Simple Bookkeeping and Accounting for Cooperatives

1. Refresher Course
on Simple Bookkeeping
September 18-20, 2019
Hotel Ariana, Bauang, La Union
Arlenne C. Espinoza
CDS II

2. ACCOUNTING AND BOOKKEEPING
I. Introduction
 Definition of Accounting and Bookkeeping
 Importance Accounting and Bookkeeping
 Users of Financial Statements
II. Basic Accounting Concepts and Principles
III. Accounting Equation and the Rules of Debit and Credit,
and the Double Entry Bookkeeping System
IV. Accounting Cycle
V. Chart of Accounts
VI. Books of Accounts
VII. Basic Financial Statements
VIII. Workshop

3. Definition…
Accounting is an art of recording,
classifying, summarizing in a
significant manner and in terms of
money, transaction and events which
are in part, at least, of a financial
character and interpreting the
results thereof.
Bookkeeping is the systematic
recording of financial transactions
and events in a chronological order.

4. Recording-this
function deals
with the writing on
the books or
records of the
business
transactions or
events. This is
technically
referred to as
bookkeeping.
Classifying-is the
recording and
summarizing
functions, similar
items are grouped
or sorted under
the same names
Summarizing-it is
the grouping or
incorporating the
details of the data
in the accounting
records.

6. Importance
1. To have a complete records of day to day
transactions and events that have
transpired within the organization for
future reference;
2. To serve as guide in the formulation of
policies and activities;
3. Bookkeeping records serve as source of
information necessary for the directors to
properly manage the cooperative;
4. Records are the basis of reports to
members; and
5. The government requires the periodic
submission of financial statements.

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8. Basic Accounting Principles
and Concepts
1. Business Entity
A business is considered a separate entity from the owner(s) and
should be treated separately. Any personal transactions of its
owner should not be recorded in the business accounting
book unless the owner’s personal transaction involves adding
and/or withdrawing resources from the business.
2. Going Concern
It assumes that an entity will continue to operate indefinitely. In
this basis, generally, assets are recorded based on their original
cost and not on market value. Assets are assumed to be held and
used for an indefinite period of time or during its estimated
useful life. And that assets are not intended to be sold
immediately or liquidated.

9. 3. Monetary Unit
The business financial transactions recorded and
reported should be in monetary unit, such as US Dollar,
Canadian Dollar, Euro, etc. Thus, any non-financial or
non-monetary information that cannot be measured in
a monetary unit are not recorded in the accounting
books, but instead, a memorandum will be used.
4. Historical Cost
All business resources acquired should be valued and
recorded based on the actual cash equivalent or
original cost of acquisition, not the prevailing market
value or future value. Exception to the rule is when
the business is in the process of closure and
liquidation.
5. Matching
This principle requires that revenue recorded, in a
given accounting period, should have an equivalent
expense recorded, in order to show the true profit of
the business.

10. 6. Accounting Period
This principle entails a business to complete the whole
accounting process over a specific operating time
period.
Accounting period may be monthly, quarterly or
annually. For annual accounting period, it may follow a
Calendar or Fiscal Year.
7. Conservatism
This principle states that given two options in the
amount of business transactions, the amount recorded
should be the lower rather than the higher value.
8. Consistency
This principle ensures similar and
consistent accounting procedures is used by the
business, year after year, unless change is necessary.
Consistency allows reliable comparison of the financial
information between two accounting periods.

11. 9. Materiality
Business transactions that will affect the decision of a user are
considered important or material, thus, must be reported
properly. This principle states that errors or mistakes
in accounting procedures, that which involves immaterial
or small amount, may not need attention or correction.
10. Objectivity
This principle states that the recorded amount should have
some form of impartial supporting evidence or documentation.
It also states that recording should be performed with
independence, that’s free from bias and prejudice.
11. Accrual
This principle requires that revenue should be recorded in the
period it is earned, regardless of the time the cash is received.
The same is true for expense. Expense should be recognized
and recorded at the time it is incurred, regardless of the time
that cash is paid. This is to show the true picture of the
business financial performance.

12. Accounting Equation
ASSETS=LIABILITIES+RESERVES+EQUITY
Assets
•Assets are things or value owned or possessed.
Liabilities
•Liabilities are debts; they are amounts owed to
creditors.
Reserves
•Reserves are amounts to be established as mandated
by RA 9520 (Philippine Cooperative Code of 2008) for
specific purposes.
•Equity is the excess of assets over liabilities and
reserves.Equity

13. Rules of Debit and Credit
Transaction is the exchange of goods or
services at a certain sum of money.
It is an exchange of monetary
values. In every transaction, there
is value received and value parted
with. Value is anything susceptible
of pecuniary estimation. It may
represent money itself, property
other than money, services, or
rights. Every transaction should be
authenticated by a genuine business
form.
For every value
received, there is
an equal value
parted with. It is
obvious therefore
that a transaction
has a double
effect, receiving
of value and
giving of value.

14.  www.slideshare.net

15. www.slideshare.net

16.  juliangooden.com

17. The accounting cycle is the step
by step procedures necessary to
come out with the end results
of accounting and which serves
as a communication tool of
cooperative to various
interested parties, the Financial
Statements.

18. 1. Analysis of
business
transactions
All transactions
must be supported
with necessary
business
documents (official
receipts, vouchers,
checks, invoices).
2. Journalizing
The chronological
recording of
transactions in the
books of accounts
following the
principles of Debit-
Credit and the
generally accepted
accounting
principles.

19. 3. Posting
The transferring of journal entries
from various books of accounts to the
General Ledger.
The General Ledger is the book where
we classify or group similar items
using different accounts. Also known
as a group of accounts and the book
of final entry.

20. 4. Preparation of Trial Balance
It is a list of accounts with balances (open
accounts) found in the general ledger.
It checks the equality of Value
Received/Debit and Value Parted
With/Credit of the journal entries.
Find the total debits and total credits and
the corresponding balance of each
account.

21. www.slideshare.net
5. Make Adjusting Entries

22. accountingflash.com

23. 6. Preparation of Adjusted Trial Balance
An adjusted trial balance is a testing of
all company accounts that will appear on
the financial statements after year-end
adjusting journal entries have been
made.
www.myaccountingcourse.com

24. slideplayer.com

25. 7. Preparation of Financial Statements
Financial Statements are prepared by
transferring the account balances on the
adjusted trial balance to a set of financial
statement templates.
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26. 8. Make Closing Entries
The books of accounts are closed at the
end of the accounting period. Nominal
Accounts (the accounts found in the
Statement of Operations) are closed
while Real Accounts (the accounts found
in the Statement of Financial Condition)
are carried forward to the next business
operation.

27. 9. Post Closing Trial Balance
10. Reversing Journal Entries

29. Books of Accounts
1. Cash Receipts Book/Journal
All cash received are recorded in this book.
2. Cash Disbursement Book/Journal
Used to record all payments of cash made.
3. Purchase Book/Journal
Goods bought and are intended for sale are recorded
in this book.
4. Sales Book/Journal
Used to record the sales of goods.
5. General Journal
Non-cash miscellaneous transactions are recorded in
this book.
6. General Ledger
7. Subsidiary Ledger

30. Basic Financial Statements
1. Statement of Financial Condition
2. Statement of Operation
3. Statement of Changes in Equity
4. Statement of Cash Flow