5/24/2014 What are the Books of Account?

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What are the Books of Account?
Written by: Maria Lourdes M. Yanuaria, CPA
All business establishments and taxpayers are required to keep a record of their day to day
business transactions in order to know the result of their operations. The said record is referred
to as book of accounts.
Whenever a business establishment or taxpayer applies for certificate of registration (COR)
with the BIR, it also required to register the book of accounts. Also, the books of account should
also be registered annually on or before January 31 of each year.
Registration of book of accounts can be any of the following
type
Manual Books of Account
Manual books of account are the traditional journal, ledger and columnar books you can buy in
the book and office supplies store. Recording in the manual books of account is handwritten.
This is the most of popular type of books of account for small enterprises since it is less costly
and easy to register with the BIR.
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Loose-leaf Books of Account
Loose-leaf books of account are printed and bounded journals and ledgers. Recording can be
done using Microsoft Excel.
Computerized Books of Account
Computerized book of account is an accounting program that facilitate efficient and fast record
keeping.
Books of Accounts Minimum Requirements
The type of books the business will maintain depends on many factors such as the size of the
business and financial capacity. However, regardless of the type of book of accounts the
company would maintain, below are the minimum requirement:
General Journal
General journal is referred to as the book of original entry. It records business transaction in
order of date using the principle of debit and credit.
General Ledger
General ledger is referred to as the book of final entry. It summarized all the journal entries of
an account to get the ending balances.
Cash Receipt Journal
Cash receipt journal is a special journal used to record cash sales and/or collection of
receivables.
Cash Disbursement Journal
Cash disbursement journal is a special journal used to record cash payments of expenses
and/or payables.
Sales Journal
Sales journal is a special journal used to record sales on credit (receivable from customer)
Purchase Journal
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Purchase journal is a special journal used to record purchases on credit (payable to supplier)
Books of Accounts for Service Business
For business or taxpayer engaged in sale of services, it is required to maintain at least four
which are the following:
1. General journal
2. General ledger
3. Cash receipt journal
4. Cash disbursement journal
Books of Accounts for Businesses Engaged in Sales of
Goods or Properties
For business or taxpayer engaged in sale of goods or properties, it is required to maintain at
least six, which are the following:
1. General journal
2. General ledger
3. Cash receipt journal
4. Cash disbursement journal
5. Sales journal
6. Purchase journal
Disclaimer: The content of this article may become outdated because of changes in the rules
and regulations over time. It does not substitute the need for inquiring professional advice.
Comments
1. jaycee castillo says:
November 16, 2013 at 01:44
Hello,
5/24/2014 What are the Books of Account?
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Just want to inquire,
Weve lost our book of accounts due to flood during habagat before, we will file a
business closure this month,We found out it is one of the requirements. We are planning
to have an affidavit of loss. is there any penalty or fees for that when we submit it to BIR?
Thanks in advance MPM.
Reply
Maria Lourdes M. Yanuaria, CPA says:
November 18, 2013 at 12:35
Hi Ms Jaycee Castillo, thank you for your comment. You need to file a notarized
affidavit of loss to the BIR. The penalty will depend if you can justify the cause of
loss. But based on the schedule of penalty from the BIR, failure to keep/preserve
records required by law or regulations are subjected to penalty ranging from
P200.00 to P50,000.00 depending on the gross annual sales or receipts.
Reply
2. Doris C. Esperanza says:
December 2, 2013 at 12:04
Hi Maam, Im very much confused of creating journal, I had a small business Gen,
Merchandise actually and we are required to do accounting i had a little knowledge but
unfortunately Im not familiar what are entries for that column and what book should I
used? Hope you can help me thanks a lot
Reply
Maria Lourdes M. Yanuaria, CPA says:
December 17, 2013 at 10:52
Hi, you may consider hiring an accountant/bookkeeper to help you with record
keeping.
Reply