Journalize Transactions
Not publishedof exam
Post Transactions
Not publishedof exam
Prepare Trial Balance
Not publishedof exam
Prepare Financial Reports
Not publishedof exam
Review Internal Control System
Not publishedof exam
Quick Facts
- Qualification
- Bookkeeping NC III
- Owner
- TESDA
- Code
- SOCBKP307
- Assessment
- Project type
- Evidence
- Written + work project
- Focus
- Five core units
- Training
- 292 nominal hours
- Duration
- Not published
- Cut score
- Not published
- Reassessment
- After one month
- Award
- National Certificate
- Roles
- Bookkeeper; accounting clerk
Normal Balances
DEAD debit; CLIC credit
D: drawingsE: expensesA: assetsL: liabilitiesI: incomeC: capital
Debit vs Credit
Debit
- Left side
- Assets and expenses increase
Credit
- Right side
- Liabilities and income increase
Side first; account second
Journal Picker
- Credit merchandise sale→Sales journal
- Credit merchandise purchase→Purchase journal
- Cash receipt transaction→Cash receipts journal
- Cash payment transaction→Cash payments journal
- Adjusting entry→General journal
- Closing entry→General journal
- Correcting entry→General journal
- Does not fit→General journal
Assessment Map
- Core focus
- Five bookkeeping units
- Basic units
- Integrated with core
- Common units
- Integrated with core
- Written exam
- Required evidence method
- Work project
- Required evidence method
- Assessment site
- TESDA-accredited center
- Performance venue
- Center-designated workplace
- SAG
- Readiness self-check
- Calculator
- Bring for assessment
- Phone
- Not allowed
Periodic vs Perpetual
Periodic
- Purchases account
- COGS at period-end
Perpetual
- Inventory account
- COGS each sale
Delayed vs continuous inventory
Debit + Credit
- Equation
- Assets = liabilities + equity
- Assets increase
- Debit
- Expenses increase
- Debit
- Drawings increase
- Debit
- Liabilities increase
- Credit
- Equity increases
- Credit
- Income increases
- Credit
- Contra asset
- Normal credit
- Contra revenue
- Normal debit
- Entry rule
- Debits equal credits
Source Documents
- Sales invoice
- Sale evidence
- Purchase invoice
- Purchase evidence
- Official receipt
- Payment evidence
- Voucher
- Authorized payment support
- Sales journal
- Credit merchandise sales
- Purchase journal
- Credit merchandise purchases
- Cash receipts
- All cash inflows
- Cash payments
- All cash outflows
- General journal
- Nonroutine entries
- Narration
- Transaction explanation
Inventory + Entity Rules
- Periodic purchase
- Debit Purchases
- Perpetual purchase
- Debit Inventory
- Periodic sale
- No immediate COGS
- Perpetual sale
- Record COGS immediately
- Sole proprietor
- Capital + drawings
- Partnership
- Separate partner capitals
- Corporation
- Share capital + retained earnings
- Owner withdrawal
- Debit drawings at cost
Accounting Cycle
Document → Journal → Ledger → Trial → Reports
Verify documentsJournalizePostAdjustReportClose
Journal vs Ledger
Journal
- Chronological
- Original accounting entry
Ledger
- By account
- Running account balance
Record first; classify second
Ledger Basics
- Journal
- Chronological record
- Ledger
- Account-classified record
- Posting
- Journal-to-ledger transfer
- Journal PR
- Ledger account number
- Ledger folio
- Source journal reference
- Footing
- Column total
- Balance
- Debit-credit difference
- Sequence
- Post chronologically
- Posting standard
- 100% accuracy
Control vs Subsidiary
Control
- General-ledger total
- One summary balance
Subsidiary
- Individual details
- Many customer/vendor balances
Total must equal details
Control Accounts
- General ledger
- Summary accounts
- Subsidiary ledger
- Individual details
- AR control
- All customer balances
- AP control
- All vendor balances
- PPE subsidiary
- Individual fixed assets
- Payroll subsidiary
- Individual employee details
- Control test
- Control equals subsidiary total
- Mismatch
- Trace posting differences
Accrual vs Deferral
Accrual
- Recognition before cash
- Record missing activity
Deferral
- Cash before recognition
- Allocate recorded cash
Missing now vs allocated later
Adjustment Picker
- Earned but unrecorded→Accrued income
- Incurred but unpaid→Accrued expense
- Prepayment partly expired→Recognize expense
- Advance partly earned→Recognize income
- Asset consumed→Record depreciation
- Receivables doubtful→Adjust allowance
- Difference divisible by two→Check wrong side
- Difference divisible by nine→Check transposition
Adjusting Entries
- Accrued expense
- Expense + payable
- Accrued income
- Receivable + income
- Expired prepayment
- Expense + asset reduction
- Earned advance
- Liability reduction + income
- Depreciation
- Expense + accumulated depreciation
- Bad debts
- Expense + allowance
- Cash account
- Never in adjustments
- Interest
- Principal × rate × time
- Straight-line
- Cost less residual ÷ life
- Adjusted balance
- Before reports
Trial Balance
- Purpose
- Test debit-credit equality
- Source
- Ledger ending balances
- Unadjusted TB
- Before period-end adjustments
- Adjusted TB
- After period-end adjustments
- Post-closing TB
- Permanent accounts only
- Equal totals
- Not proof of accuracy
- Difference ÷ 2
- Wrong-side clue
- Difference ÷ 9
- Transposition clue
- Equal omission
- TB still balances
- Wrong account
- TB may balance
Cash Flow Classes
OIF: Operate, Invest, Finance
O: daily businessI: long-term assetsF: owners and lenders
Adjusting vs Closing
Adjusting
- Before statements
- Updates balances
Closing
- After statements
- Zeros temporary accounts
Measure first; reset afterward
Financial Statements
- Income statement
- Income less expenses
- Changes in equity
- Equity rollforward
- Balance sheet
- Point-in-time position
- Cash flows
- Cash movement categories
- Net sales
- Sales less contra-sales
- Net purchases
- Purchases less reductions
- COGS
- Beginning + net purchases − ending
- Gross profit
- Net sales − COGS
- Ending capital
- Begin + income − drawings
- Statement order
- Income → equity → position
Closing + Cash Flows
- Temporary accounts
- Income, expenses, drawings
- Permanent accounts
- Assets, liabilities, equity
- Income Summary
- Closing bridge
- Drawings close
- Directly into capital
- Operating cash
- Primary business activities
- Investing cash
- Long-term asset activity
- Financing cash
- Owners + creditors
- Current ratio
- Current assets ÷ current liabilities
- Net margin
- Net income ÷ net sales
Internal Control Core
SADPI protects assets
S: segregationA: authorizationD: documentationP: physical controlsI: independent checks
Bank Side vs Book Side
Bank side
- Transit deposits
- Outstanding checks
Book side
- Charges and NSF
- Interest and collections
Book items require entries
Bank Reconciliation Picker
- Deposit not recorded by bank→Add bank side
- Check not cleared→Deduct bank side
- Bank service charge→Deduct book side
- Customer check returned→Deduct book side
- Bank collected note→Add book side
- Bank credited interest→Add book side
- Company book error→Correct book side
- Bank statement error→Correct bank side
Internal Controls
- Authorization
- Approve before action
- Segregation
- Separate custody and records
- Documentation
- Create audit trail
- Physical control
- Protect assets
- Independent check
- Separate verification
- Internal-control manual
- Document firm procedures
- Compliance check
- Validate actual practice
- Compliance report
- Findings for management
- Report filing
- Future reference
- Small team
- Use compensating review
Bank Side
DIT adds; OC subtracts
DIT: deposit in transitOC: outstanding check
Preventive vs Detective
Preventive
- Before error
- Authorization and segregation
Detective
- After activity
- Reconciliation and review
Block first; find afterward
Bank Reconciliation + Petty Cash
- Deposit in transit
- Add bank side
- Outstanding check
- Deduct bank side
- Bank charge
- Deduct book side
- NSF check
- Deduct book side
- Bank interest
- Add book side
- Book-side item
- Journalize after reconciliation
- Bank-side timing
- Usually no entry
- Imprest fund
- Fixed ledger balance
- Replenishment
- Debit expenses; credit cash
- Cash short
- Debit Cash Over/Short
Common Traps
Balanced is not correct
Totals may agree ≠ Accounts may be wrong
Cash is not adjusted
Adjustments update accruals ≠ Bank entries update cash
Inventory method changes entries
Periodic uses Purchases ≠ Perpetual uses Inventory
Posting references run both ways
Journal names ledger ≠ Ledger names journal
Bank timing needs no entry
Transit deposit is recorded ≠ Outstanding check is recorded
Petty replenishment is not setup
Setup debits Petty Cash ≠ Replenishment debits expenses
Drawings are not expenses
Drawings reduce equity ≠ Expenses reduce income
Training is not assessment
292 hours is training ≠ Assessment duration unpublished
Last Minute
- 1.Five core units; weights unpublished
- 2.Assessment = written + work project
- 3.Verify documents before journalizing
- 4.Total debits equal total credits
- 5.Journal first; post chronologically
- 6.Control account = subsidiary total
- 7.Adjust before preparing statements
- 8.Cash never enters adjusting entries
- 9.Income → equity → balance sheet
- 10.Close temporary accounts only
- 11.DIT adds; outstanding checks subtract
- 12.Book-side reconciling items need entries
- 13.Segregate custody from recording
- 14.Bring calculator; phone prohibited