Business documents–external purposes: business’
sales invoice, cash sales invoice, charge invoice,
official receipt, provisional receipt, etc.
-is controlled by the Bureau of Internal Revenue
-one of the control measures of the government to
monitor and impose taxes
Business forms– internal purposes
-dont need to be registered with the BIR
-is used for the purpose of consistency
Ex: payroll forms, journal voucher, cash receipt
voucher, sales report form, etc.
Design of Business Documents and Forms
-design is up to the owner and the accountant to
decide
-must show important information
-must entail long term usage and project the image
they want for the business
Sales Invoice–sometimes called cash sales
invoice, charge invoice or service invoice
-it documents the services rendered or the
commodities sold by the customer
-like the official receipt, all information can be
located at the option of the designing accountant
Provisional Receipt– similar to official receipt
-the only difference is that the collector issue the
document upon arriving at the office and endorse
the collection to the company cashier, who will then
acknowledge it by issuing an official receipt
-some companies use this kind of receipt if the
payment by the customer is in form of check
-considered as temporary receipt and can’t be
considered as a good evidence to be kept
Official Receipt– components:
 the name of the business enterprise, the
address, and the proprietor (if single
proprietorship)
 The Tax Identification Number (TIN)-
usually placed below no.1; this is very
important, especially for the control
procedures of the BIR
 The amount-must be written in forms and
in figures
 The form of payment
-If collection is made in cash, same amount must
be seen as deposit in bank as cash deposit
-If collection is made in check, the same amount
must be seen as deposit in check deposit
 The signature of the authorized person
to accept collection– company will not
honor unauthorized signature
 The control number–can be written
anywhere within the document
COMPONENTS OF CASH RECEIPT VOUCHER:
 The heading consists the:
Name of the company; and
Name of the office form
 The cash receipt voucher no. is essential for
future referencing. Should there be a
problem with the entry, the no. can be used
as reference
 The body of the form: particulars, debit, and
credit
 Prepared by shows the responsibility of the
person who prepared the voucher
 Checked by shows the accuracy of the
transaction and the journal entry prepared
 Approved by shows that the journal entry is
now approved for entry in the company’s
book of account
COMPONENTS OF CASH PAYMENT VOUCHER:
 The heading, which consists the:
Name of the company; and
Name of the office form
 The cash payment voucher no. is essential
for future referencing. Should there be a
problem with the entry, the no. can be used
as a reference
 The body of the form: particulars, debit, and
credit
  Prepared by shows the responsibility of the
person who prepared the voucher
 Checked by shows the accuracy of the
transaction and the journal entry prepared
 Approved by shows that the journal entry is
now approved for entry in the company’s
books of account
 The name of the bank, check number, and
the amount–essential for recording purpose
and bank reconciliation purpose
 The received by portion is essential so we
will know who received the payment in case
there is a problem
 The check itself–should be crossed to
indicate that the check payment could only
be deposited to the account payee
-cannot be encashed
Journal Voucher– form where the company
journalize its transactions
Chapter IV
Account title - is a word used to describe the
transaction, which is generally accepted and
understood by the general user of a financial
statement.
Chart of accounts - is a list of account titles used
by business enterprises to describe their
transactions.
Asset Accounts
1. Cash - is generic account
a) cash on hand - denotes to money or cash
substitutes representing the collection of the
company awaiting deposit to the company's
depository bank the following banking day,
or if the company has collection on non-
banking day, it has no choice but to wait for
the next day.
b) cash in bank - denotes to the money of the
company that is in the bank awaiting
payment.
c) cash in fund - denotes to money placed in
a specific fund for a specific purpose.
petty cash fund - a fund intended to pay petty
expenses.
d) cash equivalent - refer to short-term
investments made by the company.
(Current asset)
2. Accounts receivable - refer to costumers'
account arising from selling activities.
3. Notes receivable - refer to account receivable
or collectible of the company and is supported
by a promissory note.
4. Merchandise inventory - refers to the
merchandise of the company intended for sale
in the course of its business operation.
5. Prepayments - advance payment made by the
company
Example:
 prepaid rent
 prepaid advertising
 prepaid insurance
 unused office supplies or unused store
supplies
6. Land - the land owned by the company that is
being used in business. It is classified as
investment.
7. Building - the infrastructure owned by the
company that is used in business.
8. Furniture and Fixtures - represents the
following: chair and tables, air conditioners,
cabinets, electric fans
9. Office equipment - account that includes the
following: computer, calculator, typewriter, fax
machine, photocopier, telephone units, store
equipment
10. Delivery equipment - account that is used
instead of transportation equipment sometimes.
Liability accounts
1. Accounts payable - represent the liability
accounts of the company, arising from
purchase of merchandise that is intended for
sale.
2. Notes payable - liability accounts supported by
a promissory note issued by the company.
3. Loans Payable
Capital accounts
“letter X represents the name of the owner”
1. X, Capital - refers to the capital account of the
owner.
2. X, Withdrawal - refers to the withdrawal made
by the owner.
Revenue accounts
1. Service income - can be used for companies,
which render services in order to earn and
income like the services rendered by: beauty
parlor, barber shop, repair shop
2. Interest income - company income earned out
of lending its money or depositing money with a
banking institution.
3. Sales - a revenue account for merchandising
type of business organization that is used in
selling merchandise.
4. Sales discount - represents cash discount
given to costumers for settling their accounts on
time.
5. Sales returns - represent actual returns made
by the costumers due to wrong delivery, wrong
shipment, or defective merchandise.
6. Sales allowances - represent no actual returns
but to an allowances given instead, for the
detective merchandise delivered.
Expense accounts
1. Purchases - are merchandise purchase, which
are intended for sale.
2. Purchase discount - is a discount given by
merchandizers when you pay your liabilities on
time.
3. Purchase returns - actual returns of
merchandise you return to your supplier due to
wrong delivery, wrong shipment, or defective
merchandise.
4. Purchase allowances - allowances given by
the supplier representing reduction of price for
purchased merchandise due to defects.
5. Salaries and wages - represent the labor
payments to employees of the company.
6. Employee benefits - represent the labor
payments to the employees other than the
basic payment that are highly discretionary on
the part of the employer.
Examples: bonuses, uniforms, meal allowances,
13th month pay, vacation and sick leave benefits
7. Office supplies expense - represents various
office supplies used by the office like coupon
bonds, pencils, ballpoint pen, papers, paper
clips, etc.
8. Utilities expense - expenses arising from light,
water, and telephone expenses.
9. Rent expense - the rental expenses of the
business.
10. Advertising expense - the cost of promotion
and advertising the products of the business for
the purpose of improving it sales performance.
11. Insurance expense - represents fire and
burglary insurance of various assets of the
business.
Accounting equation
Asset = Liabilities + Capital
Assets - are defined as resources controlled by the
entity as a result of past transactions or events
which future economic benefits are expected to
flow to the entity.
Liabilities - are present obligation of the entity
arising from past transactions or events which are
expected to result in an outflow to the entity.
Capital - is the residual interest in the assets of the
entity after deducting all of its liabilities.
4 Components of Capital Account
Increase:
 Investment – resources that the owner has
transferred to his business as a startup or
additional it can be cash or tangible assets:
land, building, furniture, etc.
 Revenues – increase in economic benefit
during the accounting period in the form of
inflow.
Decrease:
 Withdrawal – temporary withdrawal of the
owner, whether cash or other assets for
personal use
 Expenses – decrease in economic benefit
during accounting period in the form of an
outflow.
Sample
Via Nar Services paid one year rental in advance
for PhP 120 000.
 Analysis of transaction: Ledger – book of final entry, where you do posting

Analysis of the Transaction

Journal Entry Of the Transaction Equation

Assets = Liabilities + Capital
Elements
Journal Entry of the Transaction
Effects Increase No Effect No Effect

Debit Credit Specific

Prepaid
Account
Rent
Affected
Prepaid Rent 120,000.00
Debit
Treatment
Effects Decrease No Effect No Effect
Cash 120,000.00
Specific
To record the Cash
Account

payment of 1 year rental Treatment Credit No Effect No Effect

of summarized transactions.

Specialized Book of Accounts How to Use a Journal Sheet

 Service revenue journal – record all services
rendered on account only.
Sales Journal – if business is trading concern
 Purchase journal – record of purchases on
account only.
 Cash receipt journal – record all the cash
receipts of the company.
 Cash disbursement journal – record all cash
disbursements of the company
 General journal – record all transactions,
which are applicable to be included in the book
of accounts.
Designing the Column Headings
 Month – first column, written once in every
page
 Date – next column, written as it occurs
 Particulars –contains entry and explanation
Bar sign (#) – signifies that we are already finished
encoding our entry, and another can be encoded.
Open row – would indicate plan of inserting entry
later, which is an indication of cheating.
 P/R (posting reference) – only used when the
bookkeeper starts posting transactions in
ledger.
- Cell for posting reference no.
 Journal’s money column

a) Cash (debit and credit) 2 columns of journal money:

b) Accounts receivable  Debit money column - left
c) Accounts payable  Credit money column – right
d) Purchases – trading concern - Each column contains eight (8) smaller
Cost of Services – service concern columns, each having 1 digit, except for the
e) Sales – trading concern last which contains centavo
Service income – for service concern
f) General administration expenses Centavo can be written using:
g) Other accounts or sundry account  00
 Dash
F and G - should be summarized at the end of  Hyphen
every month
Double rule the totals – done after we finished
recording transaction in the book of accounts.
– used to signify the completeness of our recording
for a specific moth
Posting – the totals made in journal will be
transferred to general ledger

In posting, we have to remember the ff:

1. Transfer the amount in the same placement

it is taken out, that is, if the total is a debit,
transfer it to the debit side of the account in
the general ledger. Likewise, if the total is a
credit total, transfer it to the credit side of
the account the general ledger.
2. Whenever we transfer figures from the
journal to the ledger, posting reference is
necessary.

Example: GJ-8 = page 8 of general journal

Trail Balance – first preliminary report in

accounting