________________________________________________________________ . for public use
public use. But, The sole direct constitutional restriction is that "private property shall not be seized
without reasonable compensation."

You have just completed the unit topics for the second
EXIT INSTRUCTIONS semester.

Congratulations!

SUPPORTING REFERENCES

Valencia, Edwin G., Basic Accounting Concepts, Principles, Procedures and Applications , . pages 491 – 499
http://www.ehow.com/about_5401776_kinds-bank-checks.html#ixzz16aZceGw2
http://www.ehow.com/about_5087595_bank-reconciliation.html#ixzz16sYyYkFD http://www.ehow.com/about_6619196_meaning-

reconciliation-banking_.html#ixzz16sZFC8Kjhttp://www.ehow.com/facts_5005165_what-purpose-bank-reconciliation-
statement.html#ixzz16sZT7ZJW

Income Taxation Made Easy by: Win Lu Ballada; pp. 1, 3-4

www.scribd.com

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