ACCOUNTING PRACTICE

SET
 LEARNING COMPETENCY

• Perform the steps in the accounting cycle,

from preparation of documents to the
preparation, analysis, and interpretation of
financial statements
 REVIEW THE FOLLOWING TOPICS:

• Journals – books of original entry

- Special journals
- General journals
• Ledgers – books of accounts
- General ledger
- Subsidiary ledger
• Review the different kinds of bank forms
- Deposit slip
- Withdrawal slip
- Bank checks
• Completion of the accounting process:
- Adjusting and Closing entries
- Preparing trial balance and worksheets
 DISCUSSION:

• Contemplate the reason for having special journals, in contrast

to general ledger. The purpose of the special journals is to
increase efficiency and prevent redundancy in recording
transactions in the general journal. For example, a business
may have ten credit sales transactions in one day. Without a
sales journal, this will require the recording of the following
journal entries ten times in one day.
Dr Cr
Accounts receivable Sales
• Contemplate why the sales journal is used to record only credit
sales and not to cash sales. In the same vein, why is a purchase
journal used to record only credit purchases and not cash
purchases.
• This is because all cash transactions are recorded in the cash
receipts and cash disbursement books. To record purchases and
sales made in cash in the purchase and sales journals will mean
double recording because these are already recorded in their
respective cash books. It will result in inefficiency and
complications.
 WHAT COMPANY A HIGH-
PROFILE ADVERTISEMENT?
 WHAT COMPANY A HIGH-PROFILE
ADVERTISEMENT?

• Example is a telecommunication network

company like smart that provides mobiles
phone services. This is the umbrella of PLDT.
This company they use a services provides.
WHAT ARE THE EXAMPLE OF REVENUE
TRANSACTIONS?
 WHAT ARE THE EXAMPLE OF
REVENUE TRANSACTIONS?

•Such as prepaid loads, postpaid plans

and internet data services
 WHICH ACCOUNTS IN THE
FINANCIAL STATEMENTS ARE
AFFECTED?
 WHICH ACCOUNTS IN THE
FINANCIAL STATEMENTS ARE
AFFECTED?

• Examples of expenses. In the case of smart

company, this may include tv and print ads, raw
materials for the prepaid cards and maintenance of
the cellular network.
 HOW THE ACCOUNTANTS KNEW
WHEN TO RECORD REVENUE AND
EXPENSES TRANSACTIONS?
HOW DO THESE INFORMATION
REACH THE COMPANY’S
ACCOUNTANT?
 WHO RECORDS IN THE
ACCOUNTING BOOKS AND
PREPARES THE FINANCIAL
STATEMENTS?
• Business forms are used to document business transactions. It
contains information relevant to the transaction such as date of
transaction, items bought or sold, price, tax and name of buyer
and seller. More importantly, business forms documents
accountability – identification of personnel who performed
specific functions related to the transaction. The business forms
also show that established policies and procedures are followed
in implementing the transaction.
 DIFFERENT KINDS OF BUSINESS
FORMS:
1. Internal business forms – forms used only within the business.
a. purchase request – to document the processes involve prior to sending
a confirmed order to the seller. This may include getting quotations
from various suppliers and securing budgetary approval to ensure there
is funding for the purchase.
b. Check vouchers – used to document the disbursement process. Used to
document the following reconciliation process: orders are authorized,
deliveries are from valid orders, and purchase invoices represent actual
deliveries and agreed upon price.
2. External business forms – forms used by both buyer and seller.
a. Purchase order – a form prepared by the buyer and sent to the seller to document
the order and agreed upon terms of the purchase.
b. Delivery Receipts - a form prepared by the seller, with a copy given to the buyer,
to document the delivery of the items ordered.
c. Purchase/sales invoice – it contains information on the prices of the items
delivered and the terms purchase. This should be consistent with the information
on the purchase order. The purchase invoice and sales invoice are the same form. It
is referred to as purchase invoice by the buyer because it documents its purchase
transaction.
d. Official receipts – used to document cash transaction. The entity receiving the cash
will prepare the Official Receipts (OR). The entity paying will receive the OR as
evidence of payment made.
 ASSOCIATE THE FOLLOWING BUSINESS
FORMS WITH THE RESPECTIVE ACCOUNTING
BOOKS
Business Forms Accounting Books

Check voucher (check voucher package includes purchase request, purchase Cash disbursement books
order, delivery receipts and purchase invoice), supplier’s official receipt
received for cash payment.

Official receipt issued for cash payment and cash register tapes. Cash receipts books

Sales invoice issued to customers Sales Journal

Purchase invoice received from seller Purchase Journal

 TO FILL UP THE ACCOUNTING PRACTICE SET.
THIS NORMALLY INCLUDE THE FOLLOWING:
• Fill out the business and bank forms to document the given business
transactions.
• Record the business transactions in the appropriate journal. Use the
general and special journals provided in the accounting practice set.
• Post the journal entries in the appropriate subsidiary ledgers and general
ledger accounts.
• Summarize the ledger accounts and list the balances on the trial balance
• Record the necessary adjusting entries. Information to prepare
the adjusting entries are normally provided in the accounting
practice set.
• Prepare the financial statements from the trial balance.
• Prepare necessary closing entries and record on the general
journal and ledger.
• You may perform financial statement analysis of the completed
financial statements.
 HOMEWORK ACTIVITY
• Fill out the accounting practice set. This is an exercise to
develop your bookkeeping skills.

• Ang Tindahan Co. is a wholesaler of office and school

supplies. The following are the transactions of Ang Tindahan
Co. for the first month of its operations. All cash disbursement
are made by bank check. Assume perpetual inventory methos is
used.
 FLOWCHART
• Prepares PO based on • Prepares DR based
DR
quotations received on PO.
PO
from various suppliers.
DR

• Sends approved PO Delivers merchandise

A-PO Merchandise
To supplier. With DR to buyer

DR
To buyer A-PO Received signed DR
accounting
From buyer To seller
accounting

Buyer Seller
 FLOWCHART
• Prepares RR based • Triple Checking
on merchandise 1. supplier’s delivery authorized by buyer?
Received Look approved PO.
From seller A-PO DR RR
merchandise RR
Sales
• Signed DRs Invoice
PO, RR, DR, SI
And gives DR
SI
To buyer Check
One copy DR
accounting RR
DR A-PO
to seller Check Check
• Retains one voucher
To buyer
PO,RR, DR, SI OR
copy of DR accounting
CV

Buyer Buyer – Accounting Department

 FLOWCHART
• Triple checking: • Receives signed
1. Supplier’s delivery authorized by buyer? DR from buyer
DR
Look for approved PO.
2. Billed items delivered by seller? Compare
supplier’s SI with supplier’s DR and buyer’s Sales • Prepares SI based on
RR. Invoice
DR
3. Billing prices based on agreement? Compare
prices in supplier’s SI and buyer’s PO. Check
• Prepares check based on CV. • Receives check from
• Approves check for payment. Buyer, signs on CV
• Prepares CV and attached supporting OR
documents • Prepares OR based
• For filling
On check received
Seller – Accounting Department