BOOKKEEPING AS AN ENTREPRENEURIAL TOOL

•BOOKKEEPING
  is the chronological recording of
business transactions and events.
“BOOKKEEPING IS THE SAME FROM ACCOUNTING

“ BOOKKEEPING is DIFFERENT from ACCOUNTING”

• BOOKKEEPER- those who works on the financial records
of a business in a systematic manner.

THE BOOKKEEPING VALUES

• Assets
• Liabilities
• Proprietorship
 ASSETS IABILITIES PROPRIETORSHIP
Cash Accounts payable A, Capital
Accounts receivable Notes payable B, Drawing
Equipment Mortgage payable Sales
Furniture Taxes payable Income
Inventory Salary payable Fees
Machine Electricity expense
Building Telephone expense
Land Rent expense
Water expense
Transportation expense
In bookkeeping, all items are measured in terms of money, in order to record
what the business owns.

- How much cash is available?

- How much is the cost of the equipment?
- What does the company owe, and how much?
- How much is the net worth of the business?
 THE BOOKKEEPING EQUATION

ASSET= LIABILITY + PROPRIETORSHIP

 ASSETS LIABILITIES PROPRIETORSHIP

Furniture 5000.00 Accounts 2000.00 Jay, Capital ?

Payable
Machine ? No Payable   Ron, Capital 10000.00
Accounts 7000.00 Accounts ? Sales 2000.00
Receivable Payable
Inventory 6500.00 Notes Payable ? Sales 10000.00
Cash ? Salaries 2620.00 Income 1380.00
Payable
Furniture 5000.00 Accounts 2000.00 Jay, Capital ?=3000.00
Payable
Machine ?=10000.00 No Payable   Ron, Capital 10000.00
Accounts 7000.00 Accounts ?=5000.00 Sales 2000.00
Receivable Payable
Inventory 6500.00 Notes Payable ?=3500.00 Sales 10000.00
Cash ?=4000.00 Salaries 2620.00 Income 1380.00
Payable
DOUBLE-ENTRY BOOKKEEPING-It is an accounting system where every
transaction is recorded in two accounts: a debit to one account and a credit to
another.

TRANSACTION is the exchange of goods or services for a certain sum of money.

1. Jose Cruz invested 5000.00 in cash in a barber shop.
Analysis:

ASSETS = LIABILITIES + PROPRIETORSHIP

CASH Jose Cruz, Capital

a. 5000.00 a. 5000.00
1. Jose Cruz purchased furniture worth 3,000.00
Analysis:

ASSETS = LIABILITIES + PROPRIETORSHIP

Cash Furniture Juan Cruz, Capital

a. 5000.00 = = a.) 5000.00

b. -3000.00 3000.00 =  

Bal. 2000.00 3000.00 = 5000.00

Debit and Credit
In recording business transactions, two-fold effect (debit and credit) is recorded in
each individual entry: a debit entry in one account and a credit entry in another
account.
DEBIT SIDE CREDIT SIDE
1. Increases in asset 1. Decreases in asset
2. Decreases in liabilities 2. Increases in liabilities
3. Decreases in capital 3. Increases in capital
4. Increases in withdrawal(decreasing capital) 4. Decreases in withdrawal
5. Increases in expenses 5. Decreases in expenses
6. Decreases in sales income, or fees 6. Increases in sales
Example:

Name of Accounts Debit (Effect) Credit ( Effect)

Cash 5000.00  
(increse in asset)

Cruz, Capital   5000.00

(increse in capital)
JOURNAL- It is a book of original entry in which transactions
are first recorded in specific manner.

JOURNALIZING-The process of recording business transactions

in a journal book or journal sheet.
• The journal sheets are divided into five columns which
correspond to date, name of accounts and explanation, post
reference, debit and credit.
The steps in journalizing are:
1. Write the month, date, and the year in the date column.
2. Write the debit accounts in the extreme left of the name of accounts column.
3. Write the amount of debit or debit entry in the debit column.
4. Write the credit accounts below the debit accounts; indent the first letter of the
credit accounts.
5. Write the amount of credit or credit entry in the credit column.
6. Write a simple explanation of the transaction.
7. Skip one space on the journal sheet before proceeding to the next transaction.
 Date 1991 Name of accounts P.R Debit Credit
and explanation

Debit Account a) April 18 Cash 11 5000.00  

Credit Account   Cruz, Capital 31   5000.00
Explanation   To record      
investment
           
Debit Account b) April 20 Furniture 13 3000.00  
Credit Account   Cash 11   3000.00
Explanation   To record furniture      
bought
           
Debit Account c) April 21 Equipment 12 2500.00  
Credit Account   Accounts payable 21   2500.00
Explanation To record an account

   
Debit Account d) April 26 Cash 11 1200.00
Credit Account   Income 41   1200.00
Explanation   To record income earned      

           
Debit Account e) April 27 Transportation expense 51 637.00  

11   637.00
 
 
Credit Account Cash
Explanation To record transportation
LEDGER-It is the book of final entry. Related accounts indicating debits and credits are
transferred from the journal to respective accounts in the ledger.
Parts of a ledger sheet:
A ledger sheet consists of eight main columns namely;
date column,
particular column,
post reference column,
debit amount column,
date column,
paricular column,
post reference column,
and credit amount column.
Posting- The process of transforming information from the journal in the ledger
Steps in Posting
1. Enter the date of the journal entry in the account to be debited in the ledger.
2. Enter the debit amount in the debit column.
3. Enter the cross reference in the ledger account to show that the debit was posted from the journal.
4. Enter the cross reference in the journal to show that the debit was posted to the appropriate
account.
5. Enter the data of the journal entry in the account to be credited.
6. Enter the amount in the credit column of the account to be credited.
7. Enter the cross reference in the ledger to show that the credit was posted from the journal.
8. Enter the cross reference in the journal to show that the credit was posted to the appropriate
account.
Trial balance-It is a proof of equality of all debit and credit balances in the ledger at the
end of a period of time. Trial balance contains the information needed to prepare the
income statement and the balance sheet.

Steps in preparing a trial balance:

1. Write the heading in three lines showing the name of the business on the top line, the trial
balance on the next line, and the end of the bookkeeping period on the third.
2. Write the names of accounts on the wid column and write the account titles.
3. Write the debit balances in the debit column as obtained from th ledger.
4. Write the credit balances in the credit column as obtained from the ledger.
5. Place a single rule at the last debit and credit entries.
6. Double-rule the entries showing total debits equal total credits.
Income Statement-It is a financial record that provides
information about the profitability of the business operation.
The guiding principle is income minus expense equals net
income. Net income is the profit of the business. If the
expenses are greater than the income, the business is said to
have incurred loss of income. If the income is greater than the
expenses, the business is said to have gain.
 Cruz Barber Shop

Income Statement

April 30, 1991

Income 1200.00

Less: Expenses  

Transportation 637.00

Net Income 563.00

Balance Sheet- It is recorded that shows the
financial condition of the business on a specific
date. It shows the real accounts or those accounts
that are permanent in nature and do not cease or
disappear in the books. They are the assets,
liabilities, and propriertorship of the business.
 Cruz Barber Shop
Balance Sheet
April 30, 1991

Assets Liabilities

Cash 2563.00 Accounts Payable 2500.00

Equipment 2500.00    
Furniture 3000.00 Proprietorship  
    Cruz, Capital 5000.00
    Add Net Income 563.00
    Total Proprietorship 5563.00
Total Assets 8063.00 Total Liabilities and Prop 8063.00
ENTREPRENEURSHIP AS A CAREER
Desire to become an Entrepreneur
- Becoming an Entrepreneur means embarking on a new venture with a high degree
of risk event to the extent of losing employment as long as one could gain
satisfaction from a task that fits one's skill.

“They come from a group of people with generally higher than average level of
success in their previous jobs.” – Harvard University and Massachusetts Institute
of Technology
 ORGANIZING AND MANAGING A SMALL
BUSINESS

Micro Business
- newly emerged business having small capital. However there are ups
and down in the business climate such that the product highly saleable
before are not as saleable after a while.
- Bankruptcy Up and downs
- Quality of products
- New or latest products
SYSTEMATIC PLANNING-“In an orderly or logical way”

- Business design
- Products
- Expectations
- Possibilities
- Customers
- Competitors