FABM 2 ᴥ Date

ᴥ Description/Particulars
BOOKS OF ACCOUNTS ᴥ Post Reference/Folio
1. Journal ᴥ Debit Column
2. Ledger ᴥ Credit Column

Accounting Cycle - commonly referred to as STEPS IN JOURNALIZING

accounting process, is a series of procedures in the 1. Enter the date.
collection, processing, and communication of 2. Enter the debit account title and its amount.
financial information 3. Enter the credit account title and its amount.
4. Enter the explanation.
Accounting Cycle
Journalizing - process of recording the effects of
economic transaction in the journal

SPECIFIC STEPS IN JOURNALIZING

Procedures in Journalizing
A. Under the date column
1. The year is written in small figures at the top
of the first column.
2. The month of the transaction is written on
the first line of the column. The year and
the month are not repeated except at the top
of a new page or when there is change in the
month.
3. The day of each transaction is written in the
right sub-column of the date column. The
date of the transaction occurring on the same
day is repeated.

Journal - an accounting book that is used to
initially record business transactions and events
We may also call it journal notebook, general
journal or book of original entry.
PARTS OF A JOURNAL
ᴥ Heading
ᴥ Page Number
B. Under the account titles and explanation
column
1. The name of the account debited is written
first at the left margin of the account titles
and explanation column.
2. The name of the account credited is written
on the following line, indented about one-
half inch from the left margin.
3. The explanation is placed on the next line,
indented about one inch from the left
 margin. The explanation should be short but A ledger constitutes a group of accounts. It is also
sufficient enough to explain the entry. called the book of final entry. The simpler or
skeletal form of a ledger is the t-account.
C. Under the debit column
1. The debit amount is written on the debit What function do general ledgers serve in the
column opposite the debit account. accounting process?
ᴥ CLASSIFYING
D. Under the credit column
1. The credit amount is written on the credit How is the transfer of information happen in the
column opposite the credit account. posting process?
ᴥ The information is transferred from journals
Remember: to general ledger accounts.
ᴥ Do not put peso sign, comma and decimal
point when using columnar sheets. When
there are no centavos involved, a dash is
placed in the centavo column.
ᴥ Always leave one space after each journal
entry.
ᴥ Write the name of the book as in Journal or
General Journal at the upper portion of
every page.
ᴥ Put a page number on each sheet of journal.

E. Under the folio column

1. The folio or reference column is used to
indicate the account number of the account
titles debited or credited. No number
appears in this column until the posting
process is observed.
2. A single-space should be left blank after
each entry.

THE VENETIAN MODEL - also known as the

Double Entry Bookkeeping which was introduced
by Luca Pacioli

Ledger - refers to the accounting book in which the

accounts and their related amounts as recorded in
the journal are posted periodically
- known as the book of final entry because
the balance of accounts in the ledger is used to
prepare financial statements

A ledger account is an account or record used to

sort and store balance sheet and income
statement transactions.
Posting - process of transferring the records from
the journal to the ledger
Trial Balance - a list of accounts with open
balances in the general ledger
- proves the equality of the debits and the
credits in the general ledger
Trial Balance is a list of closing balances of ledger If the credit total is greater than the debit total, the
accounts on a certain date and is the first step account has a credit balance.
towards the preparation of financial statements.
It is usually prepared at the end of an accounting OPEN AND CLOSED ACCOUNTS
period to assist in the drafting of financial
statements. When the debit total and the credit total of an
account are equal, the account is said to be a closed
PROCEDURE IN TRIAL BALANCE account. This means that the account title shall
PREPARATION not be transferred anymore to the trial balance
1. Write the heading of the trial balance which because the account has a zero-balance.
includes the following:
ᴥ the name of the business or the owner On the other hand, when the debit total and the
ᴥ title of the form credit total of an account are not equal, the account
ᴥ date of the trial balance is called an open account because it has a
2. Provide a column for the accounts and two remaining ending balance. In this case, the account
money columns—a debit and a credit. title shall be transferred to the trial balance with
3. The accounts should be written in just one its corresponding account balance.
column arranged in the ff. sequence: JOANNA FRONDA (2/10/19)
ᴥ Assets
ᴥ Liabilities
ᴥ Capital
ᴥ Income
ᴥ Expenses
4. Write the amounts opposite the
corresponding accounts under the debit
money column if the account is a debit
balance and under the credit money column
if the account is a credit balance.
5. Foot the money columns and write the totals
in small pencil figures in the uppermost
portion of the space below the single ruling.
If the two totals are equal, write them in ink.
6. Draw double lines under the totals of the
debit and credit columns. Do not write the
totals in ink and do not draw the double
lines until debit equals the credit.

DEAD CLICARE

NORMAL BALANCES - the side of an account,

whether debit or credit, to which increases to the
account are recorded

ACCOUNT BALANCE - the difference between

the debit and credit total of an open account

If the debit total is greater than the credit total, the

account has a debit balance.