The Book of Accounts

Book of Accounts is a book where you record all the financial transactions of the business. Entries in the books of accounts are required to be supported with documents such as official receipts, sales invoices, vouchers and other related supporting documents evidencing the business transactions occur.  All persons engaged in trade or business, or in the practice of profession registered with the Bureau of Internal Revenue (BIR) are required to maintain books of accounts. Books of Accounts are required to be registered with the BIR.

Types of Book of Accounts

• Manual Books of Account – It is traditional journal, ledger and columnar book. Recording in the Manual Books of Account is handwritten. This is typically used by the small enterprises.
• Loose-leaf Books of Account – It is a printed and bounded journals and ledgers. Recording in Loose-Leaf Books of Account can be done using Microsoft Excel.
• Computerized Books of Account – It is an accounting program that facilitate efficient and fast record keeping.

 

List of the Book of Accounts that a business must maintain:

1. General Journal – Also refer to as the book of original entry. It records transaction of the business in order of date using the principle of debit and credit.
2. General Ledger – Also refer to as the book of final entry. It summarized all the journal entries of an account to get the ending balances.
3. Cash Receipt Journal – It is a special journal used to record cash sales and/or collection of receivables.
4. Cash Disbursement Journal – It is a special journal used to record cash payments of expenses and/or payables.
5. Sales Journal – It is a journal used to record sales on credit.
6. Purchase Journal – It is a journal used to record purchases on credit.

Businesses engaged in Sales of Service must maintain the following Book of Accounts:

1. General Journal
2. General Ledger
3. Cash Receipt Journal
4. Cash Disbursement Journal

Business in Sales of Goods must maintain the following Book of Accounts:

1. General Journal
2. General Ledger
3. Cash Receipt Journal
4. Cash Disbursement Journal
5. Sales Journal
6. Purchase Journal

Keeping and maintaining the books of accounts of the business is important because it is mandated by the Bureau of Internal Revenue (BIR). Failure to maintain books of accounts is subject to penalties.