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procedures and controls established to gather, record, classify, analyze, summarize, interpret, and
present accurate and timely financial data for management decisions. An accounting system
allows a business to keep track of all types of financial transactions, including expenses, income,
liabilities, assets, etc. and can generate comprehensive statistical reports that provide management
Accounting Cycle:
Business transaction are recorded using double entry bookkeeping system. Each journal
entry will consist of amounts that are debits and credits, the transaction date and the
explanation of the transaction. Transaction are recorded in chronological order and as they
occur.
2. Posting to the ledger
After journalizing transactions, the data will be transferred to another account called the
ledger.
The trial balance itemizes the debit and credit totals for each account. Its purpose is to test
the equality of all debits and credits. It is also a control tool to help find errors in recording
or posting.
4. Adjusting entries
Adjusting entries are prepared to update the accounts before they are summarized in the
financial statements.
5. Financial Statements
The financial statements are the end product0 of an accounting system: Statement of
6. Closing entries
Temporary balances are reduced to zero in order to prepare the accounts for the following
year’s transactions.
After the closing entries, the only accounts that remain will be the permanent entries or real
financial records and paper works, showing what business activities had occurred. A business
document, also known as source document is the original record containing the details to
substantiate a transaction. It provides a means of verifying the accounting records and thus has an
journal entry is made for each transaction showing the accounts and amounts. There are two kinds
of a journal, a special journal and a general journal. A special journal is used to record frequently
recurring transactions such as sales, cash receipts, purchases on account, and cash disbursement
while general journal is used to record all transactions for which in a special journal is not
maintained. On the other hand, a ledger is a collection of accounts maintained by the business. The
information provided on the financial statements and the controls to be employed in carrying of
separately. General ledgers contain all accounts appearing on the financial statements. Subsidiary
of important business transactions and forms. These develop the internal control system of the
organization. The business should always consider the cost of acquiring, maintaining and the
to record entries. It consists of balance sheet accounts (assets, liabilities, capital) and income
statement accounts (revenues, expenses, gains, losses). It is used to organize the finances of the
proposed agency and to segregate expenditures, revenues, assets, and liabilities in an orderly
manner to give the proponents a better comprehension of the financial health the entity,
The accounts are divided into the following categories: Assets, Liabilities, Capital, Income,
ASSETS
Current Assets
Noncurrent Assets
103
Cooking Tools and Equipment
LIABILITIES
Accounts Payable 201
Salaries Payable 202
Tax Payable 203
Assets are defined as resources owned and controlled by the company because past transactions
and events and from which future economic benefits are expected to flow in the entity.
Current assets include assets which are held for the purpose of trading, they are expected to be
realized within twelve months after the reporting period, and they are intended to be sold and
fund in which are unrestricted and immediately available for use in the current operation. Cash
on hand take account of undeposited and other cash items to be deposited. And petty cash fund
To be debited for:
To be credited for:
Payment of expenses
Payment of debts and other
liabilities
Purchases of assets
Withdrawals
Debit memos
Other cash outlays
Inventory: This account refers to cost of raw materials on hand at the end of the accounting or
reporting period.
To be debited for:
Purchase of materials
To be credited for:
classifies as noncurrent assets are usually used for the more than one year or within normal
operating cycle.
Cooking Tools and Equipment: These represent the tangible assets that are held for use by the
business in providing the service. The costs comprise of the purchase price, freight, handling,
storage and other costs related to the acquisition, insurance, installation cost, cost of resting and
trial run and other costs needed in preparing the equipment for its intended use.
LIABILITIES (201)
Accounts Payable: These represents the entity’s Obligation to pay off short-term debt to its
Creditor.
Tax Payable: These represent the payables to the government in the form of business and transfer
taxes, income taxes, business permits, etc.
the contribution of the partners to the business. This account represents the ownership of the
partners in the business. This account is used for summarizing transactions affecting such year.
Debited for: Decrease in the partner’s capital. Share in the partnership net loss. Closing of
Credited for: Original Investment of the partners. Increase in the partner’s capital. Share
Withdrawing Account
This account is used to record cash or other assets taken by the partners for personal use.
Debited for: Withdrawals made by the partners, and for personal liabilities of the partner to the
partnership. Receivable or fund of the partnership collected and retained by the partner.
REVENUE (401)
Revenue or income is the increase in the economic benefits during the accounting period in the
form of inflows or development of assets or decreases in liabilities that result in increase in equity,
other than those relating to contributions from equity participants. It refers to the increases in
owner’s equity resulting from selling goods, rendering services or performing business activities.
Sales Receipts
Represents the gross increase in assets measures in conformity with the Generally
Accounting Principles that form profit directed activities of an enterprise that can change
the partner’s equity. The general activities from which revenue is derived from selling of
EXPENSES (501-506)
Depreciation Expenses: This account is used to record the portion of costs of the equipment
Repair and Maintenance expense: This is used to record the cost of repairs and maintenance
Utilities Expense: This is used to record the cost consumed in a reporting period.
Debited for: Cost paid
Rent Expense: This is used to record the payment of rent in a reporting period
Supplies Expense: This account reports the cost of supplies such as bullpens, erasers, stationaries,
Salaries Expense: This account represents the amount of salaries paid to the employees as
Taxes and Licenses: This account refers to business taxes, licenses, and other fees due to the
government.
objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance
with laws, regulations and policies. A broad concept, internal control involves everything that
It plays an important role in detecting and preventing fraud and protecting the organization's
resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or
At the organizational level, internal control objectives relate to the reliability of financial
reporting, timely feedback on the achievement of operational or strategic goals, and compliance
with laws and regulations. At the specific transaction level, internal control refers to the actions
The financial reports that are prepared in accordance with the Generally Accepted Accounting
Principles (GAAP) and techniques are reported to others that are useful in making economic
Statement, Statement of Cash Flow, and the Statement of Changes in Partners’ Equity. These
reports are accompanied by supporting schedules and supplementary notes that show important
details and other information that cannot be conveniently included in the body of the financial
statements.
V. FINANCIAL AND MANAGEMENT REPORTS
The management reporting system for Burgarian has been designed to generate reports that
will provide management and the supervising agency with useful and timely information for more
effective planning, coordination and control of operations. The management reporting system
covers the entire range of the existing operations of the company, thus providing both financial
and operating data necessary for effective planning and control.
The management reporting system should be evaluated periodically to assess its continued
effectiveness as a channel for the effective planning, monitoring and control of operations.
The reports used in the management reporting system are the following:
The Statement of Financial Performance, also known as the Income statement, shows the
level of activity of the business. This is used to study cyclical sales patterns, such as when sales
peak each year. Managers also establish their advertising and inventory budgets with these reports.
Gross Profit xx
Less: Operating Expenses xx
xx
Net Income after Tax
Statement of Changes in Owner’s Equity
The statement of owner’s equity is a financial statement that reports the changes in the
equity section of the balance sheet during an accounting period. In other words, it reports the events
that increased or decreased stockholder’s equity over the course of the accounting period.
Burgarian
PROJECTED CHANGES IN OWNER’S EQUITY
As of December 31, 20XX
(in Philippine Peso)
Agustin, Capital xx
Add: Share in Net Income xx
Total xx
Less: Agustin, Drawing xx
Agustin, Capital End xx
xx
Tuazon, Capital
xx
Add: Share in Net Income
Total xx
Bugtong, Capital xx
Bulaec, Capital xx
Add: Share in Net Income xx
Total xx
Umali, Capital xx
Add: Share in Net Income Total xx
The Statement of Financial Position shows the financial condition of the business as of the
year end compared with the previous year. It shows the assets that the partnership owned. In
contrast, the liabilities which are the cumulative indebtedness of the business incurred. And the
Partners’ Capital, embodies the value which the partners owned after selling their assets. This
Burgarian
Financial Statement
As of December 31, 20XX
(in Philippine Peso)
ASSETS
Current Assets
Cash xx
Inventory xx
Non-Current Assets
Cooking Tools and Equipment xx
xx
Total Assets
LIABILITIES AND EQUITY
Liabilities
Tax Payable xx
Total Liabilities xx
Partner's Equity
Agustin, Capital xx
Tuazon, Capital xx
Bugtong, Capital xx
Bulaec, Capital xx
Umali, Capital xx
The Statement of Cash Flow reflects the company's sources and uses of its funds over a
specified time period. Thus, the partners will know where their money go.
Burgarian
Statement of Cash Flows
For the Year Ended December 31,20XX
(in Philippine Peso)
The revenue cycle starts from the arrival of the client. They would choose the service that they
would want to avail of and then fill up all necessary details related to the service. The cashier
would then input the chosen service in the system. They would automatically compute the
total bill of the customer. And after, payment of the services availed would take place and the
system would furnish receipt. Payment is mandatorily made, and the official receipt would
come in.
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1 Item (s) 45.00
CASH 100.00
CHANGE DUE 55.00
(b) Deposit slip
This is used as an evidence of any deposits made by the company to its respective
bank.
The purchase cycle starts from the preparation of a purchase order in three copies by the manager.
All copies shall be forwarded to the accountant for approval by checking the supplies. And after,
one copy of the purchase order will be given to the vendor or supplier, another to the manager,
and the last copy will be given to the accountant. Afterwards, the manager will compare the three
documents namely, purchase order, receiving report, and invoice. The manager will now
summarize all the documents gathered. The summary together with the supporting documents
It is used internally to formally order supplies, equipment and tools. This is used when
This is issued to suppliers stating the specifications, and quantities for the different
It is a record showing all purchases as they are delivered, in order that better control
may be secured over the purchasing function. It is done by the receiving staff that is
Check
Supplies
Purchase
Compare
Orders
Purchase
Accountant Orders
Summary Invoice
File Purchase
Manager Order
Accountant Receiving
Vendor Report
The manager is responsible in keeping track of the time-ins and time-outs of every employee.
The accountant is responsible in computing and ascertaining the total number of hours
rendered by the employee. Based on the records from the manager, the accountant prepares
the employees’ earning records and sets two of the employees’ payroll registry. One will be
given to the manager and then the manager will prepare two copies of the payroll summary.
Finally, one copy will keep for filing while the other together with the registry will be given
It is a form certifying that the hours were worked as recorded and that the
primary basis in making changes to direct labor cost of the jobs worked on.
This shows the time an employee reports for work and goes out and is used in
payroll preparation.
(c) Payroll Register
union dues, gross pay, and net pay. The payroll register may be used as a
This shows the periodic and accumulated earnings of each employee aside
This itemizes the deductions from each employee’s earnings to derive net pay.
employment worthiness.
(h) Pay Slip
As the company receives an order from customer, sales order arise immediately and then inventory
must have to update. Then the entity issues three copies of official receipt, one copy will be given
to the customer, the other is to the accountant, and the other will be for company’s own copy
(a) Daily Sales summary report
Copies are retained by the store as a record of sales. It specifies how much is
It is the business’ accounting record. This formal ledger contains all the