AE21 MIDTERM_REVIEWER

LESSON 1_INTRODUCTION TO COMPUTERS

Introduction
 Its an electronic device which accepts input, processes data, stores data, and produces
output.
 Input refer to whatever is sent to a Computer system
 Data refer to the symbols that represent facts, objects, and ideas
 A computer processes data in a device called the central processing unit (CPU)

How Computer Works

Definition
 Computer can be defined as "An electronic and electromechanical device"
 It intakes raw data, manipulates it and gives accurate output in the form of information.

Characteristics of Computer

Main characteristics of the computer can be summarized as:

1. Speed: Computer is very fast and accurate device. It can process millions and millions of
instructions within seconds.
2. Accuracy: Computer results are highly accurate.
3. Memory: Computers have a large amount of memory to hold a very large amount of data or
information.
4. Diligence: Computer is free from problems like lack of concentration, and confusions &
tiredness.
5. Versatility: We can perform different types of tasks on computer. It is therefore versatile in
nature.
6. Power of Remembrance: Unlike humans, computer can store things for unlimited period of
time.
Types of Computer

There are three basic kinds of computers:

 Analog Computer
 Digital Computer
 Hybrid computer

Analog computers
 Analog computers are analog devices. That is, they have continuous states rather than
discrete numbered states.
 An analog computer can represent fractional values exactly, with no round off.
 They handle or process information, which is of physical nature.
 Examples: Computers in Chemical plants monitoring temperatures, pressures, voltage, etc.

Now these days, we rarely came across of analog computers in routine life.

Digital Computer
 A digital computer uses discrete states.
 A binary digital computer uses digits and process data, which is essentially in a binary state.
 Example: Personal Computers, scientific calculators, etc.

Hybrid Computer
 It refers to computer that contain both digital and analog circuit.
 For Example: A digital thermometer converts the temperature (analog signals) and gives the
output of measurement in digits (digital signal)

Classification of Computer
 Micro Computer
 Mini Computer
 Mainframe Computer
 Super Computer

Micro Computer
 Micro computer is general purpose computer, it is also called Personal Computer (PC).
 It uses microprocessor, CPU for manipulating data.
 It is smaller than Mini Computer, Mainframe Computer and Super computer.
 It has storage capacity up to Terabytes (TB)
 It is used in general purpose. Example: IBM PC, Apple Macintosh, Sony VAIO, etc.

Mini Computer
 Mini computer is smaller than Mainframe and Large than micro computers.
 It is cheap than mainframe computers.
 It has storage capacity less than micro computers.
 Examples: Data General, Wang Laboratories, Apollo Computer, and Prime Computer.

Mainframe Computers
 Mainframe Computers are very powerful large-scale general-purpose computers.
 It’s memory capacity is in megabytes (MB) and storage capacity is in terabytes (TB).
 They are used where large amount of data are to be processed.
 Examples are: IBM 4300 series, IBM Enterprise, System/9000 series

Super computer
 A supercomputer is a computer which has high processing capacity – particularly speed of
calculation.
 It has high storage capacity in Petabyte (PB).
 It has number of CPUs to make more speed.
 Example: IBM roadrunner, Cray Jaguar, Cray Titan, IBM Sequoia, etc.

Advantages & Disadvantages of Computer

Advantages
 It make sour work easier, faster and accurate.
 It saves our cost and time while collecting, manipulating and storing large amount of data
 It helps in worldwide communication

Disadvantages
 It is harmful to health , it affects eyesight and backbones if we work too long.
 It creates unemployment.
 It makes people dumb and dull.

Two Main Parts of a Computer:

1. Hardware
 “ The physical components of a computer system is called hardware. All these physical
components of a computer have mass and can be touched with our hands.
 “ The hardware that is used to supply input is called input device and hardware that is used to
display output is called output device. The hardware that is used to process data is called
processing device.

2. Software
 “Software is commonly known as programs, consists of all the instructions that tells the
hardware, how to perform each task. Software is held either on your computers CD-ROM,
 DVD, hard disk and copied from the disk in to the computer RAM (Random Access
Memory), when required.

Examples of computer hardware :

1. Monitor
2. Motherboard
3. CPU(Microprocessor)
4. Main memory (RAM)
5. Expansion cards
6. Power supply unit
7. CD drive
8. Hard disk drive (HDD)
9. Keyboard
10. Mouse

Types of Computer Software

1. System Software
 System software coordinates the complete system hardware and provides an environment or
platform for all the other types of software to work in. It is the most basic type of software in
any computer system, which is essential for other programs, applications and indeed for the
whole computer system to function.
 (System software examples – Microsoft Windows XP, Mac OS, Linux, Windows Vista,
Ubuntu etc.

2. Application Software
 Application software are those that help the user perform the tasks of his/her choice. They are
non-essential software which are installed and run depending upon the requirements, in the
environment provided by the system software.
 (Application software examples - MS Office, OpenOffice, Media Players, MS Access,
educational software, media development software, Antivirus software, etc. )

3. Programming Software
 Programming software are used to write, test, debug and develop other software programs
and applications. The various programming language editors such as Eclipse- a Java
language editor, come under this category. They are used for creating both the system as well
as application software.
 (Programming software examples – Turbo C, Xilinx, Kiel, compilers, debuggers, Integrated
Development Environment (IDE), etc.)

4. Utility Software
 They are usually small programs that help in the management of the hardware and the
application software, installed on a computer.
 Utility Software is used to remove any problem or solve a complex situation in computer.
 (Example- Disk defragmenters, Disk cleaners, etc.)

LESSON 2_INTRODUCTION TO COMPUTERS – PART 2

A Computer is an electronic device, operating under the control of instructions stored in its own
memory, that can accept data (input), process the data according to specific rules, produce
information (output), and store the information for future use.

DATA and INFORMATION

Data is a collection of unprocessed items, which can include text, numbers, images, audio, and
video. Information conveys meaning to users.

Data is essentially the plain facts and statistics collected during the operations of a business.
While information allows a business to make informed decisions by presenting data in a way
that can be interpreted by management.

PERSONAL COMPUTER (PC)

A personal computer (pc) is a computer that can perform all of its inputs, processing, output,
and storage activities by itself and is intended to be used by one person at a time.

Types of Personal Computers

 A Laptop, also called a notebook computer, is a thin lightweight mobile computer with a
screen in its lid and a keyboard in its base. Designed to fit on your lap and for easy transport.
 Tablets are usually smaller than laptops but larger than phones. It is a thin, light-weight
mobile computer that has a touch screen.
 A Desktop or Desktop Computer is a personal computer designed to be in a stationary
location. Another type of desktop is called all-in-one, does not contain a tower and instead
uses the same case to house the display and the processing circuitry.
 A server is a computer dedicated to providing one or more services to other computers or
devices on a network. Services provided by servers include storing content and
noncontrolling access to hardware, software, and other resources on a network.

MOBILE AND GAME DEVICES

A mobile device is a computing device small enough to hold in your hand. Some mobile devices
are Internet capable, meaning that they can connect Internet wirelessly. You can often exchange
information between the Internet and a mobile device or between a computer or network and a
mobile device.

Types of Mobile Devices

 A smartphone is an Internet-capable phone. Other apps are available through an app store is
typically associated with the phone. With most smartphone models, you can also listen to
music, take photos, and record videos. Most smartphones have a touch screen.
 Digital camera is a device that allows you to take photos and store the photographed images
digitally.
 A portable media player is a mobile device on which you can store, organize, and play or
view digital media. Digital media includes music, photos, and videos.
 A digital media player or streaming media player is a device, typically used in a home,
that streams digital media from a computer or network to a television, projector, or some
other entertainment device.
 E-Book Reader is a mobile device that is used primarily for reading e-books. An e-book or
digital book, is an electronic version of a printed book, readable on computers and other
digital devices.
 Wearable device or wearable is a small, mobile computing consumer device designed to be
worn. Two popular wearable devices are activity trackers and smartwatches.

A computer contains many electric, electronic, and mechanical components known as hardware.

These components include input devices, output devices, a system unit, storage devices, and
communications devices. (Shelly et al., 2008)

Input Devices

An input device is any hardware component that allows you to enter data and instructions into a
computer. Six widely used input devices are the keyboard, mouse, microphone, scanner, digital
camera, and PC video camera.

Common Input Methods

 Keyboard contains keys you press to enter data and instructions into a computer or mobile
device.
 Pointing device is an input device that allows a user to control a small symbol on a screen,
called the pointer.
 Voice and Video Input Some mobile devices and computers enable you to speak data
instructions using voice input and to capture live full-motion images using video input.
 Scanner is a light-sensing input device that converts printed text and images into a form the
computer can process.

Output Devices
An output device is any hardware component that conveys information to one or more people.
Four commonly used output devices are a printer, a monitor, speakers, and a portable media
player

Common Output Methods

 Printer is an output device that produces text and graphics on a physical medium, such as
paper or other material.
 Display is an output device that visually conveys text, graphics, and video information.
 Speakers, Earbuds, and Headphones allow you to hear audio, that is, music, voice, and
other sounds.

Memory and Storage

Memory consists of electronic components that store instructions waiting to be executed and
data needed by those instructions.

Storage holds data, instructions, and information for future use.

Software Tools for Productivity and Creativity

SYSTEM SOFTWARE: The Power behind the Power

 Application software is software that has been developed to solve a particular problem for
users—to perform useful work on specific tasks or to provide entertainment.
 System software enables the application software to interact with the computer and helps the
computer manage its internal and external resources.

There are three basic components of system software that you need to know about.
 Operating systems: An operating system is the principal component of system software in
any computing system.
 Device drivers: Device drivers help the computer control peripheral devices.
 Utility programs: Utility programs are generally used to support, enhance, or expand
existing programs in a computer system.

THE OPERATING SYSTEM: What It Does

The operating system (OS), also called the software platform, consists of the low-level, master
system of programs that manage the basic operations of the computer.
In particular, they handle the control and use of hardware resources, including disk space,
memory, CPU time allocation, and peripheral devices. Every general-purpose computer must
have an operating system to run other programs.

CPU Management
The central component of the operating system is the supervisor. Like a police officer directing
traffic, the supervisor, or kernel, manages the CPU (the central processing unit or processor). It
remains in memory (main memory or primary storage) while the computer is running and directs
other “nonresident” programs (programs that are not in memory) to perform tasks that support
application programs.

File Management
A file is (1) a named collection of data (data file), or (2) a program (program file) that exists in a
computer’s secondary storage, such as a hard disk or CD/DVD. Examples of data files are a
word processing document, a spreadsheet, images, songs, and the like.
FINDING & HANDLING FILES
Files containing programs and data are located in many places on your hard disk and other
secondary storage devices. The operating system records the storage location of all files. If you
move, rename, or delete a file, the operating system manages such changes and helps you locate
and gain access to it.

Task Management
A computer is required to perform many different tasks at once (multitasking). In word
processing, for example, it accepts input data, stores the data on a disk, and prints out a
document—seemingly simultaneously. Most desktop and laptop operating systems are single-
user systems that can handle more than one program at the same time—word processing,
spreadsheet, database searcher. Each program is displayed in a separate window on the screen.

Security Management
Users gain access in the same manner as accessing their email—via a user name (user ID) and a
password. A password is a special word, code, or symbol required to access a computer system.
If you are using a computer at work, you may give yourself a password.
 LESSON 3_MICROSOFT OFFICE EXCEL

INTRODUCTION TO MICROSOFT OFFICE EXCEL

 Excel is a computer program used to create electronic spreadsheets.

 Within Excel, users can organize data, create charts, and perform calculations.
 Excel is a convenient program because it allows the user to create large spreadsheets,
reference information from other spreadsheets, and it allows for better storage and
modification of information.
 Excel operates like other Microsoft (MS) Office programs and has many of the same
functions and shortcuts of other MS programs

OVERVIEW OF THE EXCEL SCREEN

Microsoft Excel consists of workbooks.

Within each workbook, there is an infinite
number of worksheets.
Each worksheet contains columns and rows.
Where a column and a row intersect is
called the cell. For example, cell B6 is
located where column B and row 6 meet.
You enter your data into the cells on the
worksheet.

The tabs at the bottom of the screen

represent different worksheets within a
workbook.
You can use the scrolling buttons on the left
The Name Box indicates what cell you
are in. This cell is called the “active
cell.” This cell is highlighted by a
black box.

The is used to edit your formula on

your selected cell.

The Formula Bar indicates the

contents of the cell selected. If you
have created a formula, then the
formula will appear in this space.

FORMAT MENU

You can change the

colors, borders, sizes,
alignment, and font of a
certain cell by going to
the “Cell” option in the
Format Menu.

VIEW MENU

 You can change the view of your work so

that it is page by page.
 ENTERING FORMULAS

 When entering numerical data, you

can command Excel to do any
mathematical function.
 Start each formula with an equal
sign To enter the same formulas
for a range of cells, use the colon
sign

ADDITION FORMULAS
To add cells together use the “+” sign.
To sum up a series of cells, highlight
the cells, then click the auto sum
button. The answer will appear at the
bottom of the highlighted box.
SUBTRACTION FORMULAS
 To subtract cells, use the “sign.

DIVISION FORMULAS
 To divide cells, use the “/” sign.

MULTIPLICATION FORMULAS
 To multiply cells, use the “*” sign.

TIPS FOR ENTERING THE DATA

 To highlight a series of cells click

and drag the mouse over the
desired area.

 To move a highlighted area, click

on the border of the box and drag
the box to the desired location.

 You can sort data (alphabetically,

numerically, etc). By highlighting
cells then pressing the sort shortcut
key.
 You can cut and paste to move
data around.

 To update your worksheets, you

can use the find and replace action
(under the Edit Menu).

 To change the order of

worksheets, click and drag the
worksheet tab to the desired order.

LESSON 4_CHARTS & GRAPHS IN EXCEL

Types of Chart in Excel

How to make a Chart or Graph in Excel

1. Enter your data into Excel.

2. Select the Chart Type
3. Highlight your data and click ‘Insert’ your desired graph.
4. Switch the data on each axis, if necessary.
5. Adjust your data’s layout and colors.
6. Change the size of your chart’s legend and axis labels.
7. Change the Y-axis measurement options, if desired.
8. Reorder your data, if desired.
9. Title your graph.
10. Export your graph or chart.

Creating Chart or Graph In Excel

1. Enter your data into Excel

2. Select the Chart Type

3. Highlight your data and insert your desired graph into the spreadsheet.
4. Switch the data on each axis, if necessary.
 If you want to switch what appears on the X and Y axis, right-click on the bar graph, click
Select Data, and click Switch Row/Column. This will rearrange which axes carry which
pieces of data in the list shown below. When you’re finished, click OK at the bottom.
5. Adjust your data’s layout and colors.
 To change the layout of the labelling and legend, click on the bar graph, then click the Chart
Design tab. Here, you can choose which layout you prefer for the chart title, axis titles, and
legend. In my example shown below, I clicked on the option that displayed softer bar colors
and legends below the chart.
6. Change the size of your chart’s legend and axis labels.

7. Change the Y-axis measurement options, if desired.

8. Reorder your data, if desired.
 To reorder your data, right-click on your graph and click Select Data to reveal the same
options window you called up in Step 3 above. This time, click the up and down arrows, as
shown below, to reverse the order of your data on the chart.
9. Title your graph.
 To type the title, Click on your graph and go to the Layout Tab and click Chart Title. You
can type your desired title accordingly.

10. Export your graph or chart

 Right click on chart and choose copy and paste it to the desired location and save
accordingly.

COMMON FORMULAS AND FUNCTIONS IN EXCEL

IMPORTANT EXCEL FORMULAS & FUNCTIONS

1. Average Function
2. Sum Function
3. SumIf Function
4. Count Function
5. Counta Function
6. Countif Function
7. Concatenate Function
8. IF Function
9. Drop Dow List
10. V Look up
11. PIVOT Table

1. Function
 The AVERAGE function in Excel is a statistical function and is one of the most used
functions in Excel. In the financial sector, it is mostly used to calculate the average sales and
the average revenue for a specific period of time.
2. SUM Function
 The SUM function adds values. You can add individual values, cell references or ranges or a
mix of all three.
 For example:
=SUM(A2:A10) Adds the values in cells A2:10.
=SUM(A2:A10, C2:C10) Adds the values in cells A2:10, as well as cells C2:C10.
3. SUMIF Function
 SUMIF is a function in Excel which adds all the numbers in a range of cells based on one
criteria. It is a worksheet function.

4. COUNT Function
 The COUNT Function is an Excel Statistical function. This function helps count the number
of cells that contain a number.
5. COUNTA Function
 COUNTA function is an important function under the group of “count” functions. It counts
all the non-empty cells. It counts any type of data that includes: Numeric, Texts,
Alphanumeric, Logical values, Error, Date/Time, Empty Text String (“ “)and space in a cell.

6. COUNTIF Function
 COUNTIF Function in Excel Countif function is the combination of Count and If function
where count function counts the cells as per the criteria which have set in
the Countif’s statement. 
7. CONCATENATE Function
 The CONCATENATE function combines the text from multiple ranges and/or strings, but it
doesn’t provide delimiter or Ignore Empty arguments. CONCATENATE can join up to 30
text items together.

8. function
 The IF function is one of the most popular functions in Excel, and it allows you to make
logical comparisons between a value and what you expect. So an IF statement can have two
results. The first result is if your comparison is True, the second if your comparison is False.
9. V LOOK UP FUNCTION
 VLOOKUP is an Excel function to get data from a table organized vertically. Lookup values
must appear in the first column of the table passed into VLOOKUP.  VLOOKUP supports
approximate and exact matching, and wildcards (* ?) for partial matches.

PIVOT TABLE
 Pivot tables are used to summarize, sort, reorganize, group, count, total or average data
stored in a database. It allows its users to transform columns into rows and rows into
columns. It allows grouping by any data field. Pivot tables are the perfect solution when you
need to summarize and analyze large amounts of data.
 A PivotTable is an interactive way to quickly summarize large amounts of data. A
PivotTable is especially designed for:

1. Querying large amounts of data in many user-friendly ways.

2. Subtotalling and aggregating numeric data, summarizing data by categories and
subcategories, and creating custom calculations and formulas.
3. Expanding and collapsing levels of data to focus your results, and drilling down to details
from the summary data for areas of interest to you.
4. Moving rows to columns or columns to rows (or “pivoting”) to see different summaries
of the source data.
5. Filtering, sorting, grouping, and conditionally formatting the most useful and interesting
subset of data enabling you to focus on just the information you want.
6. Presenting concise, attractive, and annotated online or printed reports
CREATE A PIVOT TABLE IN EXCEL FOR WINDOWS
 LESSON 5_REVIEW OF THE ACCOUNTING CYCLE

ACCOUNTING CYCLE
 The collective process of recording, processing, classifying and summarizing the business
transactions in financial statements is known as accounting cycle.
 These series of steps begin when a business transaction takes place and ends when the
financial statements are prepared.
 Accounting Cycle includes:
 Entering transaction
 Processing, classifying and adjusting the business transactions through the accounting
cycle
 Closing books of accounts at the end of an accounting period and
 Starting the cycle again for the next accounting period

ACCOUNTING CYCLE STEPS

The steps in the accounting cycle are as follow:

Step I – Identification of events to be recorded.
Step 2 – Transactions are recorded in the Joumal.
Step 3 – Journal entries are posted to the ledger.
Step 4 – Preparation of a Trial Balance.
Step 5 – Preparation of the worksheet including adjusting entries.
Step 6 – Preparation of the adjusted Trial Balance
Step 7 – Preparation of the Financial Statements
Step 8 – Closing entries are journalized and posted
Step 9 – Preparation of post-closing Trial Balance
Step 10 – Reversing joumal entries are journalized and

 Step 1. Identification of Events to be Recorded

 It means determining what transactions to record, i.e., to identity events which are to be
recorded.
 It involves observing activities and selecting those events that are of considered financial
character and relate to the organisation.
 The business transactions and other economic events therefore are evaluated for deciding
whether it has to be recorded in books Of account.
 For example, the value Of human resources, changes in managerial policies or
appointment of personnel are important but none of these are recorded in books of
account.
  However, when a company makes a sale or purchase. Whether on cash or credit, or pays
salary it is recorded in the books of account.

Types of events

 External events- are transactions that involve the business and another external party.
Examples includes sales, purchase, borrowing of money, payment of liabilities and the like.
 Internal events— are transactions that do not involve external party. Examples includes
production (cooking of barbecue) and casualty losses (e.g. destruction of properties due to
storm, earthquake and the like.)

4 basic steps in analyzing transactions:

1. Identify the transactions from source documents.

2. Indicate the accounts – either assets, liabilities, equity, income or expenses – affected by
transactions.
3. Ascertain whether each account is increased or decreased by the transactions.
4. Using the rules of debit and credit, determine whether to debit or to credit the account to
record its increase or decrease.

Source Documents
 Transactions and events are the starting point in the accounting cycle.
 By relying on source documents, transactions and events can be analyzed as to how they will
affect performance and financial position.
 Common source documents are: Sales Invoice, Cash Register tapes, Official Receipts, Bank
Deposit Slips, bank statements, checks, etc.

Examples of Source Documents

 Sales Invoices used for the sales of goods, if you buy groceries the grocery store will issue
you a sale invoice.
 Official Receipts used for sales of services, if you pay your tuition fee in school, the school
will issue you an official receipt.
 Delivery Receipt- is a document signed by the receiver of a shipment acknowledging the
receipt of the goods.
 Delivery Receipt- is a document signed by the receiver of a shipment acknowledging the
receipt of the goods.
 Check - is an instrument that orders a bank (drawee) to pay a person named on the check or
the bearer thereof (payee) a definite amount of money from the drawer’s bank account.
 Bank Deposit Slips - evidences a deposit to a bank account. It shows the date of deposit, the
bank account name and number, and the amount deposited.
 Bank Statement - a report issued by a bank (on a monthly basis) which shows the deposits
and the withdrawals during the period and the nun cumulative balance of a depositor's
bank account.

 Step 2 – Transactions are recorded in the Journal

The Journal
 The Journal – is a chronological record of the entity’s transactions.
 A journal entry shows all the effects of a business transaction in terms of debits and credits.
 Each transactions is first recorded in the Journal before posting it to the ledger.
 A Journal is called the book of original entry.

 The Standard Contents of a Journal

 LESSON 6_REVIEW Of THE ACCOUNTING CYCLE: WORKSHEET
AND ADJUSTING ENTRIES

The Worksheet
 This multi-column document provides an efficient way to summarize the data for financial
statement.
 The accountant generally prepares a worksheet when it is time to adjust the accounts and
prepare financial statements.
 The worksheet simplifies the adjusting and closing process. It can also reveal errors.
 It is a summary device used by accountants for his convenience.

Preparing the Worksheet

 Steps in preparing the worksheet:

1. Enter the account balances in the unadjusted trial balance columns and total the amounts.
2. Enter the adjusting entries in the adjustments columns and total the amounts.
3. Compute each account’s adjusted balance by combining the unadjusted trial balance and the
adjustment figures. Enter the adjusted amounts in the adjusted trial balance columns.
4. Extend the Asset, Liability and Owner’s Equity amounts from the adjusted trial balance
columns to the Balance Sheet columns. Extend the income statement amounts (Revenues and
Expenses) to the Income Statement columns. Total the Statements columns.
5. Compute profit or loss as the difference between total revenues and total expenses in the
income statement. Enter the profit or loss as a balancing amount in the Income Statement and
in the

Classification of Accounts
 Accounts are also classified as to:

1. Permanent also known as Real Accounts — these are the accounts whose balances are
carried over from one accounting period to another. These accounts are seen on the
Company’s balance Sheet and represent the actual worth of the company at a specific point
of time.

 The accounts that fall into permanent accounts are:

 Assets
 Liabilities
 Owner’s Equity — except Withdrawal accounts

2. Temporary — also known as Nominal Accounts — These are the accounts whose
balances are not carried forward from one accounting period to another. These accounts are
closed or transferred to permanent accounts at the end of an accounting period.

 The accounts that fall into the temporary account classification are:
 Revenue
 Expenses

Exercise l- Worksheet Preparation

 The May 31, 2021 trial balance for Abella Surveyor is presented as follows:
 The following information pertaining to the year-end adjustments were available:

a) The 360,000 prepaid advertising represents expenditure made on Nov l, 2020 for monthly
advertising over the next 18 mos.
b) A count of the ending supplies at May 31, 2021 amounted to P90,000
c) Depreciation on the surveying equipment amounted to PI 60,000
d) One-third of the unearned survey revenues has been earned at year-end.
e) At year-end, salaries in the amount have accrued.
f) Interest ofP60,000 on the notes payable has accrued at year end.

Required: Prepare the adjustments on the worksheet and complete the worksheet. Use Excel in
preparing your worksheet.

LESSON 7_REVIEW ON SPECIAL, COMBINATION JOURNALS AND

VOUCHER SYSTEM

SPECIAL JOURNALS
 Special journals are those that are designed to handle certain transactions such as cash
receipts, cash disbursements, sales, and purchases.
 Most firms record their transactions in the following special journals:

SALES JOURNAL
 The sales journal (also known as sales book and sales day book) is a special journal that is
used to record all credit sales.
 Every transaction that is entered in sales journal essentially results in a debit to accounts
receivable account and a credit to sales account
 The term sales refers to the sale of only those goods or merchandise in which the business
normally deals.
 The sale of used or outdated assets (such as old plant, machinery, equipment and newspapers
etc.) are not recorded in sales journal. These transactions are entered in general journal.

Format of Sales Journal

Posting entries from sales journal to subsidiary and general ledger

1. Posting to accounts receivable subsidiary ledger:

 At the end of each day (or immediately after the transaction has been performed), the
individual entries are debited to appropriate accounts in accounts receivable subsidiary
ledger.

2. Posting to general ledger:

 At the end of each month or another appropriate period, the column totals of sales journal are
posted to relevant general ledger accounts as follows:
 The total of accounts receivable & sales column is debited to accounts receivable account
and credited to sales account in the general ledger.

CASH RECEIPT JOURNAL

 The cash receipts journal manages all cash inflows of a business organization.
 In other words, this journal is used to record all cash coming into the business.
 For making entries in a cash receipts journal, the receipt of cash is usually divided into the
following categories:
 Receipt of cash from cash sales
 Receipt of cash from credit customers or receivables and
 Receipt of cash from other sources

Format of Cash Receipt Journal

PURCHASES JOURNAL
 Purchases journal (also known as purchases book and purchases day book) is a special
journal used by businesses to record all credit purchases.
 All cash purchases are recorded in another special journal known as cash payment journal or
cash disbursements journal.
 The amounts in the accounts payable columns are posted to the accounts payable subsidiary
ledger on a daily basis.

Format of Purchases Journal

CASH DISBURSEMENT JOURNAL

 The Cash Disbursement Journal records all cash outflows of the business. Everything that is
going to decrease cash will be recorded in this journal.
 This means that it will be a credit to cash, reducing cash. Such transactions might include:
 Expenses paid
 Assets bought
 Payments made to creditors
 Drawings
  Loan repayments

Format of Cash Disbursements Journal

Advantages of using Special Journals

 Reduces detailed recording. Using the special journal concept, individual posting is
eliminated. Only one posting for the total amount is made to the appropriate ledger account at
the end of the accounting month. For example, if a company had 500 purchases on account
during the month, the purchases account would only be debited one, not 500 times
 Permits better division of labor. Each special journal can be handled by a different person
allowing specialization and making the work more efficient.
 Permits better internal control. Allocation of work of special journal to individual person
ensure that no one person has conflicting responsibilities like the receipt and recording of
cash which ensure better internal control.

Disadvantages of using Special Journals

The disadvantages of Special Journals are as follows:

 Special journals can be very time consuming.
 Accounting of special journals can be very tedious and complex.
 The company might need to hire accounting professionals or experts for accounting of
special journals.

GENERAL JOURNAL
 GENERAL JOURNAL is the most basic of journals.
 When special journals are used, there are transactions that cannot be recorded appropriately
in special journals, these transactions are then recorded in the General Journal.
 The general journal is used for adjusting entries, closing entries, correcting entries, and all
transactions that do not belong in one of the special journals.
 If a general journal entry involves an account in a subsidiary ledger, the transaction must be
posted to both the general ledger control account and the subsidiary ledger account.

LESSON 8_REVIEW ON SPECIAL, COMBINATION JOURNALS AND

VOUCHER SYSTEM

VOUCHER SYSTEM
 A voucher system of control is used in accounting to ensure that payments made by a
business are properly approved and are documented and supported by the correct accounting
source documents.
 The voucher system in accounting can be used to support the purchase of goods or services
whether purchased on account or for cash

Diagram of Voucher System Process

Voucher System in Accounting Supporting Documentation
 The supporting documentation depends on the particular type of accounting transaction.
 In the case of a transaction with a supplier of goods the supporting documentation will
include the following.
1. Purchase requisition from the department requesting the goods
2. Purchase order produced by the purchasing department and sent to the supplier
3. Invoice from the supplier
4. Goods received note confirming the receipt of goods by the business

Information Included on the Voucher

 The voucher effectively collates the supporting documentation and summarizes the
transaction. The details included on the voucher include the following.
1. Voucher number and date. The vouchers are usually pre-numbered
2. Supplier invoice number, date, payment and discount terms, summary transaction details,
and the amount to be paid.
3. Payment approval signature.
4. Accounting ledger codes to be debited and credited.
5. Due date for payment.
6. Details of the payee.
7. Summary of payment to be made including any discounts due.
8. Details of payment method used e.g. cash, check, etc.

Voucher Payment Process

 When the voucher is due for payment it is removed from the unpaid folder and forwarded
together with the supporting documents to a responsible official for final approval for
payment.
 When the voucher has been approved the payment, a check or alternative method of
payment, is drawn up and details of the check number and date are recorded in the voucher
register. At this stage the voucher is marked as paid and filed together with the supporting
documents in the voucher paid folder. It is noted that the total of the vouchers in the unpaid
folder represent the outstanding liability to suppliers which should agree to the balance on the
accounts payable account. The final step of the process is to send the payment to the supplier.

Voucher Register
 The voucher register is a journal that records all vouchers once they are approved.
 All expenditures are recorded first in the voucher register.
 Sometimes the voucher register is called the book of original entry in the voucher system of
accounting because all the vouchers are entered into the voucher register before they are
entered into any other part of the accounting system.

 Unpaid Voucher File

 Where all vouchers that have been authorized, but not yet been paid are kept.
 Paid voucher file
 Where all paid vouchers are kept. The paid vouchers should be filed in numerical order
along with its supporting documents.
 Check register
 A book or spreadsheet that records when all vouchers were paid and how it was paid. If
the voucher was paid using a check, the check register will pair the voucher identification
numbers with the check identification numbers.

Special Problems in a Voucher System

 Gross or Net Amounts
 Recording Purchase Returns and Allowances
 Recording Partial Payments

Example of Accounting Voucher

Accounting for Payroll
 Payroll Accounting is the method of accounting for payroll. 
 Payroll is the aggregate expenditure on wages and salaries incurred by a business in an
accounting period. It can also refer to a listing of employees giving details of their pay.
 Payroll includes the gross pay due to the employee. The gross pay is divided into net pay
actually received by the employee and deductions made from the gross pay for employee
taxes and other deductions such as SSS contributions, Philhealth contributions, and union
subscriptions.

The Payroll Systems

 Expenditures for labor costs and related payroll expenses are usually significant for most
business entities for several reasons:
 Employees are sensitive to payroll errors or irregularities and maintaining good employee
morale requires that payroll be paid on a timely and accurate basis.
 Payroll is subject to various regulations
 Payroll and other related expenses have a significant effect on th net income of most
entities.
Components of Payroll Systems
 Time Cards
 Payroll Register
 Employee Earnings Record
 Pay Slip, Check or ATM
 Payroll Entries
 Remittances