Reviewers in Accounting 101
Reviewers in Accounting 101
Reviewers in Accounting 101
Nature of Business
Reviewers in Accounting 101
Module 6 Part 1. Special Journals wih Vat Applications Some industry are VAT exempt or Zero-rated such as
Value Added Tax EXPORT sales or those company with BOI certificate or
It is a business tax imposed on persons engaged in the under Economic Zones.
following activities:
o Sales, barter or exchange of goods NOTE: Non-Vat is different from Exempt or Zero-rated.
o Sale of services or lease or use of properties
o Importation of goods, whether connected with E.Who will pay the Tax?
business or for personal use.
VAT is imposed on the seller of goods or services or to
Nature of Vat the importer who is primarily responsible for the
Most of businesses registered with BIR are subject to payment of VAT.
Sales tax and the most popular types of Sales Tax are:
VAT and NON-VAT (known as Percentage tax). It is an indirect tax and the amount of VAT maybe
shifted or passed on to the buyer, transferee or lessee
Sales Tax of the goods, properties or services.
is tax imposed on the gross sales or gross receipts of
an entity with tax ranging from 3% to 12% depending on The VAT on purchases is normally called input tax while
the tax type (VAT or Non-VAT). the VAT added on sales is called output tax.
VAT NON VAT In computing the VAT due and payable to BIR, the
Vat registered business is A non-VAT registered amount of Tax on Purchases known as INPUT TAX, can
subject to- 12% sales tax entity is subject to- be deducted from the OUTPUT TAX (VAT on Sales).
on its gross sales or 3% sales tax on gross
gross receipts sales or gross The difference will be the amount to be paid by the
receipts business entity to BIR referred to as VAT PAYABLES.
Such tax is referred to as
VAT or OUTPUT TAX Such sales tax is referred If a company is NON-VAT, it is not allowed to deduct the
to as PERCENTAGE TAX
VAT on the purchases or payments it has incurred.
Module 6 Part 2
Module 6 Part 3
Value Added Tax Vs Percentage Tax
As a rule, a business is subject to VAT if it is a/ an: Specials Journals
1) VAT registered business o Special Journals are specialized lists of financial
2) Non-VAT business but its annual sales or gross
transaction records. In contrast to General
receipts exceeds the VAT
Journal , each special journal records
registration threshold (effective Jan 2018 P3.0M)
transactions of a specific type such as Sales or
3) Importer of goods.
Purchases.
o It record transactions from the source
NOTE:
documents on a daily basis as they occur and
NON-VAT businesses whose annual gross sales exceeds
then these transactions are transferred to the
the VAT registration threshold but did not register, it is
general ledger as if it was a single transaction in
subject to output VAT of 12% but no benefit of Input
a day.
VAT on purchases.
o Special journals make the recording and
maintaining of accounting records easier and
less complex as there is no need for routine the details of the controlling account. In case a
explanation for each entry. customer is assigned an account number, the number
o The use of general journal in a business with are written in the reference column to indicate that
voluminous transaction is inefficient, time entries have been posted.
consuming, tedious and expensive, the reason
why special journals are adopted by most B. Cash Receipts Journal (CRJ)
entities. is a special journal that records all business transactions
The use of special journals has three-fold advantage involving receipts of cash or inflow of cash.
compared to general journal namely :
o division of labor facilitates smoothly the The main sources of cash in a merchandising business
recording process are collections on account and cash sales and all are
o involves less time in posting phase recorded in this journal.
o less commission of accounting error
The special journals are: The columns include debits for Cash and Sales Discounts
o Sales Journal and credits for Accounts Receivable and Sales.
o Purchase Journal
o Cash Receipts Journal Other accounts or Sundry columns can be added for
o Cash Payments Journal cash receipts not related to sales. Ex: Cash invested
o General Journal by owner, etc..
There can only be one original journal, therefore, these
special journals become the books of original entry. Cash receipts are evidenced by source documents like
Transactions recorded in the special journals shall not pre-numbered official receipts(OR), cash register tapes
be anymore recorded in the general journal. (CRT), cash slips and bank credit memorandum (CM).
Accordingly, if special journals are in use, the General
Journal shall only be used for entries of other C. Purchase Journal (PJ)
transactions not recorded in the special journals, (PJ)-is a subsidiary-level journal in which it stored
including adjusting, closing and reversing entries. information about purchasing transactions. This journal
is most commonly found in a manual accounting
A. Sales Journal system, where it is necessary to keep high-volume
(SJ)-is a special journal used to record credit sales of purchasing transactions from overwhelming the general
merchandise only. ledger. No other transactions are recorded in the
Purchase Journal except Purchases on account. All types
It is a subsidiary ledger used to store detailed sales of purchases made on credit are recorded in the
transactions. Its main purpose is to remove a source of purchases journal, including the following:
high-volume transactions from the general ledger, o Office supplies
thereby streamlining the general ledger. The following o Services
information is typically stored in the sales journal for o Goods acquired for resale
each sale transaction: Cash purchases and purchase returns are not recorded
1. Transaction Date in this journal.
2. Account Number
3. Customer Name Information in this journal must include date of entry,
4. Invoice Number name of supplier, the RR No./Inv. No. and the amount
5. Sales Terms of the transaction.
6. Sale Amount - It has three money
columns such as: Accounts Individual entries are posted daily to the Accounts
Receivable (Dr.) ; Sales (Cr.) and Payable subsidiary ledgers account which continuously
Output Tax (Cr.) update the current balance of creditors.
In SJ, the Accounts Receivable serves as the controlling
account and the Subsidiary Ledgers represents
Accounts Payable is the controlling account while o Without using the control and subsidiary ledger
details of the account is reflected in the subsidiary accounts, the journal entries of several
ledgers . customers and several suppliers will be posted
in one single T-Account.
At the end of accounting period the columns totals :
Purchases, VAT input and Accounts Payable are posted o It will be very difficult to bill each customer or
to the General Ledger. send statement of account, answer their
inquiries about individual balances or make any
D. Cash Disbursement Journal (CDJ) collection effort as this will involve knowledge
is a special journal that records all business of customer’s individual names and addresses,
transactions involving payment of cash or cash outflow. transaction dates, etc.
This special journal has the most entries as it includes all o Due to volume of transactions and increasing
cash payments such as Cash purchase of number of customers and suppliers, the
merchandise, supplies or other assets, Payment to individual account becomes unmanageable .
creditors (suppliers or banks), payment of operating
expenses and other cash payments. o This problem was best addressed by the control
account A/R in the ledger and individual
The columns include Credits to Cash and Purchase customer’s account in the subsidiary ledger;
Discounts and Debits Accounts Payable and Purchases. likewise with the use of control account A/P in
the ledger and individual supplier’s account in
Other accounts or Sundry columns can be added for the subsidiary ledger.
cash payments not related to purchases or other
payments of cash such as operating expenses, etc. o The sum of the individual balances in the
subsidiary ledgers must equal to the amount of
Cash disbursements are evidenced by source controlling account as reflected in the general
documents like statement of account or Billing ledger.
statement, debit memorandum from the bank, pre-
numbered vouchers (under Voucher System and paid
with Check) or receiving report with attached duly Module 6 Part 4
approved request for payment.
The Voucher System
E. General Journal It is a system of Accounting in which control of cash
This journal is used to record transactions that cannot purchases and cash disbursements are done using a
be recorded appropriately in the four special journals “voucher” and the account used is Voucher Payable
(SJ,CRJ,PJ,CDJ). instead of Accounts Payable.
Some transactions recorded here are non-cash All request for payments are usually processed, verified
investment of owner, returns of merchandise sold and and approved before a check is issued and drawn
acquired, write-offs of uncollectibles, and other non- subject to the approval of officials or the signatories to
cash entries. the check.
CONTROL ACCOUNT- appears on the statement of All supporting documents for each voucher are attached
financial position in summary or total as applicable to before a check is prepared
Accounts Receivable, Accounts Payable and Inventory. and forward to the authorized signatories.
SUBSIDIARY LEDGER – is a detailed list or record of the Voucher – is an evidence of a business transaction , a
customers or suppliers to support the control account. serially numbered form which serves as a basis for
payment and once approved, a check is issued to
signify that payment to the payee indicated is in Checks are entered in the check register in numerical
process. This form is an accountable printed form sequence which serves as a convenient reference for
ordered from a supplier in duplicate. the check number and the date of payment.
The voucher form identifies the name of the payee, Checks are issued only based on approved and recorded
address, terms, description and invoice amount. Also vouchers thus debiting Accounts Payable and crediting
indicated are date of payment, bank & check # and the Cash or Cash in Bank and purchase discounts if
ledger entries. There also a space for the following: appropriate.
Prepared By; Checked and verified by; Audited By;
Approved By( officers to sign their approval for To safeguard against irregularities, the voucher and
payment) and Received By (the person who received underlying documents should be cancelled by the
the released check). disbursing officer by stamping it “PAID” upon release of
check and before it will be returned to the accounting
Before it is approved, it has to be verified by other department for filing.
personnel for: comparison of purchase requisition (PR),
purchase order (PO), Invoice, receiving report (RR) Imprest System
which should be attached to the voucher, Review of It is a system of cash control which requires All cash
extensions and footings and approval of ledger accounts receipts should be deposited intact and All cash
to be used. This is called the voucher package to be disbursements should be made by means of check.
recorded in the Voucher Register.
Is a form of financial accounting most common to Petty
Voucher Register Cash.
The Voucher Register takes the place of the Purchase
Journal wherein all authorized and approved check The basic characteristics of the Imprest System is that a
payments such as expenditures are recorded first. fixed amount is reserved which after a certain period of
time or when circumstances require shall be
The approved pre-numbered vouchers are entered in replenished.
the voucher register in numerical sequence so that they
can be accounted for or referred to easily. However, an entity considers it impractical to write a
check for small items such as jeepney or taxi fares,
Entries in the Voucher Register resulted to a credit to postage and other miscellaneous expenses of small
Voucher Payable account but Account Payable may also amounts thus companies set up PETTY CASH FUND.
be used and properly reported in the Balance Sheet as
is. Petty Cash Imprest System
Petty Cash -is a small amount of discretionary funds in
The columns of the voucher register include expense the form of cash used for expenditures where it is not
and asset accounts frequently debited such as sensible to make any disbursements by check because
Purchases, transportation-in, office supplies, of the inconvenience and costs of writing, signing and
transportation-out. All then cashing the check.
other accounts not provided in the columns may use
the “Other Accounts” column. For this purpose, an initial fund called petty cash fund
will be set up by issuing a check payable to the petty
Check Register cash custodian by this journal entry:
The Check Register is a simplified form of the Cash
Disbursement Journal. It records all payments made by Petty Cash Fund P5,000
check. Cash / Cash in Bank P5,000
To set up petty cash fund.
Reimbursements from Petty Cash
The fund was created to accommodate petty or small
expenses of the company. The custodian
reimbursed to employees chargeable petty expenses
using petty cash vouchers. When the fund gets
low, the petty cash vouchers will be summed up and the
custodian will ask for replenishment of the
fund .