Entrepreneurial

Accounting
November 17, 2017
A brief process description
What does this mean?

Bookkeeping
 Bookkeeping is the process of
systematically recording the business
transactions in a chronological manner.
 Accounting requires complete and
accurate bookkeeping records necessary
in the performance of its responsibility
which is the analysis and interpretation of
the financial reports.
 An accountant’s job begins at the end of
the bookkeeper’s job.

BOOKKEEPING DIFFERS FROM

ACCOUNTING
“It is a service activity. Its function is to
provide quantitative information, primarily
financial in nature, about economic entities
that is intended to be useful in making
economic decisions.”

Accounting Definition
Four Phases of Accounting

RECORDING

CLASSIFYING

SUMMARIZING

INTERPRETING
 The business should keep a “diary of all
transactions and events that it may have
entered into. It is difficult to memorize or
recall considering the volume of the day
to day transactions that occurred. The
records that are used and kept for this
purpose are called BOOKS OF ACCOUNTS.

IMPORTANCE OF KEEPING BUSINESS RECORDS

 Classifying. This is the phase of
accounting which involve sorting or
grouping similar transactions and events
into their respective kind and classes.

Four Phases of Accounting

 Summarizing. Involves the completion of
the financial statements and the
accounting requirements as well.

Four Phases of Accounting

 Interpreting. analytical and interpretative
works.

Four Phases of Accounting

  COST PRINCIPLE. Assets
should be recorded at original
or acquisition cost.

Some of the Generally Accepted

Accounting Principles
 OBJECTIVITY PRINCIPLE. Accounting
records should be based on reliable and
verifiable data as evidence of
transactions.

Some of the Generally Accepted

Accounting Principles
 MATERIALITY PRINCIPLE. This principle
dictates practicability to rule over theory
in determining the valuation of an item.

Some of the Generally Accepted

Accounting Principles
 MATCHING PRINCIPLE. Combined Concept
of Revenue Recognition and Expense
Recognition Principles.

Some of the Generally Accepted

Accounting Principles
 ACCOUNTING ENTITY. An entity that is
separate and distinct from the owner or
management.

BASIC ACCOUNTING ASSUMPTIONS

 GOING-CONCERN ASSUMPTION. The
business is assumed to have a continuous
life of existence.

BASIC ACCOUNTING ASSUMPTIONS

 TIME-PERIOD ASSUMPTION.
Calendar Year
Fiscal Year
Natural Business Year

BASIC ACCOUNTING ASSUMPTIONS

 UNIT OF MEASURE. In the Philippines we
used peso as a unit of measure.

BASIC ACCOUNTING ASSUMPTIONS

 ACCRUAL BASIS. This assumes that the
recording of income and expense follow
the accrual basis of accounting.

BASIC ACCOUNTING ASSUMPTIONS

 ASSETS. Resources controlled by the
enterprise as a result of past transactions
and events and from which future
economic benefits are expected to flow
the enterprises.

ELEMENTS OF FINANCIAL STATEMENTS

 LIABILITIES. Present obligations of an
enterprise arising from past transactions
or events, the settlement of which is
expected to result in an outflow from the
enterprise of resources embodying
economic benefits.

ELEMENTS OF FINANCIAL STATEMENTS

 OWNER’S EQUITY OR CAPITAL. Is the
residual interest in the assets of
enterprise after deducting all liabilities.

ELEMENTS OF FINANCIAL STATEMENTS

 REVENUE AND GAINS. Gross inflow of
economic benefits during the period
arising in the ordinary course of ordinary
activities of an enterprise when those
inflows result in increase in equity, other
than those relating to contributions from
owners.

ELEMENTS OF FINANCIAL STATEMENTS

 EXPENSE AND LOSSES. Gross outflow of
economic benefits during the period
arising in the course of ordinary activities
of an enterprise when those outflow result
decrease in equity, other than those
relating to distribution to owners.

ELEMENTS OF FINANCIAL STATEMENTS

 BALANCE SHEET/ STATEMENT OF
FINANCIAL POSITION. Is a financial
statement which shows the financial
position of an enterprise as of a particular
date.
assets=liabilities+equity

FINANCIAL STATEMENTS
 INCOME STATEMENT/ STATEMENT OF
OPERATIONS. Is a financial statement
which shows the performance of the
enterprise for a given period of time.
revenue-expenses=profit (loss)

FINANCIAL STATEMENTS
 Rent expense-for the amount paid or
incurred for use of property, usually
premises.

SOME ACCOUNT TITLES FOR DISBURSEMENTS

 Repairs and maintenance-for expenses
incurred in repairing or servicing the
buildings, machineries, vehicles,
equipment, etc., which are owned by the
business.

SOME ACCOUNT TITLES FOR DISBURSEMENTS

 Stationery and office supplies expense.
The stationery, envelopes, clips,
fasteners, etc., used in the office will bear
the account title as “Office Supplies”; if
use in the store “Store Supplies” or
another title may be used to describe the
kind of supplies used.

SOME ACCOUNT TITLES FOR DISBURSEMENTS

 Salaries Expense-for compensation given
to employees of a business. It may be
specified as office salaries, salesmen's
salaries, etc.

SOME ACCOUNT TITLES FOR DISBURSEMENTS

 Bad debts-for the anticipated loss that the
business may incur arising from
uncollectible accounts.

SOME ACCOUNT TITLES FOR DISBURSEMENTS

 SOME ACCOUNT TITLES FOR
DISBURSEMENTS

 Depreciation Expense- for the allocated

portion of the cost and property and
equipment or fixed assets.
 Taxes and Licenses. For the amount paid
for business permits, licenses and other
government dues except the Income Tax
paid which is not allowable by law as a
deduction.

SOME ACCOUNT TITLES FOR DISBURSEMENTS

 Utilities Expense. The account title for
telephone, light and water bills.

SOME ACCOUNT TITLES FOR DISBURSEMENTS

 Miscellaneous Expense- any amount paid
as expense which is not significant
enough to warrant a particular
classification.

SOME ACCOUNT TITLES FOR DISBURSEMENTS

 Some Common Source Documents

1. Sales Invoice
2. Official Receipt
3. Provisionary Receipt
4. Temporary Receipt
5. Purchase Order
6. Check Voucher
7. Billing Statement
8. Statement of Account
 Cash Receipts Book- Record here all cash
sales including collection of accounts
receivable.

 Cash Disbursements Book- Record here all

expenses paid in cash/ checks including
payments of accounts payable.

Books of Accounts
 DATE PARTICULARS AMOUNT

June 5, 2017 Chicken dung sales 12,000

June 15, 2015 Sales from scrap sacks 2,500
June 30, 2017 ACI June 1-30, 2017 130,000
June 30, 2017 Chicken dung sales 3,000
June 30, 2017 ACI- June incentives 2,370
TOTAL 149,870

CASH RECEIPTS BOOK

CASH Disbursements Book

DAT PAYEE / ACCT ACCT ACCT

E PARTICULARS

TOTAL FOR JUNE XX XX XX

2017
CASH LIQUIDATION REPORT
DATE PARTICULARS
June 1, 2017 Cash balance 400
June 5 Cash from boss 2,000
TOTAL 2,400
Expenses :
Snacks : june 3 ( 250 )
Fare ( june 3-9 ) ( 1,635 ) ( 1,885 )
CASH, END 515
OTHER BUSINESS FORMS
1. Ledger Cards- payables & receivables
2. Delivery Receipts
3. Receiving Reports
4. Stock cards ( inventory )
5. Logbook ( security guard )
6. Daily Time Record ( attendance )
7. EC Logbook ( Employees’ Compensation )