Fundamentals of Accountancy, Business and Management 1

BOOKS OF ACCOUNTS
What are the two books
of accounts? Why do
we need to have the
books of accounts?
BOOKS OF ACCOUNTS
o Finance records, ledgers, and journals that
compose the company’s accounts
o Ensure regulatory compliance as they serve
as proof of the business transactions of what
is reflected in the financial statements
o Two major books of accounts – the journals
and ledgers
JOURNALS
o A chronological record of all
company’s transactions listed by date
o Book of original entry

Journalizing – the recording of financial

information into the journal
GENERAL JOURNAL
o Displays the transactions date, account title
and explanations, references, and amounts
o Journal used to record all other business
transactions not recorded in the special
journals
GENERAL JOURNAL
LEDGERS
o Grouping of all accounts of a company showing its
respective outstanding balances
o Book of final entry

Posting – transferring of journal entries to the ledger

accounts to bring together the effect of the
transactions to the individual accounts of the
company
LEDGER
SPECIAL JOURNALS
o Used to record typical and similar types of transactions
1. Sales Journal – used in journalizing all sales of
merchandise on account
2. Cash Receipts Journal – used in journalizing all cash
received (including cash sales)
3. Purchases Journal – used in journalizing all purchases
of merchandise on account
4. Cash Payments Journal – used in journalizing all cash
paid (including cash purchases
SALES JOURNAL
CASH RECEIPTS JOURNAL
PURCHASES JOURNAL
CASH PAYMENTS JOURNAL
SUBSIDIARY LEDGER
o Group of accounts with similar characteristics

1. Accounts Receivable Ledger – used in tracking

individual accounts receivable balances of
company’s customers
2. Accounts Payable Ledger – used in tracking
individual accounts payable balances of
company’s creditors
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
EVALUATION
Kerokeropi & Co. distributes school and office supplies. Transactions
with customers are paid with cash or check only. Kerokeropi
transacts with three major customers that have established
accounts. These approved customers routinely buy on credit.
Following is information for June regarding each of the credit customers:
Customer 1 beginning balance, ₱30,000. Purchases on account on June
5, ₱14,000. Payment on account on June 17 ₱10,000.
Customer 2 beginning balance, ₱15,000. Purchase on account on June 15,
₱76,000. Payment on account on June 26, ₱50,000.
Customer 3 beginning balance ₱0. Purchase on account on June 9,
₱85,000.