Transaction & Analysis Recording, Part I

Summary

This video discusses the fundamental phases of accounting, focusing on recognizing transactions as accountable events and recording them properly. It covers essential steps like maintaining source documents, journalizing, and posting transactions to ledgers. The presentation emphasizes the importance of the double-entry system and highlights the phases of accounting: measuring, classifying, summarizing, and interpreting financial data. It also explains the role of source documents such as invoices, receipts, and checks, which are critical for accurate financial reporting and decision-making.

Takeaways

• 🧾 Accounting involves identifying, measuring, classifying, summarizing, and interpreting financial data.
• 📑 Source documents, such as invoices and receipts, are crucial for tracking and recording business transactions.
• 🗂️ The double-entry system brings balance and accuracy to accounting records.
• 📊 There are four phases of accounting: measuring, classifying, summarizing, and interpreting.
• 💼 Recording transactions systematically and in chronological order is fundamental in bookkeeping.
• 📋 The general journal is the book of original entry where business transactions are first recorded.
• 💰 Source documents are used to verify transactions and provide evidence for auditors.
• 📈 The interpretation phase of accounting helps make meaningful decisions by analyzing financial data.
• 💳 Documents like bank statements and purchase orders serve specific roles in recording financial activities.
• 👨‍💼 Employee attendance is tracked using daily time records (DTR) or biometrics to monitor hours worked.

Q & A

What are the four basic phases of accounting mentioned in the presentation?

The four basic phases of accounting are measuring, classifying, summarizing, and interpreting financial data.

Why is communication considered important in the accounting process?

Communication, though not formally considered one of the accounting phases, is crucial because accounting information must be properly communicated to the relevant parties after reports are analyzed.

What is the purpose of source documents in accounting?

Source documents provide evidence of transactions and events, which are then used as the basis for journal entries. They include items such as sales invoices, receipts, bank statements, and checks.

What role does the double-entry system play in accounting?

The double-entry system brings balance to the accounting process by ensuring that every financial transaction affects at least two accounts, maintaining equilibrium in the financial records.

What is the difference between official receipts and sales invoices in the Philippines?

In the Philippines, official receipts are required for the sale of services, while sales invoices are required for the sale of goods. Official receipts confirm payment for services, and sales invoices confirm payment for goods.

What is the significance of the summarizing phase in accounting?

The summarizing phase organizes financial data after an accounting period, such as a month or year, into a format that is easy to understand for both internal and external users.

How does the classifying phase help in accounting?

The classifying phase involves sorting and grouping similar items into specific categories or accounts, allowing systematic analysis of recorded data, such as grouping travel expenses under one account.

What is the purpose of a bank statement, and how is it different from a statement of account?

A bank statement lists all transactions for a bank account over a period, including deposits, withdrawals, and balances. A statement of account outlines transactions between a buyer and a seller, focusing on outstanding balances. The key difference is the issuer: a bank statement is issued by a bank, while a statement of account is issued by a business.

What does 'measuring' in accounting involve?

Measuring in accounting refers to assigning monetary values (like peso amounts) to accountable economic transactions and events, helping quantify their impact on financial records.

How are checks used in financial transactions?

Checks direct a bank to pay a specific sum to a designated party. They allow monetary transactions without physical currency exchange, making them safer for transferring large sums of money compared to cash.

Outlines

00:00

📚 Introduction to Transaction Recording and Accounting Phases

This paragraph explains the importance of recognizing transactions as accountable events and their recording in accounting books. It emphasizes the significance of keeping source documents intact, timely journal entries, and posting them into the ledger. The double-entry system and its role in balancing the accounting process are introduced. The phases of accounting, including measuring, classifying, summarizing, and interpreting financial data, are outlined. Proper communication of accounting information and reports like income statements and balance sheets, along with the use of graphs and ratios, are also stressed.

05:02

📝 The Definition and Purpose of Accounting

This section recalls the American Accounting Association’s definition of accounting as the process of identifying, measuring, and communicating economic information to enable informed decisions. The paragraph details the components of the accounting cycle, starting with identifying events through source documents, which serve as the basis for journal entries. The importance of source documents, such as invoices and bank statements, in analyzing financial performance and position is highlighted, along with how these documents affect accounting records and decisions.

10:05

💵 Official Receipts and Sales Invoices in Business Transactions

This paragraph explains the importance of official receipts (ORs) in Philippine business transactions, particularly for services. The difference between an OR and a sales invoice is clarified, with the OR being used for services and the sales invoice for goods. Sales invoices detail items purchased, payment terms, and possible discounts. The paragraph also explains payment terms like net 30 days and the implications of prompt payments.

15:05

🏦 Understanding Bank Deposits and Bank Statements

Here, bank deposit slips and bank statements are discussed. A deposit slip records the details of funds deposited into a bank account, including account number and amount. Bank statements summarize all account transactions for a month, helping users track their deposits, withdrawals, and expenses. The paragraph emphasizes the importance of reviewing bank statements to monitor spending and detect fraudulent activities.

20:05

💰 The Role of Checks and Purchase Orders

This section explains how checks work as a secure way to transfer money without physical currency. The paragraph details the elements of a check, such as date, payee line, and memo. Different types of checks, like certified and payroll checks, are introduced. The role of purchase orders in clearing logistical confusion is also explained, distinguishing them from invoices. Purchase orders confirm what was ordered, while invoices are issued to request payment after goods or services have been delivered.

25:06

⏰ Time Records and Biometrics in Employee Management

The final paragraph focuses on time records and biometrics in monitoring employee attendance and work hours. Daily time records (DTRs) and biometrics systems are described as tools used by companies to track employee presence and manage time effectively. Biometrics machines provide additional support for DTRs, ensuring accurate time monitoring for payroll and management purposes.

Keywords

💡Source Documents

Source documents are physical or electronic records that provide evidence of transactions in accounting. They include items like sales invoices, cash register tapes, and official receipts. These documents are crucial for verifying and entering transactions into the accounting system, as highlighted in the video with examples like purchase orders and bank statements.

💡Journalizing

Journalizing is the process of recording financial transactions in a chronological order in the accounting books. It is referred to as the 'book of original entry,' and it's a key phase in ensuring that financial data is accurately captured and stored for future use in reports. In the video, the importance of prompt recording into the journal is emphasized.

💡Ledger

A ledger is a book or system used to record and classify financial transactions by account category, such as travel expenses or sales revenue. It organizes information that has been previously recorded in journals. The ledger is essential in the summarization and classification of financial data, allowing for easier analysis and interpretation later on.

💡Double Entry System

The double entry system is an accounting method where every transaction affects at least two accounts, ensuring that the accounting equation (Assets = Liabilities + Equity) is balanced. This system brings equilibrium to financial records, and the video highlights its importance in maintaining the integrity of the accounting process.

💡Accounting Phases

The video outlines four main phases of accounting: measuring, classifying, summarizing, and interpreting. Measuring involves assigning monetary values to transactions, classifying groups similar transactions, summarizing aggregates data, and interpreting helps decision-makers understand financial information. These phases provide a structured way to process and analyze financial data.

💡Summarizing

Summarizing in accounting refers to condensing financial data after a specific period, like a month or year, into formats that are easily understandable by users of financial statements. This process involves creating financial reports like income statements and balance sheets. The video underscores the importance of this phase in communicating financial health to stakeholders.

💡Interpreting Financial Data

Interpreting financial data is the phase where accountants analyze and draw insights from the summarized data. This analysis is used by businesses to make informed decisions regarding financial conditions and future plans. In the video, this phase is described as critical for helping users of the information to assess profitability and other financial aspects.

💡Income Statement

An income statement is a financial report that shows the company's revenue and expenses over a specific period, helping to determine profit or loss. The video mentions this document as part of the essential accounting reports prepared after summarizing financial data, which allows users to assess a business's operational performance.

💡Accounting Cycle

The accounting cycle refers to the systematic process of identifying, recording, and summarizing accounting events during a fiscal period. It starts with the identification of transactions and ends with the preparation of financial reports. The video explains this cycle as the foundation for accurate and organized accounting practices.

💡Bank Statement

A bank statement is a document provided by a bank that summarizes all account transactions, including deposits and withdrawals, over a given period. The video describes it as an essential source document that helps businesses track financial transactions and monitor accounts for accuracy and fraud prevention.

Highlights

Importance of keeping source documents intact for accurate transaction recording.

The double-entry system brings balance to the entire accounting system.

Four basic phases of accounting: measuring, classifying, summarizing, and interpreting financial data.

Accounting communication, while not formally a phase, is crucial for informed judgment and decision-making.

Measuring phase assigns peso amounts to accountable economic transactions.

Classifying phase groups similar items under designated categories, such as travel expenses.

Summarizing phase presents data at the end of each accounting period in a clear, understandable format.

Interpreting financial data allows end-users to make meaningful judgments about a business's financial conditions.

Recording or journalizing is the phase where financial transactions are recorded systematically and chronologically.

Source documents, such as sales invoices, official receipts, and bank statements, initiate the accounting process.

Cash register tapes contain detailed information about purchases, including clerk number and transaction details.

Official receipts (OR) are essential in the Philippines for documenting the sale of services.

Sales invoices record sales of goods, including item details, discounts, and payment terms.

Bank deposit slips and statements track and verify transactions, deposits, and withdrawals for account holders.

Checks provide a secure way to transfer funds without exchanging physical currency, especially for large sums.

Transcripts

[Music]

to easily comprehend this topic it is

very important to draw an

outline on how a transaction is being

recognized

as an accountable event and eventually

entered in the accounting books

in this presentation you will learn the

importance of keeping source documents

intact

prompt recording of transactions into

the journal and posting

the recorded transactions into the

ledger and you will learn to appreciate

the double entry system and the balance

it brings into the whole accounting

system

there are four basic phases of

accounting such as measuring classifying

summarizing and

interpreting financial data

communication may not be formally

considered one of the accounting phases

but it is a crucial step as well all

accounting

information should be communicated

properly to the appropriate parties

after analyzing accounting reports

must be prepared and distributed and

should

include the basic income statement and

balance sheet

as well as additional information

including accounting ratios

diagrams graphs and funds flow

statements

thus let us discuss authority the four

basic phases of accounting according to

their technical definition

measuring is the assigning of peso

amounts

to the accountable economic transactions

and events

the classifying phase of accounting

involves

sorting and grouping similar items

under the designated name category or

account this phase uses systematic

analysis of recorded data in which all

transactions

are grouped in one place for example

travel expenses might be a category that

accountants use to classify

expenses relating to company travel

the term ledger refers to the book in

which

classifications are recorded

summarizing phase of accounting involves

summarizing the data after each

accounting period such as

a month quarter or a year

the data must be presented in a manner

which is easy to understand

and use by both external and internal

users of the accounting statements

graphs and other visual elements are

often used

to complement the text data the

interpreting phase of the accounting

process

is concerned with analyzing financial

data

and is a critical tool for decision

making

this final function interprets the

recorded data in a manner which

allows end users to make meaningful

judgments

regarding the financial conditions of a

business

or personal account as well as the

profitability of business operations

this data is then used to prepare future

plans

and frame policies to execute financial

plans

let us discuss also the basic definition

of recording or journalizing despite the

fact

that the focus of business right is on

the four basic phases only

so to integrate recording is a basic

phase

of accounting that is also known as

bookkeeping

in this phase all financial transactions

are recorded in a systematical

and chronological manner in the

appropriate books or databases

accounting recorders are the documents

and books involved

in preparing financial statements

accounting recorders

include records of assets liabilities

ledgers journals and other supporting

documents such as invoices and checks

note that business transactions are

originally recorded in the book of

original

entry called general journal and beneath

the recording phase or identifying and

measuring

the phases of accounting such as the

measuring and classifying are usually

done during the period

and the summarization and interpretation

are done

at the end of the period the tasks

involved are analyzing identifying

measuring recording and classifying

remember one of the definitions of

accounting provided by american

accounting association

in the statement of basic accounting

theory and my discussion

on the first presentation this

definition

provided by american accounting

association has institute

the test of time let's recall accounting

is

the process of identifying measuring

communicating economic information

to permit informed judgment and decision

by users of the information

thus it states the very purpose of

counting

which is to provide quantitative

information

useful in making an economic decision

its components are identifying the

analytical component

measuring the technical component and

communicating the formal component

the accounting cycle refers to a series

of sequential steps or procedures

performed to accomplish the accounting

process

the first step in the accounting cycle

is identification of events to be

recorded

and it aims to gather information about

transactions or events generally through

the source documents

thus since the first step is

identification of events to be recorded

in the journal that means to say that

the task

involved is identified

and it aims to determine as well which

events are to be recorded as accounting

transactions

transactions and events are the starting

points in the accounting cycle

by relying on source documents

transactions and events can be analyzed

as to how they will affect performance

and financial position

source documents identify and describe

transactions and events

entering in the accounting process this

original written evidences contain

information about the nature and the

amounts of the transactions

these are the basis for journal entries

some of

the more common source documents are

sales invoices

cash registered tips official receipts

bank deposit sleep bank statements

checks purchase orders time cards and

statements of account

thus the source documents are simply the

evidence of events

and it starts the process

it describes transactions it contains

information about transacting parties

and others

[Music]

source documents are the physical basis

upon which

business transactions are recorded

source documents are typically retained

for use as

evidence when auditors later review a

company's

financial statements and need to verify

that transactions have enforced

they usually contain the following

information

a description of a business transaction

the date of the transaction a specific

amount

of money an authorizing signature

many source documents are also stomped

to indicate an approval

or on which to write down the current

date or the accounts to be used

to record the underlying transaction

a source document does not have to be a

paper document

it can also be electronic such as an

electronic record of the hours

worked by an employee as entered into a

company's timekeeping system

through a smartphone

cash register tips provide a wealth of

information

but most people never really notice

what's there

look closely though and you can spot far

more than a list

of prices more registered tips also

carry merchant information

identify the checker and provide details

about each item purchased

the exact placement of data varies from

store to store but most

modern cash registers have the ability

to print a great deal of information on

the receipt

we have here an example of a cash

register tape

which contains the following information

such as

the date and time the clerk number

the clerk name the consecutive number

the register number and the unit price

of each item

and the text simply represents the items

such as the following jacket pants shirt

belt and also it contains the

merchandise

subtotal and the tax total amount

and the total amount of the invoice such

as

296.80

the cash standard which is 300

dollars so the first standard is simply

the amount

of money given by the buyer

to the cashier and then we have here the

cash

change which is 13 pesos

and then the cash change which is three

point

and then the cash change which is three

point

twenty dollars

and then the cash change which is three

point twenty dollars

thus you have actually seen the source

document especially when you are buying

or purchasing a merchandise

from an establishment they usually use

cash register tips

next is official receipts if you are

involved

in business in any way in the

philippines you should be familiar with

the official receipt

or or where is the or from that supplier

can you please send us the or before the

end of this week

we can close our books this month

until we find those ors

so what's all the fuss about why are

people always

talking about official receipts whether

your business sells or

buys services you need to understand

your rights and responsibilities when it

comes to official resides

in the philippines an official receipt

or or is a document that provides

evidence of a sale of a service by or

to a business official receipts should

be issued by the business performing the

service

immediately upon receipt of payment from

a customer for

that service next is sales invoice

a sales invoice or sales field

is an essential and common document used

by all

kinds of companies companies

use sale invoices to inform customers of

the amount

they own in exchange for goods or

services that were sold the sales

invoice

should include which items the customer

purchased

how many of the items were purchased

any discounts received and the total

amount

most sale invoices will always include

information

as to when payment is expected the total

earnings of a business

include the total amount of all sales

invoices plus any additional income it

may have

earned from various activities a sales

invoice will include information

regarding when the payment is expected

to be received

some of the standard payment terms are

zhu net 30 days

1 over 10 net 30 days 2 over 10

net 30 days the first two terms indicate

that no discount will be applied for

prompt payment

drew upon receipt means that the payment

is true

as soon as the invoice is received

whereas net 30 days means that

the payment must be received within

30 days the last two terms indicate

that a discount is offered if the

payment is made within the indicated

days

in this example a payment term of 1

over 10 net 30 days means

that a customer can take one percent of

the net amount

owed if the invoice is paid within 10

days of

the invoice date 2

over 10 net 30 days indicates

that a 2 discount will apply

if the invoice is paid within 10 days

if this deadlines are not met then the

full amount

will be due within 30 days

before going to the next example of

source document

let us first discuss the distinction

between official receipts

and sales invoices in the philippines

official receipts are only required for

the sale of a service

a sales invoice is a different document

and is required in the case of a sale of

goods

a sales invoice provides evidence that

the sale of goods has occurred

and that payment has now become due for

those

groups once payment is received

a collection receipt which is different

than an official recipient

when issued to confirm the payment for

and the sale of goods

bank deposits tips deposit sleep is a

small paper

form that a bank customer includes when

depositing funds into a bank account

the deposit sleep by definition contains

the date the name of the depositor

the depositor's account number and the

amounts being deposited

i guess all of you already knows how a

deposit sleep looks like

and you might have already tried

depositing a certain sum of money

into a bank by simply filling up

the bank deposits leak

as you can see here on the following

examples you can find details regarding

the

the purpose of the sum of money

being tendered to the bank it might

probably be for

deposit or simply for payment of

bills the type of the account whether

savings or current account and

the currency of the amount being

deposited

the account number and the depositors or

simply merchant's name if you are to pay

a bill

and the type of deposit or payment

whether it is

tendered in cash or simply in check

so the total deposits are payment which

amounts to 5 000 pesos

so you can see details as such

when filling up about deposit sleep or

when receiving a bank deposit

next is bounce statements

a bank statement is a document also

known as

an account statement that is typically

sent

by the bank to the account holder every

month

summarizing all the transactions of an

account during the month

bank statements contain bank account

information

such as account number and a detailed

list

of deposits and withdrawals

the bank statement is a list of all

transactions

for a bank account over asset period

usually monthly

the statement includes deposits

charges withdrawals as well as

the beginning and ending balances for

the period

account holders generally review their

bank statements

every month to help keep track of

expenses

and spending as well as monitor for any

fraudulent charges

or mistakes you might be wondering

how a bank statement works a bank issues

a bank statement to an account holder

that shows

the detailed activity in the account it

allows

the account holder to see all the

transactions

processed on their account banks usually

send monthly statements to an account

holder on a set date

in addition transactions on a statement

typically appear in a chronological

order

a statement of account also known as

an account statement or customer

statement

is a document that outlines the

transactions between a buyer and a

seller

account statements can serve a few

different purposes

by listing every transaction between a

business and a customer

a statement of account can be used to

calculate

an outstanding account balance remind

a customer to settle their account

balance

avoid disputes with customers

and it isn't common to use an account

statement

to remind a customer to pay a single

overview invoice

instead you should send a reminder

letter

thus before going to the next example of

source document again let us

differentiate

the statement of accounts

and the bank statement as we have

discussed a while ago

the statement of account and about

statement

are similar when it comes to their

purpose

and that is to remind the client

or the buyer as to their accounts

outstanding balance

[Music]

however the difference lies only on

identifying who

is the issuer of the source document

so for the statement of account the

issuer

is the sender and for about statement

the issuer is the bank of course

so that is simply the difference

furthermore the bank statement contains

not only of

the charges but also of the deposits

and withdrawals of the account holder

a check is a written dated and signed

instrument that directs a bound to pay a

specific sum of money to the bearer

it is another way to instruct about to

transfer

funds from the payers account to the

payee

or the person's account check features

include the date the payee line

the amount of the cheque the payers

endorsement

and a memo life types of checks

include certified check cashiers checks

and payroll checks also called paychecks

how checks work a check is a bill of

exchange or document

that guarantees a certain amount of

money

it is a printed for the drawing bank to

give an account holder

the payer to use the payer writes

the cheque and presents it to the payee

then takes it to their bank or other

financial institutions

to negotiate for a cash or to deposit

into an account the use of

checks allows two or more parties to

make a monetary

transaction without the need of actually

exchanging physical currency

instead the amount for which the check

is written is a substitute

for a physical currency of the same

amount

checks can be used to make bill payments

as

gifts or to transfer sums between two

people or

entities they are generally seen as a

more secure way of

transferring money than cash especially

when there

are large sums involved if a check is

lost or stolen a third party is not able

to cash it

as the peggy is the only one who can

negotiate the check

modern substitutes for checks include

debit and credit cards

wire transfers and internet banking just

imagine receiving your monthly salary

amounting to 5 million

pesos in cash of course

there is a tendency that you might be

kidnapped

or hold up because of that

matter thus having large

sums of money in your pocket would

really bring you danger

next is purchase order a purchase order

is a document

sent from a purchaser to a vendor to

confirm a specific purchase of

goods or services one little document

can

go a long way in clearing up the

logistical confusion of a growing

business

how are poor chase orders different

from an invoice a purchase order

is issued by the buyer who wants to make

sure that

they got exactly what they ordered while

an invoice

is issued by the vendor wants to make

sure

they get paid porsche's orders are sent

by the buyer to the vendor first and

they outline exactly what the order

should contain

and when it should arrive it

include things like quantity of items

detailed descriptions of the items the

price

date of purchase and payment terms

a vendor sends an invoice only after

they have

approved the purchase

when invoicing vendors usually include

the purchase order number

included on the original purchase order

so that

finance can make sure the information on

both

forms is the same next

is time record it involves the process

of monitoring and organizing

time information far from just

being a way to monitor the attendance of

an employee

having a ddr system allows a company to

effectively manage

its employees by providing adequate data

so formerly what is being used in order

to monitor

the employees attendance is daily time

records

so this is really helpful in order to

track

whether the employee is really present

during office hours

but now what is being used as the

biometrics machine which is

just then supported by a dtr

the monitoring of the employee's time

provided to the company is made issued

through

the biometrics machine