Journals - also called the “book of original entries”

- is the accounting record where business transactions are first recorded.

- business transactions are recorded in the journal through journal entries . This recording process is called
journalizing.

Ledger - also called the “book of secondary entries” or “book of final entries”
- systematic compilation of a group of accounts.
- it is used only after business transactions are first recorded in the journals . This recording process is called
posting.

Examples of special journals and their use are the following:

a. Cash Receipts Journal – is used to record all cash that had been received.
b. Cash Disbursements Journal – is used to record all transactions involving cash payments.
c. Sales Journal (Sales on Account Journal) – is used to record all sales on credit (on account)
d. Purchase Journal (Purchase on Account Journal) – is used to record all purchases of inventory on credit (or on account)

The normal balances of these accounts are listed below:

a. Asset Accounts – Debit Balance; however the normal balance of a contra asset account is credit.
In the above chart, the contra asset accounts are:
Allowance for Bad Debts,
Accumulated Depreciation (Accum. Deprn.) – Store Equipment
Accum. Deprn. – Off Eqpt
Accum. Deprn – Trans Eqpt Accum. Deprn – Building
b. Liability Accounts – Credit Balance
c. Equity Accounts – Owner’s, Capital account has a normal balance on the credit side while the Owner’s, Withdrawal
account has a normal balance on the debit side.
d. Income – Credit Balance
e. Expense – Debit Balance

Statement of Financial Position Increase (Normal

Decrease
Accounts Balance)

Asset Debit Credit

Liability Credit Debit
Owner’s Capital Credit Debit
Owner’s Withdrawal Debit Credit
Income Credit Debit
Expense Debit Credit

Business usually maintain two types of account: (1) savings account , and (2) checking or current account
A. Savings Accounts
• These are intended to provide an incentive for the depositor to save money.
• The depositor can make deposits and withdrawals using the form provided by the bank.
• Banks usually pay an interest rate that is higher than a checking account or a current account.
• Some savings accounts have a passbook, in which transactions are logged in a small booklet that the
depositor keep
• Some savings accounts charge a fee if the balance falls below a specified minimum
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B. Checking or Current Accounts

• Money held under a checking account can be withdrawn through issuance of a check
• Banks usually allows numerous withdrawals and unlimited deposit under this type of account.
• The interest rate for checking account is usually lower as compared to a savings account.
• The account holder or depositor of a checking account is normally provided at the end of the
month a bank statement showing all the deposits made, checks paid by the bank, and the
balance of the account.
• The depositor is given easy access to the funds as compared to a savings account.

Withdrawal Slip
Without a withdrawal slip, the bank will not allow you to get money from your account. The required information
in the withdrawal slip are:
• Account Name - the name of the depositor
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• Account Number – the unique identifier given by the bank for every account maintained
• Date of the withdrawal
• Type of account - savings or current
• Currency
• Amount to be withdrawn - the amount that the depositor wishes to withdraw from his account. The
amounts in words and in figures are indicated.
• Signature of the Depositor – this is the most important part in the withdrawal slip. The signature is a
proof that the depositor is authorizing the bank to get money from his account. Usually, the bank compares the
signature in the withdrawal slip against the signature in the bank records submitted during the opening of the
account.
1. Cross Check
It is marked to specify an instruction about the way it is to be redeemed. A common instruction is to specify that it
must be deposited directly into an account of the payee. It is usually done by writing two parallel lines on the upper left
portion of the check. A cross check cannot be encashed over the counter by the payee. It should be deposited to the payees
account.
2. Stale Check
A cheque which a bank will not accept and exchange for money or payment because it was written more than a
certain number of months ago. In the Philippines a check becomes stale if it exceed 6 months from the date of the check.
Share the following as an additional information to the learners: