DTM 40123 PRINCIPLES OF ACCOUNTING FOR TOURISM & HOSPITALITY Page 1of 23BOOKS OF PRIME ENTRY 3.0 Journal and Ledger Definition JOURNAL oJournal is a sheet in which all business transaction entries are recorded in chronological order. oJournal can be categorized as: 1.General journal – basic journal used to record all business transactions that cannot be recorded in cash book or special journal. 2.Special journals – used to record a specific type of transaction only. Examples: oPurchase journal oSales journal oPurchase returns journal (returns outwards journal) oSales returns journal (returns inwards journal) oJournal entries must be posted to the ledger of related account based on the double-entry system. oJournal is a sheet in which all business transaction entries are recorded in chronological order. LEDGER oA ledger is the principal book for recording and totaling economic transactions measured in terms of a monetary unit of account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account. oAll ledger’s account must be balanced before a trial balance is prepared. oAll ledger’s account is balanced by comparing the total debit amount with the total credit amount, and determining which amount is larger. oTypes of ledgers: Subsidiary account -Account receivable (debtors) At the end of this chapter, students should be able to: Demonstrate mastery of knowledge and understanding of a journal Practice the methods of recording in General journal based on hospitality industry activities Practice the methods of recording in special journal based on hospitality industry activities Demonstrate mastery of knowledge and understanding of Cash Book LEARNING OUTCOMES
DTM 40123 PRINCIPLES OF ACCOUNTING FOR TOURISM & HOSPITALITY Page 2of 23-Account payable (creditors) Non-subsidiary account -Real accounts Liabilities & Owner’s equity Assets: a) Current assets. Eg: cash, bank, and account receivable b) Non-current assets: Eg: Building, land, motor vehicle -Nominal account Expenses. Eg: Discount allowed, rent, salaries Revenue. Eg: Commission received, discount received, rent received. The Source Documents Used in the Business Reporting Book of Original Entry Transaction Recorded Purchases Journal Credit purchases of goods Sales Journal Credit sales of goods Returns inwards (Sales returns) Journal Returns of sales Returns outwards (Purchase returns) Journal Returns of purchases Cash book (DR) Cash inflow or receipts Cash book (CR) Cash outflow or payment General Journal ALL OTHER transactions that cannot be recorded in special day book, cash book or petty cash book. THE ACCOUNTING EQUATION Also called as the balance sheet equation, it represents the relationship between the assets, liabilities, and owners' equity of a business. The equationshows that the value of a company's assets always equals the sum of its liabilities and owners' equity.