what is books of accounts

Books of Accounts

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There are two main books of accounts, Journal and Ledger .  Journal used to record the economic transaction chronologically.  Ledger used to classifying economic activities according to nature. 

Types of Journals

Special Journals are used in large business organizations, where it is found inconvenient to journalize every transaction in one journal. Therefore, the journal is sub-divided into different journals known as the subsidiary books. The journal is divided in such a way that a separate book is used for each class of transactions The important books of accounts used in modern business world are the following:

• Purchase Day Book

Sales Day Book

Return inward book, return outward book.

• General Journal

>> Practical Multiple Choice Questions Books of Accounts MCQs .

Video Lecture: Books of Accounts in Urdu & Hindi-Workbook  Practice

Purchases Day Book

Purchases book or purchases day book is a book of original entry maintained to record credit purchases. You must note that cash purchases will not be entered in purchases day book because entries in respect of cash purchases must have been entered in the Cash Book . At the end of each month, the purchases book is totaled. The total shows the total amount of goods purchased on credit. Purchases book is written up daily from the invoices received. The invoices are consecutively numbered. The invoice of each number is noted in the purchases book.

Purchase Day Book Format

Example # 1:

From the following transactions of a trader prepare the Purchases day book:

2014                    

Jan 5                     Purchased goods from Qurat Ul Ain & Co                                     Rs. 2,400

”     15                     Purchased goods from Saba Sajjad                                                     6,000

”     25                     Purchased goods from Omer Nawaz & Co                                          1,500

”     30                     Purchased goods from Maqbool & Co                                                 3,000

A sales book is also known as sales day book in which are recorded the details of credit sales made by a businessman. Total of sales book shows the total credit sales of goods during the period concerned. Usually the sales book is totaled every month. The sales day book is written up daily from the copies of invoices sent out.

Sales Day Book Format

Example # 2:

From the following transactions of a trader prepare the sales day book of M. Amin:

March    5              Sold goods to Ideal College                                        Rs. 200

”              10           Sold goods to Ahmad & Co                                              100

”              20           Credit sales to Ayesha Bibi                                             400

”              31           Sold goods to Gulbaz Khan                                             100

Sales returns book is also called returns inwards book. It is used for recording goods returned to us by our customers. Customers who return goods should be sent a credit note. It is a statement sent by a business to customer showing the amount credited to the account.

Return Inward Book Format

Example # 3:

From the following transactions of a trader prepare the sales returns book:

June 8                                    Goods returned by Sana Khalid & Co                             Rs. 40

”     20                                     Goods returned by Ideal Traders                                            52

Purchases returns book is a book in which the goods returned to suppliers are recorded. It is also called returns outward book or purchases returns day book. Goods may be returned because they are of the wrong kind or not up to sample or because they are damaged etc.When the goods are returned to the suppliers, intimation is sent to them through what is known as a debit note. These debit notes serve as vouchers for these entries. A debit note is a statement sent by a businessman to vendor, showing the amount debited to the account.

 Return Outward Book Format

Example # 4:

From the following transactions of a trader prepare the purchases returns day book:

July 14                                   Karim & Sons                                       Rs. 135

”     27                                     Maria Waheed & Co                                 150

”     31                                     Saeed Bros                                                   25

>> Download and Practice Books of Accounts Problems PDF

Proper General or General Journal

Journal proper is book of original entry (simple journal) in which miscellaneous credit transactions which do not fit in any other books. It is also called miscellaneous journal or General Journal. For example purchase assets on credit, Correcting Entries , Adjusting Entries and Closing Entries etc.

Example # 5:

Record the following transactions in the appropriate journal?

March    3              Purchased goods from Ali & Co for Rs. 4,500

“           8              Sold merchandise to Naeem & Sons worth of Rs. 6,000

“            12            Purchase merchandise from B & Brothers Rs. 3,000

“            14           Credit sales of goods to Z & Co for Rs. 2,500

  “            15           Naeem & Sons returned goods Rs. 1,000

“            18           Return merchandise to Ali & Co Rs. 500

“            22           Purchase Furniture from Mr. Saeed of Rs. 3,200

“            24           Returned goods to B & Brothers of Rs. 200

“            27           Purchase Machinery on account from MMM Machines Rs. 7,000

“            29           Z & Co returned merchandise of Rs. 300

>>> Practice Books of Accounts Quiz 1  and Quiz 2 .

Related Topics

Books of Accounts MCQs

Single Column Cash book

Cash Book MCQs (I)

Single Cash Book Problems

More Interest

Double Column Cash Book

Three Column Cash Book

Cash Book MCQs (II)

Cash Book Problems

Books of Accounts Problems

Further Readings

Principles of Accounting

Accounting Examples

Accounting MCQs

Accounting Formats

Mukharji, A., & Hanif, M. (2003). Financial Accounting (Vol. 1). New Delhi: Tata McGraw-Hill Publishing Co.

Narayanswami, R. (2008). Financial Accounting: A Managerial Perspective. (3rd, Ed.) New Delhi: Prentice Hall of India.

Ramchandran, N., & Kakani, R. K. (2007). Financial Accounting for Management. (2nd, Ed.) New Delhi: Tata McGraw Hill.

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One small addition that would make the concept holistic would be to give an introduction of the scenario preceding Books of Original Entry i.e. Source Document.

A Source Document is also known as a prime book, or subsidiary books or daybook or journal. It usually contains the raw and unprocessed information. This information is then transferred to books of original entry in a summarized manner.

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Bookkeeping

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

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Table of Contents

Bookkeeping: definition.

Bookkeeping is the art of recording business transactions in a systematic manner. However, bookkeeping has been defined in various ways by different authors. Some of the major definitions are given below:

• Bookkeeping is an activity concerned with recording financial data related to business operations in a significant and orderly manner
• The part of accounting that is concerned with recording data is often known as bookkeeping (Frank Wood)
• Bookkeeping is the daily operation of an accounting system, which involves recording and classifying routine transactions (Meigs & Meigs)

In simplified words, bookkeeping is the art of recording business transactions comprehensively and in a prescribed, careful way in the books of accounts.

Bookkeeping: Explanation

What is bookkeeping.

This is an important question that deserves a basic but important answer. Bookkeeping is the process of correctly recording cash, credit , and other transactions in the books of account.

What Are Books of Account?

The primary book of account is called the ledger . It is known as the ledger because all transactions, after first being recorded in subsidiary books , are afterward grouped or summarized in the form of accounts in the ledger.

Why Are Goods/Services Bought or Sold on Credit?

Almost all business dealings are conducted on a credit basis to avoid the inconvenience and danger of carrying large amounts of cash .

The supplier of goods or services is usually satisfied to receive payment at some further date. The main exception is the real trade for a private individual.

Why Record These Transactions?

Even in the smallest business, the proprietor or manager will want to have accurate and up-to-date information about how much has been brought and sold, how much money has been received for sales , and how much has been paid away for purchases .

Private individuals often find it convenient to have the same information for their cash receipts and payments . You can imagine that with a very large business, chaos would quickly result without this information.

Does Bookkeeping Really Involve Analyzing Transactions?

It is reasonable to say that bookkeeping involves recording transactions so as to permit analysis in a systematic fashion, in a way that can be applied to all businesses of whatever kind, and that is intelligible not only now but at any future time.

How Has Bookkeeping Changed?

The term "books of account" has a distinctly old-fashioned sound. It perhaps makes you think of a Charles Dickens novel set in early Victorian England, with rows of clerks perched on high stools writing in large books.

Bookkeeping today is likely to be done with the aid of a computer rather than with handwritten books, and this is a virtual certainty in a business of any size or significance.

Nevertheless, modern bookkeepers are doing exactly the same as the clerks were in the novels of Charles Dickens.

Today we are doing it faster and more accurately, but the Victorian clerks achieved very high standards. Whether or not they were any happier is a question for another book!

Importance of Bookkeeping

All businesses, without exception, need to keep accurate and readily accessible records of their financial transactions.

As a child, I had a neighbor who died at the age of 75, leaving records that accounted for every penny of their income and expenditures since their 21st birthday.

Surprisingly, he was a charming, generous man and in no way a miser. Perhaps you too have a personal bookkeeping system to record your own financial affairs, though I would not recommend taking it to these extreme lengths.

The benefits of dependable financial records in business are probably self-evident. They include:

The law requires all companies, as well as many other organizations, to prepare accounts satisfying certain criteria. This can only be done if the basic, supporting financial records are in place.

• The tax authorities require it. If you don't believe me, try telling Her Majesty's Revenue and Customs that you can't complete a VAT return because you haven't kept proper records.
• It's necessary to manage bank accounts, cash, and borrowing. Otherwise, checks might bounce and an unproductive surplus may build up.
• When intelligently used, accounting records warn of impending financial difficulties or even insolvency .
• Financial records provide the basis for efficiency savings and profitable business decisions.
• Without proper bookkeeping, the owners cannot know the worth of the business.
• It is, in many instances, essential to engage in bookkeeping in order to comply with money laundering regulations.

Bookkeeping FAQs

Why record these transactions.

It is reasonable to say that Bookkeeping involves recording transactions so as to permit analysis in a systematic fashion, in a way that can be applied to all businesses of whatever kind, and that is intelligible not only now but at any future time.

Does bookkeeping really involve analyzing transactions?

The term “books of account” has a distinctly old-fashioned sound. It perhaps makes you think of a charles dickens novel set in early victorian england, with rows of clerks perched on high stools writing in large books.

How has bookkeeping changed?

Today we are doing it faster and more accurately, but the victorian clerks achieved very high standards. Whether or not they were any happier is a question for another book!

What is the importance of bookkeeping?

How can we maintain accurate accounts.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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What is a Book of Accounts?

A book of accounts contains transaction records for commercial accounts. Double entry accounting systems used by commercial organizations involve numerous ledgers or books, including the general ledger and general journal. Collectively, these ledgers are referred to as books, a shortened term for books of account. A single book of accounts can refer to any one of the numerous books used in the accounting process.

Primarily, the most common use of the term "book of accounts" references the general ledger used in double entry accounting systems. The general ledger contains all accounts used by an organization, along with the current balances of those accounts. Changes to these accounts require entries to note the transactions, creating an ongoing record of the organization's financial history. Other types of ledger and account books include the general journal, cost ledger, and subsidiary ledger , depending on the specific accounting system chosen. Each book fits the definition of book of accounts, although the term is used for these books less often.

In double entry accounting, the general ledger is one of numerous record-keeping components used in tandem with other books in the commercial accounting system. Information from the general ledger carries over to the financial statements for the organization at the end of the accounting period. Transactions are recorded as they relate to account balances in the general ledger, but these records merely reflect credit or debits to the accounts listed. Detailed information on specific transactions are recorded in via journal entries in the general journal.

Books of account house records showing changes to various commercial accounts used by an organization. These accounts show changes in balances for assets, liabilities, and expenses. For double entry accounting, the general journal records specific transactions involving at least two affected accounts, one with a credit and one with a debit. The new account balance drawn from the general journal information transfers to the general ledger as a summary entry.

An example can help to explain how a book of accounts is used. The purchase of office equipment creates a reduction in cash and an increase in the asset account for office equipment. The specific transaction, affected accounts, and notation about the transaction each warrant an entry on separate lines in the general journal. The increase or decrease to each account then transfers to the primary book of accounts, the general ledger. At the end of the accounting period, the general ledger balances transfer to financial statements such as the balance sheet , income statement, and statement of owner's equity.

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• What is a General Ledger: Your Comprehensive Guide to Financial Recordkeeping

Discussion Comments

Post your comments.

• By: robert cabrera A general ledger contains all accounts used by an organization, along with current balances of those accounts.

What is "Books of Accounts"

What is Books of Accounts becomes evident when viewing them as the financial diary of a business. They capture all monetary movements, such as income, expenses, assets, and liabilities. This organized documentation facilitates the preparation of financial statements and ensures transparency in financial reporting.

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Books of Accounts Definition

Books of Accounts encompass the systematic and chronological records of financial transactions maintained by a business entity. These encompass ledgers, journals, and other accounting documents providing a comprehensive overview of a company's financial activities.

Books of Accounts Meaning

The meaning of Books of Accounts is rooted in their role as the foundation of accounting. These records enable businesses to track and organize their financial transactions, offering a clear and accurate representation of the company's financial health. Books of Accounts are vital for compliance, decision-making, and financial analysis.

Books of Accounts in Detail

Delving into the details, books of accounts comprise various components.

• Ledgers: Recording transactions by accounts.
• Journals: Documenting transactions in chronological order.
• Trial Balance: Verifying the accuracy of recorded transactions.
• Financial Statements: Summarizing the financial position and performance.

"In the intricate world of finance, Books of Accounts are the silent narrators, chronicling the financial journey of a business with precision and clarity."

Efficient management of Books of Accounts is not just a legal requirement; it is a strategic imperative for businesses aiming for financial success and stability.

Applying Books of Accounts in the UAE

In the vibrant business landscape of the United Arab Emirates (UAE), accurate Books of Accounts are indispensable. For instance, in the thriving retail sector of Dubai, businesses meticulously maintain their Books of Accounts to monitor sales, track inventory, and manage expenses, ensuring financial stability and compliance with local regulations.

In the UAE's dynamic construction industry, companies utilize detailed Books of Accounts to manage project costs, track expenditures, and ensure that financial resources are allocated efficiently. This practice is essential for adherence to local regulations and international accounting standards.

In conclusion, our glossary unravels the significance of Books of Accounts, providing clarity on its definition, meaning, and detailed aspects. Whether you're a business owner, aspiring accountant, or simply curious about financial processes, this guide equips you with essential knowledge for navigating the world of financial management.

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Content Author: Atton Accounting & Consulting Editorial Department

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Principles of Accounting Volume 1 Financial Accounting

(11 reviews)

Contributing Authors

Copyright Year: 2019

ISBN 13: 9781947172678

Publisher: OpenStax

Language: English

Formats Available

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Learn more about reviews.

Reviewed by Richard Hale, Associate Professor, Berea College on 12/1/23

The authors do a fine job of proceeding through the expected topics at a manageable pace while giving sufficient depth for an introductory course. read more

Comprehensiveness rating: 5 see less

The authors do a fine job of proceeding through the expected topics at a manageable pace while giving sufficient depth for an introductory course.

Content Accuracy rating: 5

Coverage of content is accurate. Basic principles are introduced in the proper sequence, and the authors clearly present the topics in the expected manner.

Relevance/Longevity rating: 5

Examples are current and relevant.

Clarity rating: 5

Accounting is often referred to as "the language of business." Accordingly, the text does a fine job of relating the terminology to introductory students to topics and concepts they may not have encountered in prior dealings.

Consistency rating: 5

No unexpected jumps in difficulty nor lapses in topic coverage.

Modularity rating: 5

As with all other OpenStax offerings, modularity is an area in which this textbook shines. It would be easily possible to assemble a survey course combining topics from this book and the second offering (Principles of Managerial Accounting) to create a one-semester offering.

Organization/Structure/Flow rating: 5

Principles of Accounting has a certain flow to it which this book replicates.

Interface rating: 5

The textbook reads as well online as it does in print.

Grammatical Errors rating: 5

No editorial or grammatical errors noted.

Cultural Relevance rating: 5

OpenStax has traditionally been inclusive in its examples.

An issue that may arise when adopting this textbook...there is an appalling lack of publisher-provided ancillaries. Yes, there are PowerPoint slides. No, there are not quizzes, homework assignments, or in-class work available. Supposedly, these materials exist in the user community, yet I was unable to locate or obtain them. This remains a stumbling block (in my mind) to adoption.

Reviewed by JiangBo Huangfu, Assistant Professor of Accounting, Berea College on 11/30/23

I'm pleasantly surprised by the book's comprehensiveness. For instance, my classes use a textbook from a major publisher, and upon comparison, I observe no significant difference in the breadth and depth of the content they cover read more

I'm pleasantly surprised by the book's comprehensiveness. For instance, my classes use a textbook from a major publisher, and upon comparison, I observe no significant difference in the breadth and depth of the content they cover

I incorporated some exercises from this book into my current classes, and they proved to be highly effective. I did an intensive reading of one chapter for class preparation, I did not identify any errors.

I'm currently using the latest edition of a textbook from a major publisher. I think the content of this textbook is up-to-date content because it aligns well with the one I am using. Nonetheless, it would be beneficial if the textbook included relevant case problems.

I read a couple of chapters in greater depth and find the textbook offers remarkable clarity, making complex concepts easily understandable for readers.

I find a coherent and connected learning experience when I scanned the whole book and when I intensively read a few of the chapters.

I feel that the chapters in this textbook are effectively structured with well-defined subsections. Each chapter is thoughtfully organized into digestible segments, allowing readers to navigate through the material with ease. This breakdown into subsections enhances comprehension by presenting information in manageable portions.

I think the organization of this textbook is both logical and systematic. Each chapter unfolds in a coherent manner, with a clear progression of ideas and concepts. The content is well structured, often beginning with an introduction with a case to set the stage, followed by a systematic breakdown into sections or subsections. This organization facilitates a smooth flow of information, helping readers understand the material progressively. Key concepts are appropriately highlighted, and the inclusion of relevant examples and illustrations further enhances clarity.

The online version is easy to navigate.

Upon careful review, I found no apparent or obvious errors were detected in the content. I quite enjoy reading the book and feel the information presented is thoroughly checked and consistently reliable.

I appreciate the textbook's focus on accounting and business principles. The content is tailored to provide comprehensive insights into accounting practices and their applications in the business world without perpetuating cultural insensitivity.

Reviewed by Dave Jordan, Instructor, Northeastern Illinois University on 4/29/23

Principles of Accounting Volume 1 is comprehensive and covers all elements of a typical introductory accounting course. The text goes deep into certain areas and only touches the surface on others. The text sometimes takes a multi-pass approach... read more

Comprehensiveness rating: 4 see less

Principles of Accounting Volume 1 is comprehensive and covers all elements of a typical introductory accounting course. The text goes deep into certain areas and only touches the surface on others. The text sometimes takes a multi-pass approach to explain a topic. In Chapter 2 - the text provides an introduction to the financial statements and then builds on it in Chapter 3. I have seen this in other textbooks. My desired approach is show an income statement with operating income / other / tax / EPS; show a statement of owners equity with dividends. Chapter 3 is great. I love that expenses are explained using the house of GAAP. Nice touch. I would have introduced a compare and contrast of expenses to assets in Chapter 3. In recording JEs in Chapter 3; I would have preferred less transactions and the T-Account to be illustrated earlier. JE, A=L+E; T-account, then end with TB and F/S.

So as it relates to comprehensiveness - It's there; sometimes over-explained with words (like trying to show both perpetual and periodic inventory methods simultaneously (why??)) / underexplained (like in Chapter 2) / but mostly topics are explained, and are sufficiently covered

Some chapters are not organized naturally (e.g. AIS.) The student is learning about inventory and then immediately accounting information systems in the next chapter. I like the content in the chapter but either early on as a basis for understanding tools that accountants use or at the end. In teaching from this book - I would be forced to skip chapters and introduce chapters out of order. There are too many chapters (provides options for instruction who emphasize certain chapters over others) but a concern is the way the text is constructed.

In Summary - the book is comprehensive. I rate it a 4 out of 5 as in very good.

Content Accuracy rating: 4

Principles of Accounting Volume 1 is highly accurate. I do think there are some issues with immaterial items like re-naming titles of sections (e.g. 1.3 Describes Typical Accounting Activities and the Role Accountants Play in Identifying, Recording, and Reporting Financial Activities to "Types of Organizations: as it appears to me as this section is mis-titled), but more importantly when the text defines elements of revenues and expenses it defines these elements over multiple chapters; and the earlier chapters (Chapter 2) is actually materially incomplete. The text provides an introductory definition and then provides a better definition in later chapters. Just define it correctly, once? When the text simplifies a definition - the text approaches misleading the student into an understanding of an element that is incorrect. Another example of this is the first pass (introduction) of the statement of cash flows. It is not wrong but it does not show a statement of cash flows, it's elements, or its purpose. I would show a more complete statement and let the instructor simplify the illustration.

The text is accurate and comprehensive. I gave it a 4/5 as in very accurate. Many items, I can teach directly from the text by only using the text. Accurate and clearly presented.

Principles of Accounting Volume 1 is mostly an outline of accounting rules that have been around for a long time; won't change; and will be relevant for the foreseeable future. There are some changes (e.g. analytics) that changing the way accountants work. The text does have material in Chapter 7 (e.g. 7.1 storing data) that may need to be addressed as technology changes and/or might make it obsolete, but I don't see a way around this. AIS is an important topic and is a basic tool. It needs to be explain now even though the tools are evolving quickly to be cloud based and app based.

Overall the relevance of this text is up to date that will not quickly become obsolete (depending in part on technology changes in the near future).

Clarity rating: 3

Principles of Accounting Volume 1 could be presented much more concisely, more simply; and with better clarity. Certain chapters could be explained with less words, although I love the picture selections (e.g. Capone); certain chapters could be partially eliminated (i.e. Chapter 2 and explanation of periodic and perpetual inventory methods at the same time; certain chapters break continuity (e.g.AIS); and certain chapters could be completely eliminated (e.g. Chapter 14 accounting for corporations, which is outlined in each chapter before). These suggestions would improve clarity from the student learning perspective and process.

The text could provide a general introduction to accounting (tasks, profession, and regulation) in a more clear approach.

I gave the text 3/5 as being both accessible prose and inaccessible (confusing) prose, adequate content and inadequate content. It is a sold text book that would require significant modification and adaptation to work for me.

Consistency rating: 4

The text is consistent in terms of terminology and framework. The approach used by the authors through each chapter is consistent.

Modularity rating: 3

The text is divisible into smaller reading sections but not easily. Some content as presented is confusion so my approach would be to reframe it and not use it. Some content is too wordy but that is easily remedied by paraphrasing and summarizing (making it fine for modularity)

Overall the text is fine (3/5) but not great.

Organization/Structure/Flow rating: 4

The chapters could be more progressive building off of each other better. As a storyboard - the profession / the users / the systems (AIS) / The tasks (journal entries from start to finish (adjusting and closing) /Trial Balance / Financial Statements.

The text, however, took a curvy approach to the explanation of the topic, but not unlike other textbooks. Overall it wasn't great but it was typical and above average. I could use this textbook with modifications and content selectiveness (some content needs expounding / some needs modification / some needs elimination) and chapters don't work as presented for me.

The text navigation was straight forward. The chapters might be distracting or require modification but the interface was straight-forward. The pictures (images and graphs) were great! Really brings the student into the objective of the chapter/unit.

I am not the best judge - but to me the book was overly wordy in some sections - did not have any grammatical issues.

The text is professional and inclusive.

Overall the text is usable, informative, and complete. I would rate it a 3.8/5 rounding to a 4 as better than average but the text could use some work for my preferences. Accounting is difficult enough on its own - and no book is a complete instruction manual; so my preference would be to create an environment that outlines in a clear simple approach the profession / tasks (recording and reporting) / and the governance (regulations) of the profession.

Reviewed by Jennifer Sherman, Associate Professor, Bunker Hill Community College on 3/15/23

The book covers all the basics and starts with the foundations, what is accounting, the steps of accounting and thru the various parts of the balance sheet. Each chapter includes a section with the appropriate ratio, an important part of linking... read more

The book covers all the basics and starts with the foundations, what is accounting, the steps of accounting and thru the various parts of the balance sheet. Each chapter includes a section with the appropriate ratio, an important part of linking financial accounting to managerial accounting to finance

I did not find any glaring errors

The accounting field changes almost annually so it's difficult to say all content is 'up to date'. It is current up to it's publishing date (2019) so it will need to be updated soon

Clarity rating: 4

It flows as much as possible given that many of the terms are so particular to the industry

Very consistent!

Modularity rating: 4

As it's laid out, it can be subdivided. I do think the first 2 chapters could be combined but overall it looks easy to divide up

It flows well - or at least how I organize my classes.

Interface rating: 1

There seems to be no interface with Moodle or any online homework/testing that competitors (e.g. McGraw Hill) has. Also seems limited in student resources (e.g. videos) and the instructor resources are pathetic compared to other cometitors

I didn't see any grammar issues but I'm also not an English teacher!

Given the topic, there is little cultural impact/sensitivity. Given that this is for US based accounting for business, including international perspectives in any kind of great detail would just add to confusion and dilute the learning. Mention it yes, go into detail , no.

While I think this book is quite adequate, the lack of instructor and student resources makes it less desirable. The lack of an online homework/testing component would also prevent me from using the book.

Reviewed by Michael Griffin, Associate Teaching Professor, University of Massachusetts Dartmouth on 11/8/22

This book covers all the same topics that I would cover in an Accounting I course. read more

This book covers all the same topics that I would cover in an Accounting I course.

As an OpenStax book, it has gone through QA procedures and reviews and it also appears to me to be accurate and error-free.

Relevance/Longevity rating: 4

It has a 2019 copyright and is up-to-date with current financial accounting fundamentals. I do think that in its next update, some consideration should be given to the evolution of the CPA exam and the emphasis on data analytics. Also, some problem-solving with MS Excel would be a nice addition to the text.

The writing is clear and concise. Accounting does have a lot of specialize language/vocabulary and the book does a nice job with that.

The book is consistent throughout.

The sections of the text make it possible to assign various modules and to stop and lecture and problem solve based on those sections.

The topics are organized along the same lines as best-selling financial accounting textbooks.

This interface is effective, navigation of the ebook is easy and intuitive, and all tables and figures seem to load correctly and make sense.

I see now grammatical errors in the text.

OpenStax does a good job of working an editorial process that eliminates any culturally insensitive content.

One concern that I have with any accounting textbook is whether there will be a homework system that the students can benefit from and that makes grading homework an easy process. With the books that I use in my courses (McGraw-Hill, Wiley, and Pearson), I rely heavily on the LMS platforms that the publisher provides. I could be wrong, but I did not see evidence of that in this text. Of course, I could create such a homework system with our university's blackboard system but it would be a great deal of work, especially if a robust and comprehensive (content) system was created. Again, if I missed that type of technology and content, I apologize. I do know that Blackboard cartridges are available but those do not usually offer the same kind of homework that I am looking for whereby students complete worksheets, journal entries, ledgers, financial statements, and even MS Excel-like work and it is all graded by the system. Students in a financial course need lots of hands-on work - learning by doing and grading all that manually, is an impossible task because of other demands on faculty time.

Reviewed by Sayan Sarkar, Assistant Professor, University of Mary Washington on 7/8/22

With respect to comprehensiveness- the text book is very comprehensive. It also includes a section on Time value of Money which is a very important section in financial accounting. read more

With respect to comprehensiveness- the text book is very comprehensive. It also includes a section on Time value of Money which is a very important section in financial accounting.

The text-book is accurate and I did not find any error. As per my understanding, I did not find any bias.

The test is consistent. Updating the book should not be a difficult. Just by revising the examples, the book can be easily updated. I do see the book to be relevant for a long time.

For the most most part the book is clear. Though combining a few chapters can really help. This is a one semester class and covering 16 chapters can be a lot. Combing chapter 1 and 2 and combining chapter 12 and 13 can reduce the number of chapters from 16 to 14. Also financial statement analysis is an integral part of financial accounting, I suggest introducing ratios to respective chapter where they are more relevant. For examples introduce inventory management ratios in the chapters that deals with inventory.

The textbook is consistent with respect to terminology.

Overall the chapters can be easily divided into smaller parts.

Organization/Structure/Flow rating: 3

For the most part the text are presented in a logical, clear fashion. Though I suggest, moving Chapter 10 Inventory after Chapter 6 Merchandising Transactions makes more sense. Chapter 6 and Chapter 10 are both related to inventory management and moving chapter 10 to chapter 7 makes the flow much better.

Interface rating: 3

This is a place where the book can use some some help. For examples creating some more images/charts to explain the accounting equation and transactional analysis can really help with the understanding,

Grammatical Errors rating: 1

I did not find any grammatical errors.

Cultural Relevance rating: 1

As this is mostly a quantitative subject, issue of culture is not really relevant. But the examples that are used seemed very inclusive and there is no cultural in-sensitiveness.

Reviewed by Cheryl Kline, Online Faculty/Instructor, Trine University on 6/23/22

This textbook covers all areas that I would expect to see in an Accounting 1 course. There are many examples presented that make the material easier for accounting and non-accounting students to understand. The book contains an index. There are... read more

This textbook covers all areas that I would expect to see in an Accounting 1 course. There are many examples presented that make the material easier for accounting and non-accounting students to understand. The book contains an index. There are also PowerPoint slides that include selected graphics from the text, key concepts and definitions, examples, and discussion questions. The index is an in-depth glossary of terms used throughout the book,, and also states which chapter and subsection the term is used.

The book is accurate, error-free and unbiased. The book complies with the current accounting rules and regulations. OpenStax updates these textbooks on a regular basis, so there is no worry about using an outdated textbook for your classes. The principles of GAAP which pertain to accounting consistency, transparency and ethics are followed. There were no errors found during my review. I did not note or sense any bias throughout the book.

The students love not having to purchase a book. Instructors can rely on up-to-date accounting information, but unlike purchased publisher textbooks, these are not replaced every other year. Any significant accounting changes will be updated and the examples will not be outdated.

This book is specifically designed for both accounting and non-accounting majors, explaining the core concepts of accounting in familiar ways to students. Each chapter opens with a relatable real-life scenario for today’s college student to build a strong foundation that is applicable across many aspects of business.

Consistency in the terminology and framework was prevalent throughout the textbook. The accounting framework is used consistently to measure, recognize, present, and disclose the information appearing in financial statements.

The modularity is consistent throughout the book. Each chapter is divided into subsections that may be individually assigned if that is more appropriate for a class than assigning the entire chapter. For example, a chapter on Fraud, Internal Controls, and Cash has seven subsections; one on Petty Cash and another one on Bank Reconciliations. If you want to concentrate on one or more of these topics rather than the entire chapter, it is very easy to do. This also makes the reading more comprehensive and easier for the students who cannot finish the reading assignment at one time.

The topics are presented in a logical and clear fashion. The chapters build on one another and flow from one to the other effortlessly.

Interface rating: 4

The book's is basically free of interface issues. The book has a detailed chapter of contents and an index with an alphabetized glossary. The images and charts are simple and easy to read and understand. There didn't seem to be any display features that would distract the normal reader. There was an issue with the embedded charts and graphs. These are not acceptable for the reading impaired, and it was necessary to retype them when using them for assignments. It would also be great to have page numbers included for students using the online version of the book. Page numbers are sometimes used in OER classes to direct students to the correct assignment.

There were no grammatical errors found in my review.

There were no culturally insensitive or offensive words, phrases, or references observed. It would be advisable to include examples for races, ethnicities', and inclusive backgrounds.

I would recommend this book for use in accounting classrooms. There is also a second book, Principles of Accounting 2, which concentrates on management accounting.

Reviewed by Dianne Poulos, Adjunct Professor, Bunker Hill Community College on 6/30/20

The textbook provides a thorough overview of the accounting system. It delves quite a bit into the "why" of accounting which is sometimes glossed over in favor of mechanics in other texts. read more

The textbook provides a thorough overview of the accounting system. It delves quite a bit into the "why" of accounting which is sometimes glossed over in favor of mechanics in other texts.

No errors were encountered in my review.

The life examples are drawn from companies which are relevant and understandable to students today.

Looking at this from the context of a non-native English speaker, some of the language or vocabulary would be difficult to comprehend. Words such as ancillary even though explained later, might turn off a reader who already struggles with the language.

There is much consistency between the chapters in terms of how they are structured. Terminology is consistent as well.

Each chapter is broken into smaller, easily digested sections. Although chapters 1-5 must be presented in sequential order since we are discussing a sequence of events in an accounting cycle, the others can easily be moved around in terms of order presented.

The illustrations are particularly helpful. Also, really liked how debits and credits are brought into the discussion of the accounting equation early. Other texts have the instructor teaching to the equation and then introducing the concept of debits and credits. This creates a lot of confusion in some of the students.

Interface was great.

No grammatical errors detected.

I did not detect any. However, as a straight, white woman, I might not be as sensitive to the issues.

This is a good, solid textbook. There are many exercises and problems for students to use in the application of the material. The "Think it Through" sections in the chapter will provide some good fodder for discussion. I'm always looking for a way to not be lecturing but discussing. These open framework hypotheticals do the trick. Real life examples are presented in a way that most students have encountered in their life. This has been the way I've been teaching and this book will be a good resource to further enhance my lectures.

Reviewed by William Holmes, Instructor, LSUE on 4/15/20

The text covers all the important aspects that should be covered in the introduction to financial accounting. The text covers an overview of accounting information systems which I have not seen in textbooks I've used. It looks like the content... read more

The text covers all the important aspects that should be covered in the introduction to financial accounting. The text covers an overview of accounting information systems which I have not seen in textbooks I've used. It looks like the content is solid and comprehensive.

The information contained in the book is accurate and inline with what would be expected from an introduction to financial accounting textbook.

The topics covered in the book are relevant. I've used two textbooks for my course in the last five years and the information is comparable.

The book is clearly written.

The book is consistent.

The book is split into appropriate parts. This book did introduce financial statements and how to prepare them early than other books I've reviewed; however, I see how this can assist the student in understanding how financial statements are useful in business and how they can be used before getting into the weeds of details on analyzing accounts. As noted, I like the fact they are introducing accounting information systems which is an important topic.

Please refer to the previous comment, the book is well organized and consistent with other books that I have reviewed on the subject matter.

The book interfaced well. There did not appear to be any problem with navigation or other displays such as charts and graphs.

No grammatical errors were noted.

This text is straight forward and focused on the subject of financial accounting. It was no insensitive in any way.

After reviewing the book, and the accompanying resources I will consider adopting it for use in my classes. If not as a primary resource, I will recommend the source as an additional reading option for my students.

Reviewed by Darin Bell, Business Instructor, Treasure Valley Community College on 1/4/20

This textbook has all of the content that I cover with the publisher textbook that I have used for the past 6 years. read more

This textbook has all of the content that I cover with the publisher textbook that I have used for the past 6 years.

I have not used this test yet for an actual course but in my initial review I did not find any errors in the text.

This text includes some very relevant information about careers in accounting. I did not see a tie-in with data analysis which would have been nice but there are other ways to integrate this in to a course.

This textbook uses of T-accounts and diagrams to make the concepts become clearer for students. For a fee there are also videos through the OpenStax app.

This text is written in a single voice and allows for consistency through out the entire textbook. The types of graphics and the language that provides structure is also the same throughout the entire book.

Each chapter has subunits and it would be possible to remove or skip some of the units and there learning objectives because they are all numbered and ordered.

This text lays out the basic accounting foundation in the first five chapters. The publisher book I have used does it in 4 chapters. Having more chapters is a plus especially if your student struggle with the basic concepts. I wish that the chapters on merchandising and inventory were back-to-back. I will flip these when I use the book in my class to provide more continuity for these concepts. All of the other chapters are in a logical order.

There are many format options that are common to OpenStax textbooks that make this book a very accessible and usable book.

In my limited review I did not find any grammatical errors. I have not used this text yet in a course. Upon using it in a course I suspect any errors will surface.

I did not find any culturally insensitive or offensive content in this textbook.

I am excited to use this textbook in my courses this next year. I plan on creating my own videos and exam problems to expand the course. I will also create a Canvas course that I am will to share.

Reviewed by Andrew Hartzler, Professor of Accounting, Goshen College on 7/15/19

This book is perhaps the most comprehensive text I have seen for financial accounting. For those who are familiar with Financial Accounting, the index and glossary are sufficiently detailed. The fact that the text is so comprehensive is both a... read more

This book is perhaps the most comprehensive text I have seen for financial accounting. For those who are familiar with Financial Accounting, the index and glossary are sufficiently detailed. The fact that the text is so comprehensive is both a positive and a negative. It is positive in the sense that it has essentially every topic that you may want to cover in an introductory course. For newer instructors however it may be a bit daunting to distill the content down to what is most essential to cover in an introductory course. The text has some content that is more relevant to courses such as Accounting Information Systems, Financial Management, and Intermediate Accounting. An experienced instructor can recognize this and use the necessary elements for a principles course whereas for a new instructor the content is too extensive to cover in a single semester long course and would potentially overwhelm them. If an instructor's principles course contained only students who quickly and easily understood accounting concepts, then it would be possible to touch on such a wide variety of concepts in an introductory course. However, most principles courses contain business majors and other non-accounting majors who would struggle with the pace required to cover so much material.

I noticed a few typo-graphical errors but overall the text is well-written and accurate. I noticed no specific bias in the writing or examples.

Basic accounting concepts have not changed for a long time. For that reason, open source texts such as this one should be more widely used. The small incremental changes made in the basic structure of accounting do not warrant the frequent new editions that publishers try to push through. The only elements that would need to be updated may be the dates after a period of time so that they are more current and perhaps a few of the examples. The basic accounting elements however will not become obsolete and will remain relevant for the foreseeable future.

This text is very well-written. It contains excellent explanations of concepts such as the differences/similarities between revenue and gains. The primary issue I see with the text (as with other financial accounting texts) is how quickly it assumes students understand concepts of revenues/expenses, the function of accounts, and cash vs. accrual accounting. For those very familiar with accounting, the ordering of the concepts in financial accounting textbooks seems to make sense. However, if one takes a step back and thinks about what students might be struggling with, one can quickly see how fast these texts expect students to make leaps in their understanding. An example of this (which is common to most financial accounting texts) is the introduction of financial statements in chapter two before students fully grasp what the elements reflected on the financial statements represent. It is critical to spend enough time with students making sure that they understand how the basic accounting system works (revenues, expenses, accounts, cash and accrual basis) before they can make full use of the subsequent accounting concepts that are presented.

The structure of the book is consistent throughout.

The text is sufficiently modular in format to be easily reorganized and realigned.

The topics follow a clear, logical order. The only exceptions are chapters 1 and 2. Chapter 1 presents a broad overview of accounting which is common in financial accounting texts. What is included is fairly logical, but I find that topics such as retail businesses vs. service businesses and the difference between lenders/creditors/stockholders are more meaningfully included later in the text when the instructor is dealing directly with the accounting elements that illustrate the differences between these topics. As I mentioned previously, chapter 2 makes the assumption that students already grasp at this early stage what revenues and expenses are and the differences between cash and accrual accounting.

The interface is clean and easy to follow.

I noticed a few typo-graphical errors but overall the text is well-written grammatically.

I did not notice any cultural insensitivity. I noted a variety of inclusive examples.

Table of Contents

• 1. Role of Accounting in Society
• 2. Introduction to Financial Statements
• 3. Analyzing and Recording Transactions
• 4. The Adjustment Process
• 5. Completing the Accounting Cycle
• 6. Merchandising Transactions
• 7. Accounting Information Systems
• 8. Fraud, Internal Controls, and Cash
• 9. Accounting for Receivables
• 10. Inventory
• 11. Long-Term Assets
• 12. Current Liabilities
• 13. Long-Term Liabilities
• 14. Corporation Accounting
• 15. Partnership Accounting
• 16. Statement of Cash Flows
• 17. Answer Key

Ancillary Material

About the book.

Principles of Accounting is designed to meet the scope and sequence requirements of a two-semester accounting course that covers the fundamentals of financial and managerial accounting. Due to the comprehensive nature of the material, we are offering the book in two volumes. This book is specifically designed to appeal to both accounting and non-accounting majors, exposing students to the core concepts of accounting in familiar ways to build a strong foundation that can be applied across business fields. Each chapter opens with a relatable real-life scenario for today’s college student. Thoughtfully designed examples are presented throughout each chapter, allowing students to build on emerging accounting knowledge. Concepts are further reinforced through applicable connections to more detailed business processes. Students are immersed in the “why” as well as the “how” aspects of accounting in order to reinforce concepts and promote comprehension over rote memorization.

About the Contributors

Senior Contributing Authors Mitchell Franklin, LeMoyne College (Financial Accounting) Patty Graybeal, University of Michigan-Dearborn (Managerial Accounting) Dixon Cooper, Ouachita Baptist University

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Here are the basic Books that every taxpayer like you should keep in mind.

1️⃣ General Journal ​ This book is referred to as the original entry book. It records the transactions of the business in the order of the date using the principle of “debit and credit”.

2️⃣ General Ledger ​ This book is referred to as the final entry book. This is where you will see the summarized journal entries of an account to get the reconciled balances. This book tracks your Assets, Liabilities, Owner’s capital, Revenues, and Expenses.

3️⃣ Cash Receipt Journal ​ This is a special journal used to record all cash payments for expenses and/or collections of receivables. Entries can be in the form of cash sales; the sale of an asset for cash; collections from customers; a collection of interest, dividends, rent, etc.

4️⃣ Cash Disbursement Journal ​ This book is an internal record kept by accountants to record and track the business’s outflow of cash. This helps keep the General Ledger up-to-date.

5️⃣ Sales Journal

This is a special journal used to record sales on credit (received from customers).

6️⃣ Purchase Journal ​ This is a special journal used to record credit purchases (payable to the supplier).

To download JuanTax's Books of Accounts templates, click on this link: https://bit.ly/JuanTax_BOA

Do you know that you can manage your books of accounts in JuanTax in just a couple of minutes? Want to learn more? Reach out to our Support Team on weekdays from 9 AM to 6 PM or view this demo .

Books of Accounts: What Is The Best Fit For Your Business?

Posted on february 20, 2019, 3 mins read.

What are books of accounts? Why are they so important for a company? What type of books must you have? Who is going to check? In short, every business in the Philippines (and the world!) should have and maintain up-to-date books of accounts. They are an essential element of a successful business for many reasons. We have outlined below the types of accounting books that companies in the Philippines must maintain. We have also provided guidance on which books are likely to be the best fit for your business.

Make sure to visit www.cloudcfo.ph/blog on a regular basis for updates and information on innovative and progressive accounting and bookkeeping services in the Philippines.

No matter how big or small your business is or what kind of industry you operate in, you need to prepare and maintain books of accounts. Books of accounts are the place in which all of the financial transactions and operations of a company are recorded. The books enable business owners and managers to understand what money is coming in and out of the business. They are also important for preparing cashflow forecasts and financial reports. It would be almost impossible to run a company successfully without books of accounts.

Compliance is another important reason for a company to have books of accounts. The Bureau of Internal Revenue (BIR) requires that all corporations, companies, partnerships and individuals who pay taxes in the Philippines must maintain books of accounts. The BIR can then monitor companies and ensure the correct amount of tax is being paid. So between financials, governance and compliance, make sure your books of accounts are in order!

Types of accounts

There are three main types of books of accounts approved by the BIR for use – manual, loose-leaf and computerized books. The company itself can decide which one of the three they wish to use. In each case, the books will generally have to include at a minimum, the following information: the general ledger, sales, purchases, accounts receivables and payable, inventory and payroll ledgers. Companies must register their books of accounts with the BIR upon incorporation and also on an annual basis. With this in mind, it is important to identify which books of accounts are the best fit for your business!

Manual Books of Accounts

This is where a business maintains physical books, journals and ledgers. There are no computer or automated processes used for these books. Daily transactions are recorded entirely by hand. This is the most popular system for accounting books across the Philippines. It is most commonly used by freelancers, sole traders and smaller companies as they will usually have a lower volume of transactions and less complex processes.

It is cost efficient as it only requires the purchase of hard copy journals and ledgers but it can be time consuming, more prone to manual errors and fairly inefficient. While companies don’t have to apply for a BIR permit to use the manual books system (as required for other types of accounting books – see below), manual books of accounts do have to be registered with the BIR.

Loose Leaf Books of Accounts

Loose-leaf books of accounts are a somewhat hybrid system between manual books and computerised books. Transactions are recorded into a computer or cloud-based system. When it is time to register or submit the loose-leaf books to the BIR, the company must printout the computer files, bind them together and then submit them to the BIR in hard-copy. If a company wants to use loose-leaf books of account, it must first apply to the BIR for a permit enabling the company to do so.

Cloud based accounting is commonly used in conjunction with the loose-leaf books as they achieve more efficient processes and generates real value-added information for the company without the effort and expenditure required for the registration of the computerized books of account. QuickBooks and Xero are just some of the accounting software that CloudCfo uses.

Computerized Books of Accounts

These books of accounts are “systems generated”. This means recording transactions and generating reports and documents through a computerized accounting system. Computerised books are generally used by bigger organisations that deal with a large volume of transactions and have more complex accounting processes. Capital investment is required as companies must invest in computer hardware, accounting software programmes and data storage.

The company must submit the books of account to the BIR in soft copy (i.e. CD-ROM). The BIR must first approve the company’s use of the computerized books of accounts, including the particular computerised system that the company is operating. Sometimes, the BIR will notify larger companies in the Philippines that they must use computerized books.

Each year, many companies in the Philippines are required to have their books of accounts audited and submit an Audited Financial Statement (AFS) to the BIR. For many companies in the Philippines, the deadline for submitting the AFS is 15 April– just around the corner! Check out our recent article which outlines what you need to know this audit season .

CloudCfo – Online Accounting and Bookkeeping Services in the Philippines

CloudCfo is an outsourced accounting and finance service provider for companies in the Philippines.

We put efficient processes in place so that our clients’ books of accounts are always in order and ensure that our clients can extract real-time value-added information about the financial status of their business.

We provide all our bookkeeping services online via cloud accounting and we are fully enabled by smart technology.

Let us show you the most efficient system for managing your books of accounts – tailored services to fit your specific business model!

Visit us at www.cloudcfo.ph or contact us at [email protected] .

DISCLAIMER: This article is strictly for general information purposes only. Nothing in this article constitutes or intends to constitute financial, accounting, regulatory or legal advice and must not be used as a substitute for professional advice. It is still necessary to consult your relevant professional adviser regarding any specific matter referenced above.

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• April 29, 2021

Books of Accounts: What you need to know, and all that needs to be accounted for

Every corporation, partnership, and tax-paying individual (sole-proprietor or professional) is required to have records of their daily transactions. As a business owner, you need to log your daily operations. Knowing the exact numbers allow you to make informed decisions and projections. Most of all, you need to properly record the amounts of your transactions for tax filing purposes. It is this set of records that are called “books of account”.

The Details of These “Books”

In general, each transaction a business entity makes falls under a certain account. If you buy inventory with cash, you will see a decrease in your cash account, and you will log an increase of an equal amount to your inventory account. These accounts have to be registered with the Bureau of Internal Revenue and can be registered as one of the following types :

• Manual Books of Accounts (handwritten)
• Loose-leaf Books of Accounts (typewritten and printed)
• Computerized Books of Accounts (specialized accounting software). 

These above-mentioned books assure transparency that all transactions are duly credited and all income and expenses rendered are accurate. If you don’t maintain your accounts accurately, you may be subject to Oplan Kandado or Tax Mapping.

The Books of Accounts

Below is the list of books of accounts that are the minimum requirement for any business entity , may it be sole-proprietorship, corporation, partnership, or professional category.

1. General Journal

This is the most basic book of accounts and is also called the book of original entry. This is because all transactions are first encoded herein in order of occurrence, using the double-bookkeeping method that utilizes debit and credit.

2. General Ledger

The General ledger summarizes the transactions of the general journal under each account to get their ending balances. For example, the general ledger of cash would compile all transactions under cash, both debit and credit, listed in the general journal. This process is done for all accounts under assets, liabilities, and equity.

3. Cash Receipt Journal

A cash receipt journal is a detailed journal used specifically for cash sales and collection of receivables. As seen in its name, cash receipt refers to any transaction that adds to the company’s cash assets.

4. Cash Disbursements Journal

Opposite the cash receipt journal, the cash disbursement journal is a special journal that companies use to record their cash payments and payables. A cash disbursement is any sum of cash or amount of payables that reduces a company’s cash assets.

5. Sales Journal

The sales journal is a journal that is used to record credit sales only. These credit sales are what customers owe to the company for their service or goods. It is, therefore, representative of the amount that a company will need to collect from a customer for a sale of goods and services.

6. Purchase Journal

A purchase journal is a special journal companies and individuals use to compile the purchases made on credit. Purchases made on credit is defined as the sum that a company or person owes to their suppliers. 

It is important to note that while these are the minimum requirements, the books of accounts used by your business are dependent on the product of your company, whether it provides services or goods. Only four Books of Accounts are required in the service business, namely General Journal, General Ledger, Cash Receipts Journal, and Cash Disbursement Journal. For businesses that partake in the sale of goods (wholesale or retail), all six of the minimum required books of accounts are required.

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Explain the different types of books of accounts

Books of accounts are defined as "a place where all financial information is related to a person or a business". Books of accounts are maintained under Income tax Act, companies Act 2013 and GST Act.

Maintaining books of accounts is compulsory if the turnover/gross receipts/sales from profession or business is above Rs.2500000/-. As per rule 6F, cash books, ledgers, bills/receipts (Bills), journals and daily cash registers come under books of accounts.

The two main types of the books of accounts are journal and ledger.

Journal is sub classified into the following −

• Purchase Day book − Original book of entry which records credit purchases is called purchase book/purchase day book.
• Sales Day book − Records the details of credit sales by businessmen.
• Return Inward book − It records returned goods by customer or goods returned to dealer/supplier by customer. It is also called a sales return book.
• Return outward book  − It records goods returned to the supplier. This is also called a purchase return book.
• General journal  − Records entries which do not fit in other books or miscellaneous transactions (credit).
• Cash book − This book records only cash receipts and payments related to cash.

Ledger is sub classified into the following −

• Cash book − only cash related receipts and payments are recorded.
• General ledger − All business financial transactions.
• Debtor ledger − Provides information about the credit sales (related to customers).
• Creditor ledger  − Provides information about the credit purchases (related to sellers).

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• Jun 19, 2021

5 FAQs About Books of Accounts Answered

Updated: Jun 19, 2022

Your books of accounts, also known as the “accounting books” are records of your business transactions. We previously released a blog on how you can maintain simple accounting books. The tips there are useful so long as you are not yet registered with the Bureau of Internal Revenue (BIR). Once you are registered, you should maintain your accounting books in certain formats as discussed in this blog.

Take note, however, that your books of accounts should not just be for compliance, but they should serve as the official record for financial overview and control over your business. Your books of accounts should also organize all your financial transactions and therefore, serve as the basis in the preparation of financial statements and other reports for decision-making purposes.

In this blog, we would like to guide freelancers and small businesses by answering their five (5) frequently asked questions about books of accounts:

1. What are the types of books and How many should you have?

Some BIR district offices (Revenue District Offices or RDOs), allow freelancers to maintain two (2) sets of books (i.e., Cash Receipts Journal and Cash Disbursements Journal), while some RDOs issue one (1) book (i.e., Simplified Set of Bookkeeping Records for use by small merchants).

2. Should your manual books of accounts have a BIR stamp?

Yes! The books of accounts can be purchased from any bookstore. Simply look for a “Journal”, “Ledger” or “Columnar Book.” However, for these to be official, you need to proceed to BIR and have them stamped within 30 days after you’ve secured your BIR Certificate of Registration (COR).

3. What needs to be recorded in each book and How will you record them?

Cash receipts journal (crj).

What? - This contains a record of all the cash you received from business transactions, as supported by all receipts you’ve issued.

How? - Record an entry in the CRJ upon issuance of a receipt. When you do this, make sure to have columns for (at least):

Name of the customer

Receipt number

Output VAT (if applicable)

TIP THAT MATTERS: If you have two or more bank accounts, it’s best to add amount columns for each bank account, so that tracking is much easier. At the end of month or quarter, you may use this information to reconcile the amount per record versus the amount per bank (i.e., bank reconciliation).

Cash Disbursements Journal (CDJ)

What? - This contains all expenses and purchases you’ve paid in cash, as supported by receipts or cash invoices from suppliers.

How? - Record an entry on the CDJ once you pay an expense or purchase an item. When you do this, make sure to have columns for (at least):

Name of supplier

Particulars (to note the item/service bought)

Receipt/Invoice number (or any reference number)

Input VAT (if applicable)

TIP THAT MATTERS: Use a columnar book with four (4) or more columns. Use the columns for each of the different types of expenses (e.g. rent, subscriptions, supplies, etc.). In this way, you’ll know what types of expenses you spend heavily on. This will also guide you as you prepare your financial statements.

Sales Journal (SJ)

What? - This contains a record of all sales transactions made on credit (i.e., goods delivered but unpaid), as supported by your Credit Sales Invoice.

How? - Once goods are delivered to customers, issue a Credit Sales Invoice. When you do this, make sure to have columns for (at least):

Name of customer

Credit Sales Invoice number

Particulars (to note the item sold)

Upon receiving payment from your customer, record the transaction under the CRJ.

Purchases Journal (PJ)

What? - This contains a record of all purchases or transactions on credit (i.e., goods and services received but not yet paid), as supported by credit sales invoices or billing statements from suppliers.

How? - If you have credit terms with your suppliers, record the unpaid amounts in the PJ. When you do this, make sure to have columns for (at least):

Supplier's Credit Sales Invoice/Billing Statement number (or any other reference number)

Particulars (to note the expense or item purchased)

General Journal

What? - This contains all other transactions aside from those recorded in the books above (e.g. sales or purchases on credit in case you don’t have a SJ or PJ, depreciation of equipment, amortization of prepaid expenses, etc.)

How? - Make sure to have columns for (at least):

Particulars (to put a brief description of the transaction)

General Ledger

What? - This contains the summary of all the entries made in the different books of account and shall be the basis of all information in your financial statements and tax returns.

How? – Make sure to have a section for all your chart of accounts . Also have columns for the following:

Source books (i.e., CRJ, CDJ, SJ, PJ, GJ)

Every month, you must compute the total debits and credits for each account, from which you can already calculate the net debit/credit. All net debits/credits are then posted on a Trial Balance.

TIP THAT MATTERS: Basic accounting knowledge is necessary to fill out the books of accounts especially the general journal and general ledger. You may consult with an expert to properly fill out this book. There are also online tax filing platforms with books of accounts generation functionalities that could make your life easier.

4. Is there another option to maintain books of accounts other than manual books?

Yes! There are three types that you may register with the BIR:

Manual Books - These are pre-printed books that you normally buy in bookstores.

Looseleaf Books - These are prepared through worksheets using your computer, printed and bound thereafter.

Computerized Accounting System (CAS) - These are generated through an accounting software registered with the BIR.

TIP THAT MATTERS: Upon registering your business, you may opt to register either of the books above. Traditionally, the easiest option would be manual books. Eventually, you may shift to looseleaf or CAS by applying with the BIR. A service provider like Numbers that Matter can definitely assist you on this.

5. Do I need to submit my books of accounts to the BIR regularly?

It depends on what type of books you maintain.

Manual Books - Submitted only to the BIR when the books are full. You must buy another set of books and have them stamped.

Looseleaf Books - Printed copies must be submitted to the BIR on or before January 15th of the following year.

CAS - Records must be saved in a CD-ROM (read only) in text file format together with a duly notarized affidavit ascertaining/attesting the accuracy of the number of receipts and invoices used during the year, and the soft copy of the books of accounts and other accounting records/documents. These must be submitted to the BIR on or before January 30th of the following year.

TIP THAT MATTERS: Always keep your books of accounts updated. Don’t cram to meet the deadline nor comply just for tax mapping or audit purposes. Remember that your books of accounts help you with internal tracking of your financial records too!

Some terminologies might still puzzle you but don’t worry! Watch out for our future blogs or follow our social media accounts as we simplify accounting and tax topics that are relevant as you run your business. If you need assistance in your books of accounts, contact us.

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Disclaimer: Numbers that Matter Inc. aims to curate topics that are simplified and easily digestible for micro, small and medium enterprises, by balancing our technical know-hows as accounting professionals and the practical experiences of our team working on ground with our clients. There may be technicalities intentionally omitted from our content to preserve its simplicity. Any practical tip is purely the opinion of the team and is merely informal advice, and thus, should not be taken as a definitive rule. Should you have any specific questions, feel free to message the team at [email protected] and we’d be happy to discuss with you further.

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5 Practical Guidelines to Follow after Business Registration

In our post Starting the Year Right: Meeting Your Annual Compliance Requirements , we listed the books of accounts as one of the requirements of the Bureau of Internal Revenue (BIR) for businesses. These books, which you have to register with the BIR, list all the transactions of your business. Registration of these is done when you first register your business with the BIR, and every year after that.

This article covers the essential things you need to know about the books of accounts. Let’s start with their various types.

Types of Books of Accounts That May be Registered

You have three choices when it comes to the format of your books of accounts, each of which has its own advantages and disadvantages. These books are:

Manual Books: The most basic among the three are manual books of account, which are also known as journals, ledgers, or columnar books. You enter transactions manually into the book, making it ideal for smaller ventures, which need to record only few transactions. These are also more accessible and affordable since you can purchase them at stores where office supplies are sold. Another advantage of manual books is that these require less maintenance as you need to register or submit these to the BIR only when you are required to do so.

Loose-leaf Books: Loose-leaf books strike the balance between the ease of using manual books and the efficiency of computerized books. You can use any spreadsheet account such as Microsoft Excel or Google Sheets to record your transactions, which you should then print and bind. This option is perfect for recording large volumes of transactions without the cost or complexity of using a specialized accounting software. Unlike manual, books, however, you are required to register loose-leaf books on or before January 15 of every year.

Computerized Books: For even larger transactions and more complex computations, you can use an accounting software to do the job for you. This is more suited to larger enterprises and even multi-site businesses as there are software that allow you to collate data from different sites or branches. The downside to this is the steep cost of purchasing and maintaining the software. Also note that when submitting computerized books to the BIR, these must be in a CD-R, DVD-R, or other optical media format. The deadline for submitting this is on or before January 30 of every year.

Types of Books Businesses Should Keep

• General Journal – Better known as the book of original entry, this contains your business transactions sorted by date.
• General Ledger – This is the so-called book of final entry because it summarizes all the transactions of the account and computes the ending balance.
• Cash Receipt Journal – As the name would suggest, this lists cash received by the business, specifically sales and collections.
• Cash Disbursement Journal – Cash that is spent by the business for payment of services, products, and other expenses is listed here.
• Sales Journal – This lists sales on credit, or cash received from customers.
• Purchase Journal – This lists purchases on credit, or cash that must be paid to suppliers.

Of these books, only the first four are required if you are a services provider . Meanwhile, all books are required if you sell goods or properties.

How Long You Should Keep Your Books

According to the BIR’s Revenue Regulations No. 17-2013, businesses are required to preserve all their books of accounts and accounting records for 10 years from the day after the deadline of filing a tax return, or from the date of the filing of the return for the taxable year when the last entry has been made on the books in case of books that were filed after the deadline.

In addition, you are required to store your books and other supporting records and documents in your place of business. These may then be subject to audit by the BIR for a variety of reasons, including regular audits.

When You Lose Your Books

In the event that you lose one or more of your books of accounts, you will have to submit a notarized affidavit of loss to the Bureau. You may then be subject to penalties depending on the cause of the loss of your books.

Maintaining and storing your books are without a doubt time-consuming yet essential requirements in ensuring that you pay the correct taxes. This is where a tax consultant, a professional tax services firm, or an account may be able to help you. Their knowledge and expertise on tax-related matters will help you cut through the complexity and the laborious process of keeping your books. For more information on how a dedicated accountant can assist you, contact us today .

Disclaimer: Information contained in this article may become outdated and is therefore meant as general guidance only. It is not intended as professional accounting or tax advice.

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The 7 Best Accounting Books in 2024

The accounting books on this list are entertaining and educational

As legendary investor Warren Buffett famously observed, “ Accounting is the language of business.” Thus, even if you aren’t an accountant by trade, if you own a business or work for one—or if you serve in a leadership role in a not-for-profit organization—it helps to be conversant with at least the basics.

Fortunately, there are many books that can assist. Here, we list seven of the best, based on Investopedia’s analysis and the judgments of other independent reviewers. We’ve grouped them by category to make it easier to find a book (or books) that will meet your particular needs and rated one best overall for the breadth of information and advice that it offers.

Best Overall Accounting Book: Accounting All-in-One for Dummies

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Part of the ubiquitous Dummies series on every conceivable subject, Accounting All-in-One for Dummies has been a bestseller in its category since its second edition appeared in 2018. A third edition, published on Aug. 30, 2022, has not been widely reviewed but appears substantially similar.

The “all-in-one” in the book’s title refers to the fact that its 700+ pages are divided into nine separate “books” on various aspects of accounting, starting with “Setting up Your Accounting System” and ending with “Auditing and Detecting Financial Fraud.”

The introduction to the second edition explains that its intended reader is “an accountant, accountant wannabe, a businessperson who needs to know about some aspect of business accounting, or an investor who needs to know how to make sense of financial statements.” The book also assumes a reasonable level of comfort with basic math, adding that higher-level math is “why we have accounting software.”

Best Accounting Book for Non-Accountants: Accounting for Non-Accountants

Accounting for Non-Accountants is an easy-to-read, 210-page paperback covering the basics of accounting for businesses of all sizes (though it’s most likely to appeal to smaller ones). Now in a third edition issued in 2013, it uses a fictitious small company that makes, repairs, and sells bicycles to show how to prepare a balance sheet , income statement , cash flow statement , and other common documents. It also explains how to create a general journal and general ledger , as well as a master budget . Useful glossaries of relevant terms appear throughout the book.

The author, Wayne A. Label, is a certified public accountant (CPA) who also holds a Ph.D. in accounting. Label mentions at the end of the book that he is pondering a fourth edition, but this remains the most current one. The book is also available in a Spanish language edition, Contabilidad Financiera Para No Contadores .

Best Accounting Book for Small Business Owners: Accounting QuickStart Guide

Any number of books on the market today can acquaint small business owners with the rudiments of accounting, including the two books listed above. However, the Accounting QuickStart Guide stands out for its encouraging tone, clarity, and completeness (all within 213 pages), making it a solid choice for busy business owners with a lot of other things on their minds. The book offers a good introduction to the basics of accounting and bookkeeping , along with a useful chapter on tax matters.

Author Josh Bauerle is a CPA whose biography says he specializes in working with online business owners. The latest update of this book is the third edition, published in 2018.

Best Accounting Book for Not-for-Profit Board Members: Nonprofit Accounting and Financial Statements: Overview for Board, Management, and Staff

As its subtitle announces, Nonprofit Accounting and Financial Statements offers guidance for board members, managers, and employees of not-for-profit organizations . But author Thomas R. Ittelson notes that it was written “primarily from a board member’s perspective because oversight and financial accountability ultimately rest with the board.”

The book walks readers through the accounting rules that apply to this sector and the types of financial statements that nonprofits are supposed to prepare and board members are expected to comprehend.

In addition to this 283-page book—now in a third edition, published in 2020—Ittelson is the author of a 60-page visual “companion book:” A Picture Book of Nonprofit Financial Statements , which covers statements of activities, statements of financial position, statements of cash flows, and statements of functional expenses.

Best Accounting Book for Investors: Warren Buffett and the Interpretation of Financial Statements

Warren Buffett and the Interpretation of Financial Statements begins with a quotation from the fabled “Oracle of Omaha” himself, part of which proclaims: “unless you are willing to put in the effort to learn accounting—how to read and interpret financial statements—you really shouldn’t select stocks yourself.”

While there are any number of books that attempt to distill Warren Buffett’s investing wisdom, this one has the advantage of being written by an actual Buffett: Mary Buffett, his onetime daughter-in-law, who co-authored it with David Clark, a longtime “Buffettologist.” (Yes, that’s what such people are called.) The pair have collaborated on some half-dozen books to this point, but this one, issued in 2011, focuses most specifically on how to analyze corporate financial statements to find stocks with reliable long-term profit potential.

Best for QuickBooks Users: QuickBooks 2022 All-in-One for Dummies

QuickBooks has become the go-to accounting software for many business owners. In Investopedia’s latest ratings of the best accounting software for small business , QuickBooks Online ranked best overall, and QuickBooks Self-Employed was named best for self-employed freelancers.

QuickBooks 2022 All-in-One for Dummies , by CPA Stephen L. Nelson, is a comprehensive guide for both new and experienced QuickBooks users. The “all-in-one” in this title means that its 640 pages are subdivided into eight separate books, each covering its own topic. Nelson guides readers step-by-step through QuickBooks’ many functions, such as invoicing, paying vendors, tracking inventory, managing bank accounts, coordinating payroll, and preparing budgets and financial statements. Additional “books” cover common business analysis tools, including ratio analysis , economic value added analysis, and cost-volume-profit analysis . The final chapter throws in a handy crash course in Excel .

Whatever questions a reader might have about QuickBooks, this book very likely answers them.

Best Accounting Dictionary: Dictionary of Accounting

Oxford University Press

Definitions for many accounting terms are readily available online, including here at Investopedia . But for a handy desk reference, the 480-page Dictionary of Accounting from Oxford University Press would be a solid choice.

Edited by Jonathan Law, it provides more than 3,800 definitions, not only of U.S. accounting terms but also those commonly used in the United Kingdom, Australia, India, and the Asia-Pacific region. The latest version of this dictionary is the fifth edition, published in 2016.

Other business-related books in the Oxford Quick Reference series include Dictionary of Finance and Banking and Dictionary of Business and Management , both also edited by Law.

Accounting has an unfortunate reputation as a difficult, if not deadly dull, field of study. Happily, there are some very accessible books that can help anyone who wants to know the essentials of accounting that are relevant to their own work (and perhaps nothing more than that). The widely available Dummies series has an assortment of accounting-related titles, two of which made our “best” list, including our best-overall pick, Accounting All-in-One for Dummies. But if that book, at 752 pages, is too intimidating, readers might want to start with a briefer introduction, such as Accounting for Non-Accountants or Accounting QuickStart Guide.

Why Trust Investopedia?

Reviewer Greg Daugherty has covered financial topics for more than 30 years, including stints as a senior-level editor at Money magazine and Consumer Reports. He is also the author or co-author of two books on personal finance.

To compile our list, Daugherty and his Investopedia colleagues combed the bookstores, both online and off, checked out libraries, consulted publisher websites, and reviewed reader comments online. We also asked members of Investopedia’s Financial Review Board for recommendations. We based our final judgments on the authors’ credentials, the quality and clarity of the advice offered by the books, and how suitable they would be for readers with varying levels of accounting and financial knowledge.

University of Nebraska-Lincoln, College of Business. “ Alumnus Warren Buffett Celebrates 89 Years .”

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Books of Accounts BIR: Guide to Registration, Filling Up, and Record-Keeping

Did you know that in addition to paying your income taxes, you are also required by the BIR to register and maintain books of accounts for your business?  

Whether you’re a large corporation, a person practicing your profession, or a freelancer, you must keep official records of all your business-related transactions. 

The BIR wants you to keep a record of your accounts to monitor your business transactions. Through your books of accounts, the BIR can quickly determine whether your business is earning.  It can then discover if you are paying the correct taxes for your business.  

Are you overwhelmed by the number of BIR books of accounts that need to be filled up? This article simplifies everything so you can keep a record of your accounts in no time. 

Table of Contents

What are the 3 types of books of accounts allowed by the bir according to format, 1. manual books of accounts.

The manual books of accounts are those you can easily buy in the market, such as bookstores and shops selling office supplies.  They are the columnar books you must fill by handwriting the accounting entries in the respective ledgers, journals, and subsidiary books.  These are the easiest to obtain and maintain and are most common, especially for small business owners .

a. Documentary Requirements

• A new set of pre-printed and bound journals, ledgers, and subsidiary books for BIR stamping
• BIR Form 1905

b. Steps in Registration

Step 1 : Submit BIR Form 1905 at the RDO or concerned office under the Large Taxpayer Service having jurisdiction over the place where the head office and branch are located

Step 2: Present the manual books of accounts for stamping and registration to the BIR

c. Deadline

You should have your manual books of accounts registered before the deadline for filing the first quarterly income tax return or the annual income tax return, whichever comes earlier 3 .

d. Subsequent Registration

Simply label a new portion of the books for each additional year you use it.

You only need to register a new set of manual books of accounts when all the pages of your previously registered books have already been used.  

After you have used every page of the book you had registered, please bring a new set of books to the BIR and follow the steps you made, like when you first had them stamped and registered.

2. Loose-Leaf Books of Accounts (With a Permit To Use)

This method requires a permit from the BIR and combines the manual and the computerized methods of recording your entries. 

What makes it different from traditional manual books is that instead of buying pre-printed ledgers and journals from bookstores, you first record the entries on your computer through Excel or other simple computer software.  After that, you print the entries you have made, bind them, and present them to the BIR for registration.

The following are the requirements 4 you need to be issued a permit to use loose-leaf books of accounts by the BIR. 

• BIR Form 1900
• Sample format and print-out of the books of accounts you intend to use
• Sworn Statement identifying the type of books your business will use. This includes the invoices, receipts, and other accounting records with the serial numbers of receipts and invoices to be printed.
• Sworn Statement confirming your intention and commitment to permanently bind and file the loose-leaf forms within 15 days after the end of each taxable year or upon the termination of each use.
• Confirmation of payment of the company’s 0605 Annual Registration Fee
• The government-issued ID of the authorized representative (if applicable)
• Special Power of Attorney (for individuals with a representative) or a Board Resolution/Secretary’s Certificate (for corporations and similar types of companies)

Step 1 : Submit all the documentary requirements at the RDO or concerned office under the Large Taxpayer Service that has jurisdiction over the place where the head office and branch are located

Step 2 : Wait for BIR to issue your Permit To Use Loose-Leaf Books of Accounts 

You must register your loose-leaf books of accounts 15 days after the end of each taxable year or within 15 days from the closure of business operations, whichever comes earlier (RMC 29-2019).

Loose-leaf books (including your invoices, receipts, and other accounting records) should be permanently bound and presented for registration together with a sworn statement attesting to the correctness of the entries made and the number of all invoices, receipts, books of accounts used for the period covered, on or before 15th day following the end of each taxable year or within 15 days from the closure of business operations, whichever comes earlier (RMC 29-2019).

3. Computerized Books of Accounts (With a Permit To Use)

This is the most advanced method of recording your accounting entries.  It uses a computer program fully designed by in-house programmers of the business or accounting software that is readily available in the market. On the flip side, it has the most requirements for registration.  

The BIR mandates large taxpayers 5 to use a Computerized Accounting System 6 .

The following are the requirements 7 needed in applying for the registration of computerized books of accounts. 

• Sworn Statement ( Annex A-1 ) or Joint Sworn Statement ( Annex A-2 ), whichever is applicable, with duly attached accomplished Summary of System Description, Commercial Invoice/Receipts/Document Description, Forms/Records, and Reports Specification (Annex A-3)
• Sample print-out of Principal and Supplementary Receipts/invoices
• Sample print-out of Books of Accounts (BOA) 
• A printed copy of Audit Trail (activity log generated by the system)
• Duly accomplished and signed Annex B – Standard Functional and Technical Requirements
• If the software license of the software to be used is under the name of the parent or affiliate: Certification from the purchasing company that the taxpayer-applicant uses the same system

Step 1 : Submit all the documentary requirements at the RDO or concerned office where the head office and branch are located.

Step 2: Upon submission of complete documentary requirements, an Acknowledgement Certificate shall be issued within three working days by the RDO where the taxpayer-user of the system is registered. 

You should submit the Computerized Books of Accounts and other accounting records in electronic format to the RDO or concerned office of the BIR where the Head Office or Branch is duly registered within 30 days from the close of each taxable year or within 30 days from the closure of business operations, whichever comes earlier (RMC 29-2019).

The requirements for submission of annual Computerized Books of Accounts and other Accounting Records are as follows:

• Three copies of duly accomplished BIR Form 1905
• Sworn Statement
• Received BIR Form 1905 from the last submission
• Soft copies of books restored in CD-R or DVD-R 
• Copy of CAS Permit, including Annexes

You must submit a new application for registration in case of significant system enhancement, such as the following:

• Change in the functionalities of the system, particularly on improvements that will have a direct effect on the financial aspect of the system
• Addition or removal of modules or submodules within the system that will have a direct impact on the financial part of the system 
• All other enhancements that will be deemed major system enhancements based on the recommendation of the technical evaluators after the comparative functionalities of the old and upgraded “system” were presented by the taxpayer.

What Are the 6 Books of Accounts the BIR Requires To Be Registered, Filled Out, and Kept by Taxpayers?

Non-VAT-registered taxpayers are only required to register four books accounts.  On the other hand, VAT-registered taxpayers must register all six books of accounts.

1. Non-VAT Registered Taxpayers

A. general journal.

The General Journal is called the book of original entry because this is the usual book of account where you first record your accounting transaction.

The following are the usual data you need to record in the General Journal:

• Particulars/Description
• Reference Code
• Debit amount with relevant Account Name
• Credit amount with relevant Account Name

Sample transaction:

To record the accumulated depreciation for your equipment, you should record the following journal entry:

Depreciation is when the asset you bought for your business, like your laptop, decreases in value over time.  This also means that you estimate the useful life of your asset, e.g., five years.  Over that period, you have to save some of your earnings to buy another one when it can no longer be used like before. This portion of the income you save is an expense for the current period.

You debit the expense to recognize an increase in your expenses and credit the accumulated depreciation, a contra-asset account.  This decreases the value of your asset in the books.

The supporting documentation could include the purchase receipts for the equipment concerned.

You can read our article about basic bookkeeping for more information on making journal entries and the accounting process.

b. General Ledger

General Ledger is what we also call the book of final entry. This is because this is the book where you need to summarize the transactions recorded in the General Journal and other Special Journals. 

The following are the usual data you need to record in General Ledger:

• Account Name
• Debit amount
• Credit amount

To record the depreciation expense from the General Journal.

DEPRECIATION FOR EQUIPMENT

c. Cash Receipt Journal

The Cash Receipts Journal is a specialized journal where you record all your cash receipts before transferring the total amount to General Ledger.

The following are the usual data you need to record in the Cash Receipts Journal:

• Official Receipt Number
• Other Account Titles relevant to the transaction

When you need to record the receipt of cash from sales to customers.

You need to fill the corresponding columns in the Cash Receipts Journal to record a cash sale from your customer.  Simply record the actual cash received under the “Cash” column. Record also the amount under the “Sales” column. Don’t forget to write the date and the receipt number. You can also write your customer’s name under the “Particulars” column.

Here is how you will record the entry in your Cash Receipts Journal:

The supporting documentation for the above is the Official Receipt issued to the customer.

d. Cash Disbursement Journal

The Cash Disbursements Journal is a specialized journal where you record all your cash disbursements before transferring the total amount to General Ledger.

The following are the usual data you need to record in the Cash Disbursements Journal:

• Other Account Titles

When you need to record travel expenses paid in cash.

If your business includes travel, you must recognize the money you spent by recording the relevant information in your books. Write the date and check number and the description of your cash disbursement under “Particulars.”  Record the amount you spent under the “Amount” and “Travel” columns.

Here is how you will record the entry in your Cash Disbursements Journal:

You can use receipts from your travel, such as plane tickets, as supporting documents.

2. VAT-Registered Taxpayers

All the above books plus the two books below:

a. Sales Journal

This is a special ledger where you record all your sales transactions.

The following are the usual data you need to record in the Sales Journal:

• Customer’s TIN
• Customer’s Name (or Customer Code if Customer Master File is available)
• Address (not necessary if Customer Master File is available)
• Description
• Reference/Document No./ Sales Invoice No.
• VAT Amount (Output Tax)

If your business is VAT-registered, you need to record your sales in a special book called “Sales Journal.”  While you can generally write your cash receipts in a Cash Receipts Book, the Sales Journal would help record other information like the TIN, Sales Invoice, and VAT Output Tax from your sales.

You can record both cash and account sales in your Sales Journal. For cash sales, record the “Cash” you received. For account sales, write “Accounts Receivable.”  For VAT Output Tax, multiply your “Sales” by 12%.

To better explain the Debits and Credits for this type of transaction, here are the entries that show how each account would be affected by a cash or account sale:

You need to know the above primary entries when you post the balances later on to your General Ledger.

Supporting documents: Sales Invoice, Official Receipt

b. Purchase Journal

In addition to the Sales Journal, you need a Purchase Journal if you are a VAT-registered business.  

This is a special ledger where you record all your purchase transactions.

You need to write additional information like the TIN, Purchase Invoice/Reference Receipt, and VAT Input Tax from your purchases.

The following are the usual data you need to record in the Purchase Journal:

• Supplier’s TIN
• Supplier’s Name (or Vendor’s Code if Vendor Master File is available)
• Address (not necessary if Vendor Master File is available)
• Reference/Document No./Sales Invoice No.
• VAT Amount (Input Tax)
• Net Purchases

You can record both cash and account purchases in your Purchases Journal.  For cash purchases, record the “Cash” you paid.  For account purchases, write “Accounts Payable.”  For VAT Input Tax, write the amount contained in your receipt. This amount represents 12% of the goods or services you purchased.

To better explain the Debits and Credits for this type of transaction, the entries below show how each account would be affected by a cash or account purchase. Note that not all purchases would be VAT purchases.  For purchases involving Non-VAT transactions, you cannot recognize VAT Input Tax.

Sample transactions:

You need to know the above basic entry when you post the balances later on to your General Ledger.

Supporting documents: Invoice, Official Receipt 

How To Register BIR Books of Accounts Online: Step-by-Step Guide

Part of the efforts of the Bureau of Internal Revenue to digitize transactions is its launching of an online facility where taxpayers can register their books of accounts. This facility is now called ORUS (Online Registration and Update System) 8 .

Taxpayers using this online facility must create an ORUS account first. Ensure you have an active email address before attempting to create an account. If you already have an existing BIR record and TIN , your ORUS email address should be the same as the one you have used for BIR registration.

How To Create an ORUS Account

To create an ORUS account, follow these steps:

• Access the ORUS website here .
• Select “New Registration” >>>Pick “As a Non-Individual” or “As an Individual.”
• Review the documentary requirements shown, then click “Create an Account” to proceed.
• Agree to ORUS “Terms and Agreements”
• Select “Taxpayer” 
• Select whether you have an existing TIN or none, and complete the form.
• If you pick “With Existing TIN,” enter your TIN, complete name, civil status, gender, and email address. Afterward, provide a password for your ORUS account. Click “Register” afterward.
• If you pick “Without Existing TIN,” select your “User type” (i.e., Business as professional, Single Proprietorship, Professional and Single Proprietorship, or foreign individual) and “taxpayer type.” Afterward, enter your complete name, civil status, gender, and email address. Afterward, provide a password for your ORUS account. Click “Register” afterward.

Note: The email address will also be your (or your business’) username. This is also where OTP verification will be sent if you forget your password. You can only change your provided email address by manual processing in a BIR branch since this feature is not available in ORUS.

• Validate your email address to complete your registration

You will receive a notification to complete enrollment at the email address you have provided. This email will prompt you to click a link redirecting you to the ORUS site and confirming your registration. You only have 24 hours to validate your email. If you did not receive an email notification from BIR, check your SPAM folder.

That’s it! You already have an ORUS account. To log in, access the ORUS site >>> Click “log in” at the upper-right portion of the screen >>> Select “Taxpayer” >>> Enter your email address and password.

How To Register Books of Accounts BIR Using ORUS

The steps below apply to any BIR Book of Accounts (i.e., Manual Book, Loose-Leaf Book, Computerized Book).

1. Log in to your ORUS account

2. Click “Secondary Registration” >>> “Book of Account” >>> “Register Book of Account.”

3. Complete the Online BIR Form by entering the following details:

Select whether you’re registering for “Head Office” or “Branch.” The taxpayer’s TIN, RDO code and Business Address will be presented upon clicking.

Hit the Add button inside the box below the taxpayer’s information to start registering books.

Click Add Row to register books of accounts.

Enter the following details about the books of accounts you want to register:

• Type (i.e., “Manual,” “Loose-Leaf,” “Computerized”)
• Type of Books to be Registered (e.g., “General Ledger Account Receipt,” “Income Book,” “Daily Receipt Report,” etc.)
• Last Volume
• Volume From and Volume To (auto-computed, no need to input values)
• Validity Period
• Date of Registration
• PTU CAS No. or Acknowledge Certificate Control Number 
• Date of Issuance
• Taxable Year from and Taxable Year to

Once you’ve completed the details above, click Add Books.   All books you’ve added will be displayed in rows in a summary table. You can add or delete rows if needed. Click Continue to proceed. 

You will return to the first page of the form so you can add books for other branches or offices that you will add to the registration. If there are no more books you want to register for different branches, click Continue .

4. Upload documentary requirements as a PDF or JPEG file. 

The maximum file size allowed is 25 MB. There will be a notification for every file you successfully upload. Once done, the screen will present a summary page containing the taxpayer’s information, business information, books of accounts details, and documents submitted (attachments).

5. Tick the boxes for the “Agreement of Services” and click Submit Application .

A confirmatory message will appear that includes your Application Reference Number (ARN). It will also state additional instructions if you need to submit other requirements.

How To Generate Book Stamps in ORUS

Stamps are provided as proof of the registration of your books of accounts. However, ORUS provides Quick Response (QR) codes as proof of registration instead of traditional stamps.

Here are the steps to generate stamps in ORUS 9 :

• In your ORUS profile page, scroll down to find the “Stamps” section
• Click the book of account you want to generate a stamp. Upon clicking, you can view the generated QR stamp and download it.

Once you’ve downloaded the QR stamp, you must print and paste it on the first page of your loose-leaf or manual books of accounts. For computerized books of accounts, you need to attach the QR stamp to the transmittal letter that shows the detailed content of the USB flash drive in which the books of accounts are stored upon submission to the Bureau of Internal Revenue.

How Do You Take Care of Your Books of Accounts? How Long Do You Need To Keep Them?

1. Brief Description of the Books of Accounts and the Period They Need To Be Preserved

Your books of accounts, including subsidiary books and other accounting records, need to be kept and preserved for ten years.  

The period of 10 years starts from the day following the deadline for filing an ITR. If the ITR is filed after the deadline, the period begins from the date of the return filing for the taxable year when the last entry was made in the books of accounts 10 .

Accounting records referred to above include invoices, receipts, vouchers, returns, and other documents supporting the entries in the books of accounts.

2. The Types of Document Formats Needed To Be Kept (Manual or Electronic)

Within the first five years, as stated above, you need to retain hard copies of the books of accounts, including subsidiary books and other accounting records. 

After that, you only need to retain an electronic copy of the books of accounts, subsidiary books, and other accounting records. 

The electronic storage system should follow the requirements below:

• There should be an accurate and complete transfer of the images of the hardcopy of the books of accounts, including subsidiary books and other accounting records, to an electronic storage media; and
• They should index, store, preserve, retrieve, and reproduce the electronically stored images of the hardcopy of the books of accounts, subsidiary books, and other accounting records.

The electronic storage system must also include the following:

• Reasonable controls to ensure integrity, accuracy, and reliability
• Reasonable controls to prevent and detect any unauthorized creation of, addition to, alteration of, deletion of, or deterioration of electronically stored books of accounts, subsidiary books, and other accounting records
• Inspection and quality assurance program supported by regular evaluations of the electronic storage system (periodic checks of electronically stored books of accounts, subsidiary books, and other accounting records)
• Retrieval system that includes an indexing system
• Ability to reproduce legible and readable hard copies of electronically stored books of accounts, subsidiary books, and other accounting records.

All books of accounts, subsidiary books, and other accounting records reproduced by the electronic storage system must be easily read when displayed on a video display terminal and when reproduced in hardcopy. Letters and numbers shown should be quickly identified by observers (RMC 29-2019 and RR 5-2014).

3. The Place Where the Documents Should Be Kept

You must always keep the books of accounts, registers, records, vouchers, and other supporting documents in your place of business 11 .

4. Condition of Documents

Your books of accounts as well as the registers, records, vouchers, and other supporting documents, should be kept intact, unaltered, and unmutilated.  This means that these should not be torn or damaged. Ensure they are not scratched, smudged, or stained (RMC 29-2019 and RR 17-2013).

5. Responsibility of CPA in Keeping Records of the Books of Accounts

Your Certified Public Accountant (CPA) should preserve the electronic copies of your business’s audited and certified financial statements (including audit working papers) for ten years from the due date of filing the ITR or the actual date of filing, whichever comes later (RR 5-2014).

6. BIR Inspection of Records

Your books of accounts and related records may be examined and inspected by the BIR once in a taxable year. The exceptions are as follows 12 : 

• In cases of fraud, irregularity, or mistakes
• When the taxpayer requests reinvestigation
• When there is a need to verify compliance with withholding tax laws and regulations
• When the taxpayer’s capital gains tax liabilities need to be verified
• When the BIR Commissioner decides to use his power under Section 5(B) of the NIRC. This is to obtain information involving the examination of other taxpayers.

Examination and inspection of books of accounts and other accounting records will occur in your office or place of business or the BIR office. 

What Are the Penalties for Non-Registration, Non-Retention, and Other Violations on the BIR Books of Accounts?

The penalties to be imposed for violations regarding the BIR books of accounts can be light or heavy depending upon the kind of violation and the intention of the person making the violation. Intentional offenses and fraud have more significant penalties and may even include imprisonment.

Here are some of the violations and penalties related to the books of accounts:

Frequently Asked Questions

1. What is the difference between the loose-leaf and the computerized format of the books of accounts?

Loose-Leaf books of accounts are still considered manual books. There is no program used to enter the accounting entries electronically so that they would automatically be posted in the ledgers, creating financial statements from their balances. The entries are merely encoded or typed with the use of computers and then printed out.    Computerized books of accounts use a computer system that automates the accounting process from the journal entries to the ledger balances and the creation of financial statements.

2. What is the difference between the General Journal and General Ledger?

The General Journal is the book of original entries.  This is where the accounting entries are first recorded.  General Ledger is the book of final entry.  Each account has its ledger and reflects the balance of the account after the journal transactions have been posted.

3. When do you record transactions in General Ledger?

You can record transactions to General Ledger after posting the accounting entries in the respective Journals (General Journal, Cash Receipts Journal, Sales Journal, etc.).  For practical reasons, however, you can post summaries of said transactions at the end of a given period, e.g., monthly. 

4. Why do you need other special journals besides the General Journal?

Special Journals help in the easier recording of transactions. While every transaction can be recorded in the General Journal, it helps to have Specialized Journals so that repetitive transactions like sales, purchases, cash receipts, or cash disbursements can be posted more quickly and efficiently.  

The Specialized Journals also contain specific information that can easily be accessed for similar types of records, such as when you need to compute the VAT Input and VAT Output accounts.

5. Can you register more than one set of books?

No, you may not. The Tax Code expressly says that any person who keeps two or more sets of books of accounts will be punished by a fine not less than P50,000 but not more than P100,000.  You will also be imprisoned for not less than two years but not more than six years ( SEC.257 of the NIRC and RMO No. 7-2015 ).

6. Can you use computer printouts and paste them into your manual books of accounts?

No, you may not. All entries in the manual books of accounts should be handwritten.

Printouts of the accounting records pasted/glued/inserted onto pages/sheets of the registered Manual Books of Accounts are prohibited and subject to penalty.  See the penalties above for failing to preserve/keep the books of accounts ( RMC 29-2019 ).

7. Why do we have only four books of accounts for Non-VAT registered taxpayers?

There are additional transactions that need to be recorded for VAT-registered taxpayers. This is the reason why they should use the Sales Journal and the Purchases Journal in addition to the four books of accounts that Non-VAT taxpayers should use. These transactions are related to computing the Net VAT payable by the taxpayer at the end of a given period.

8. Do you need a CPA to record the transactions for you in the books of accounts?

Businesses with gross annual sales, earnings, receipts, or output that does not exceed P3,000,000 can forego having their books audited by independent CPAs. They can, however, employ accountants to help them record and summarize the accounting entries in their books of accounts (RMC 29-2019  and RA 10963 14 .

9. What happens when you lose the books of accounts?

You should prepare an Affidavit of Loss explaining the valid reason for losing your books of accounts. You then have to notify the BIR as soon as possible. Depending upon the discretion of the BIR, you may receive a penalty for failing to preserve your books of accounts. The penalty amount is P 1,000 but does not exceed P 25,000 for the calendar year (SEC. 250 of the NIRC).

To help you save time, here’s an Affidavit of Loss template you can download for free .

10. When should you renew the books of accounts, and how?

You should only renew your manual books of accounts after all the pages have been used. It is not necessary to register a new set yearly.  

11. How long am I required to use the books of accounts? Is there a time when the BIR books of accounts are longer needed?

You must record your business transactions in your books of accounts as long as your business is operating. Upon your business’s retirement, you should submit your books of accounts within ten days to the BIR for examination. If your business is a corporation or a partnership, you should also inform the BIR if you are planning for a business dissolution.  This is so that you may be cleared of any tax liability (SEC. 235 of the NIRC).

12. Does the BIR check the books of accounts?

According to the “Taxpayer’s Bill of Rights” 15 , every taxpayer’s books of accounts may be inspected by the BIR. They prepare an audit program to select the tax returns they will examine for the year.

Meanwhile, SEC. 235 of the NIRC informs us that the BIR may examine your books once in a taxable year. Some exceptions include fraud cases or when obtaining information regarding other taxpayers is needed.

• Official Gazette of the Republic of The Philippines. Republic Act No. 10963 (Tax Reform for Acceleration and Inclusion or TRAIN) (2017).
• Public Information & Education Division, Bureau of Internal Revenue (BIR). (2018). Taxpayer's Bill of Rights [Ebook]. Retrieved from https://www.bir.gov.ph/images/bir_files/public_information_and_education/taxpayer_bill_of_rights/Taxpayer-Bill-of-Rights-2018.pdf
• Bureau of Internal Revenue (BIR). (2019). Revenue Memorandum Circular No. 29-2019: Keeping, Maintaining, and Registration of Books of Accounts. Retrieved from https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20Full%20Text%202019/RMC%20No.%2029-2019_copy.pdf
• Bureau of Internal Revenue (BIR). (2020). Revenue Memorandum Circular No. 57-2020: Streamlining of Business Registration Requirements and Revised Checklist of Documentary Requirements. Retrieved from https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2020%20RMCs/RMC%20No.%2057-2020.pdf
• Bureau of Internal Revenue (BIR). (2010). Revenue Regulations No. 17-2010: Consolidated Regulations Implementing Republic Act No. 7646, An Act Authorizing the Commissioner of Internal Revenue to Prescribe the Place for Payment of Internal Revenue Taxes by Large Taxpayers and Prescribing the Coverage and Criteria for Determining Large Taxpayers. Retrieved from https://www.bir.gov.ph/images/bir_files/old_files/pdf/55153RR%2017-2010.pdf
• Bureau of Internal Revenue (BIR). (2009). Revenue Regulations No. 9-2009: Maintenance, Retention, and Submission of Electronic Records. Retrieved from https://www.bir.gov.ph/images/bir_files/old_files/pdf/48343rr%20no.%209-2009.pdf
• Bureau of Internal Revenue (BIR). (2020). Revenue Memorandum Circular No. 5-2021: Simplified Policies on the Application for Registration of Computerized Accounting System (CAS), Computerized Books of Accounts (CBA), and/or its Components, including the Electronic Storage System (ESS), Middleware, and Other Similar Systems. Retrieved from https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2021%20RMCs/RMC%20No.%205-2021.pdf
• ORUS (Online Registration and Update System): Registration of Books of Accounts Taxpayer Guide [PDF]. (2023). Bureau of Internal Revenue (BIR).
• Philippines, Bureau of Internal Revenue (BIR). (n.d.). Revenue Memorandum Circular No. 3-2023: Policies and Guidelines on the Online Registration of Books of Accounts .
• Bureau of Internal Revenue (BIR). (2014). Revenue Regulations No. 5-2014: Amending Revenue Regulations No. 17-2013 dealing with the “Preservation of Books of Accounts and Other Accounting Records.” Retrieved from https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202014/RR%205-2014.pdf
• Bureau of Internal Revenue (BIR). (2013). Revenue Regulations No. 17-2013: Preservation of Books of Accounts and Other Accounting Records. Retrieved from https://www.bir.gov.ph/images/bir_files/old_files/pdf/75723RR%20No%2017-2013.pdf
• Official Gazette of the Republic of The Philippines. National Internal Revenue Code (1997) .
• Bureau of Internal Revenue (BIR). (2015). Revenue Memorandum Order No. 7-2015: The Revised Consolidated Schedule of Compromise Penalties for Violations of the National Internal Revenue Code. Retrieved from https://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202015/RMO%20No.%207-2015.pdf
• Public Information & Education Division, Bureau of Internal Revenue (BIR). (2018). Taxpayer’s Bill of Rights [Ebook]. Retrieved from https://www.bir.gov.ph/images/bir_files/public_information_and_education/taxpayer_bill_of_rights/Taxpayer-Bill-of-Rights-2018.pdf

Written by Jocelyn Soriano, CPA

in Accounting and Taxation , Juander How

Jocelyn Soriano, CPA

Jocelyn Soriano is a CPA and a previous risk-based auditor for 11 years in a government agency exercising complementary supervision of banks. She graduated Summa Cum Laude with a degree in Accounting. She has published more than 15 books, developed several Android apps and is currently a freelance writer and blogger who is experienced in creating websites, writing SEO-optimized posts, managing newsletter subscriptions, and social media marketing. She is also a poet and dreams of publishing her Filipino epic high-fantasy novel.

Browse all articles written by Jocelyn Soriano, CPA

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Books of Accounts of Taxpayers in the Philippines

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 and is where your records all financial transactions about your business.  Entries in the books of accounts are matters of past transactions and events and are required to be supported by documents and papers such as official receipts, sales invoices, vouchers, and other related documents and papers evidencing completed business transactions.  Your books of accounts will tell whether you paid the rightful amount of taxes due to the BIR so extra care and effort should be exerted in preparing the same to avoid unnecessary penalties.

The BIR allows three types of books of accounts  – (1) manual books of accounts, (2) computerized books of accounts, and (3) loose-leaf books of accounts. It is the taxpayer who determines which of the three types would he adopt. However, Large Taxpayers duly notified by the BIR are mandated to use computerized accounting system. Of course, failure to maintain books of accounts is subject to penalties, or worst, imprisonment for willful and fraudulent intent to evade taxes.

Manual books of accounts

These are the readily available in the market and compiled ones you can normally buy from bookstores pre-printed with the corresponding names – Journal, Ledger, Columnar Journals, etc. Entries in the books of accounts based on the business documents and papers are recorded in a handwritten manner. You register the same initially after the release of your BIR Certificate of Registration. As soon as the pages are consumed, you are allowed to register additional volumes.

 Computerized books of accounts

This represents the series of programs and operations configured into an accounting system and duly registered with the BIR. Upon registration, BIR will verify its capability to process the information accurately and the same will be undertaken through their developing a deeper understanding of the process and through some walk-through tests. This normally requires some amount of investment depending on the complexity of your operations. You can either secure the services of an IT-expert on accounting systems development customized to the complexities of your business operations, or you can simply buy readily available accounting systems in the market – e.g. QuickBooks, Peachtree, myob, zero, sap, etc. BIR registration of systems bough in the market may seem to be easier because of BIR’s familiarity in other application for registrations of other taxpayers, as compared to customized accounting systems that has to go through a thorough system evaluation by the BIR.

Loose-leaf books of accounts

This refers to loose sheets of computer printed books of accounts not generated under a computerized books of accounts. In other words, this is not a computerized accounting system simply printed, but, are simply computerized instead of being handwritten. For BIR registration, the BIR will require you to justify the need to adopt the same in lieu of the manual or computerized books. You will likewise need to present a sample print outs. Said sample print-outs will be book-bound and will be submitted to the BIR for stamping.

As to component parts, such books of accounts would depend on their BIR registration – value added tax (VAT) or other percentage tax (OPT or Non-VAT). VAT registered is normally required to maintains six (6) components, while OPT or NON-VAT registered taxpayers are normally required to maintain at least four (4) components as follows:

For VAT and Non-VAT or OPT registered

• Cash Receipts Books
• Cash Disbursements Books

For VAT Registered

• Subsidiary sales journal
• Subsidiary purchases journal

Please note that keeping books of accounts is critical for your business because it is where all your business transactions are recorded. Based on such records, tax returns and other tax compliance matters are prepared. If your bookkeeper prepares your returns without any books of accounts as basis, I suggest you consider securing their explanation as to the basis of your returns because it appears to be risky.

Books of accounts will need to be audited by an independent Certified Public Accountant (CPA) at the end of the taxable year as a matter of BIR requirement once your quarterly gross sales or receipts or earnings exceed P150,000.00, except, sole proprietors who opted for optional standard deduction (Update under TRAIN Law: .. there is a mandatory requirement for corporations, companies, partnerships or persons whose gross annual sales, earnings, receipts or output exceed Three million pesos (₱3,000,000) to have their books of accounts audited and examined yearly by an independent Certified Public Accountants) . In an audit, the independent CPA or auditor will determine whether or not your books of accounts are prepared in accordance with the prescribed accounting rules – Philippine Financial Reporting Standards (PFRS). Audited Financial Statements will then be issued and will be attached to the annual income tax return (ITR) for filing with the BIR.

As a check and balance of your tax compliance, the BIR has the right to examine your books of accounts within three (3) years from date tax returns are required to be filed or from late filing of tax returns. Fraudulent returns or failure to file returns could be assessed within ten (10) years from discovery of fraud or falsity.  During tax examinations of BIR, their tax auditors will conduct the verification and assessments through the books of accounts. Books of accounts are the responsibility of the taxpayer and it would not matter to the BIR who your bookkeeper is. In case of erroneous entries, BIR will run after you and not your retainer paid bookkeeper or employed accounting staff. Thus, we suggest that you give your best shot in choosing a good bookkeeper.

References for more readings…

• Section 232 of the Tax Code, as amended
• Revenue Regulations No. V-I
• Revenue Memorandum Order (RMO) No. 20-2001, as amended by RMO No. 29-2002
• Revenue Memorandum No. 13-82

Disclaimer : This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may also please send mail at info(@)taxacctgcenter.ph, or you may post a question at Tax and Accounting Center Forum  and participate therein.

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Books of Accounts and Audit Requirements

Updated on : Apr 19th, 2022

The Income Tax Act has specified the books of accounts that are required to be maintained for the purpose of  Income Tax . These have been prescribed under section 44AA and Rule 6F.

Who is required to maintain books of account?

Books of accounts/accounting records have to be maintained if the gross receipts are more than Rs. 1,50,000 in 3 preceding years for an existing profession. This also applies to a newly set up profession whose gross receipts are expected to be more than Rs. 1,50,000.

The accounting records to be kept have been prescribed in Rule 6F. The below professions are required to maintain Books of accounts/accounting records:

• Engineering
• Architectural
• Accountancy
• Technical consultancy
• Interior decoration
• Authorized representative — A person who represents another person for a fee before a tribunal or any authority constituted under any law. It does not include an employee of the person so represented or a person who is carrying on the profession of accountancy.
• Film artist — This includes a producer, editor, actor, director, music director, art director, dance director, cameraman, singer, lyricist, story writer, screenplay or dialogue writer and costume designers.
• Company secretary
• If you are a freelancer pursuing any of these listed professions and your gross receipts are more than Rs. 1,50,000, these rules shall apply to you.
• If the gross receipts of the Professions listed above are not more than Rs 1,50,000 in any one or more of the preceding 3 years for an existing profession or for a newly set up profession whose gross receipts are expected to be not more than Rs 1,50,000 – the professional is not required to maintain books of accounts as per section 44AA. In such a situation, a professional has to maintain books of accounts which would enable the AO to compute the taxable income of the professional from them.

Specified books of account as per Rule 6F

• Cash book A record of day to day cash receipts and payments which shows cash balance at the end of the day or at best at the end of each month and not later.
• A journal according to mercantile system of accounting A journal is a log of all day to day transactions. It is a record, in accounting terms, where total credits equal total debits, when we follow the double entry system of accounting ie each debit has a corresponding credit and vice versa.
• A ledger where all entries flow from the journal, has details of all accounts, this can be used to prepare the financial statements.
• Photocopied of bills or receipts issued by you which are more than Rs 25
• Original bills of expenditure incurred by you which are more than Rs 50

Following are the additional requirements in case of a person carrying on medical profession — physicians, surgeons, dentists, pathologists, radiologists, etc.

• Daily cash register with details of patients, services rendered, fees received and date of receipt
• Details of stock of drugs, medicines, and other consumables used

These books should be maintained at the Head Office or at each of the offices.

For how long should these books be maintained?

Each year’s books must be kept for a period of 6 years from the end of that year. Failure to maintain books of accounts : If you fail to maintain books of accounts as prescribed, you may be charged a penalty of Rs 25,000 or in some cases where you may have international transactions and you have failed to maintain information and documents for such transactions – 2% of the value of each international transaction.It would be diligent to maintain your books of accounts and keep track of all your expense and income in a methodical way.

When is bookkeeping not required?

• Where the income does not exceed Rs 1,20,000 or total sales, turnover or gross receipts are not more than 10,00,000 in all preceding 3 years — no books of account are required to be maintained. In the case of a newly set up profession or business the same rule applies when income is expected to be less than Rs 1,20,000 or sales/turnover/gross receipts are expected to be less than Rs 10,00,000.
• Where the income is more than Rs 1,20,000 or total sales, turnover or gross receipts are more than 10,00,000 in all preceding 3 years, such profession or businesses must maintain books of accounts and other documents which may enable the Assessing Officer to calculate their taxable income as per the Income Tax Act. No specific records are prescribed. In case of a newly set up profession or business, the same rule applies when income is expected to be more than Rs 1,20,000 or sales/turnover/gross receipts are expected to be more than Rs 10,00,000.
• For Professions and Businesses covered under section 44AD and 44AE Businesses covered under section 44AD and 44AE are not required to maintain any books of accounts. However, taxpayers who claim that their income from business is lower than the presumed income calculated under section 44AE must maintain books of accounts as specified in section 44AA and have them audited under section 44AB. A taxpayer may shifts from presumptive taxation under section 44AD/44ADA to normal taxation to claim that their income from business or profession is lower than the presumed income calculated under section 44AD/44ADA. In such a case, where the income exceeds the basic exemption limit of Rs 2,50,000, books of accounts as required under section 44AA have to be maintained and audited as per section 44AB.
• In the case of a taxpayer whose turnover was less than Rs 25 Lakh, but having total income above the maximum amount not chargeable to tax, are excluded from maintenance of books of accounts as per 44AA.

Audit Requirements

Audit of accounts is compulsory by a Chartered Accountant for the following persons

Due date for getting records audited and submission of audit report

The deadline for audit and submitssion of report is November 30 in case of international or specified domestic transactions.

Penalty when accounting records as required are not maintained as per Section 44AA

If the taxpayer fails to maintain accounting records as per the requirements of Section 44AA, a penalty may be levied under section 271A. The maximum penalty that can be charged is Rs. 25,000. However, if the taxpayer can prove there is a reasonable cause for failure to maintain accounting records – such penalty may not be levied.

If the taxpayer fails to get the accounting records audited or furnish audit report as per the requirements of Section 44AB, a penalty may be levied under section 271B. The minimum penalty that can be charged is 0.5% of the total sales, turnover or gross receipts. The maximum penalty is Rs 1,50,000. However, if the taxpayer has a reasonable cause for failure to get an audit done – such penalty may not be levied.

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Jen Psaki to Remove False Account of Biden ‘Watch Check’ From Her New Book

The Biden flack turned MSNBC star wrongly claimed the president never checked his watch during a ceremony for troops killed at Abbey Gate, calling it “misinformation.”

Justin Baragona

Senior Media Reporter

Dia Dipasupil/Getty

Former White House press secretary Jen Psaki said on Monday that she will remove a passage from her new book Say More that falsely claims President Joe Biden never checked his watch during a ceremony for American troops killed during the 2021 withdrawal from Afghanistan.

Psaki, now an MSNBC primetime host , was spurred to act after Axios reported that her recollection that “the president looked at his watch only after the ceremony had ended” was contradicted by news reports and firsthand accounts from Gold Star families at the time.

In what Axios described as the “latest instance of current and former Biden administration officials downplaying or misrepresenting controversial episodes from the Afghanistan withdrawal,” Psaki wrote in Say More that the president’s critics had engaged in “misinformation” by blasting him over the infamous photos of him looking at his watch.

Following the horrific attack at the Abbey Gate base that left 13 soldiers dead, Biden faced intense backlash over not only the chaotic withdrawal from Afghanistan but also because he appeared to be inconsiderate during the dignified transfer of the troops’ bodies at Dover Air Force Base.

While the Associated Press snapped multiple photographs of Biden looking at his watch twice throughout the ceremony, and Gold Star families spoke on the record about the president repeatedly checking the time, Psaki insisted in her book that wasn’t the case. Instead, she wrote, he only looked at the end of the transfer. Republicans were weaponizing the image, Psaki suggested, to make “him appear insensitive, concerned only about how much time had passed.”

Additionally, as Axios reported, Psaki cited the wrong fact check to bolster her case. Though quoting from a USA Today article , she claimed the Washington Post noted that Biden looked at his watch at the end of the ceremony. The article she cited, however, also concluded that “photos and video show [Biden] also checked his watch during the ceremony.”

Psaki, who now considers herself a TV journalist, initially declined to comment when Axios first published its story. After publication, though, she reached back out and told Axios that the “detail in a few lines of the book about the exact number of times he looked at his watch will be removed in future reprints and the ebook.” The White House declined to comment to Axios.

Psaki also said that the “story on Afghanistan is really about the importance of delivering feedback even when it is difficult told through my own experience of telling President Biden that his own story of loss was not well received by the families who were grieving their sons and daughters.”

Elsewhere in Say More , she stated that Biden was left speechless by the criticism he’d received from Gold Star families because he had spent ample time talking with them about the loss of his own son Beau.

Joining the left-leaning cable news network directly from the White House in 2022, Psaki soon scored her own Sunday MSNBC talk show. In late 2023, she also became the primetime lead-in to star anchor Rachel Maddow, who now only hosts on Monday nights.

A representative for MSNBC did not immediately respond to a request for comment on whether Psaki will address the removal of the book passage on her Monday evening program.

Got a tip? Send it to The Daily Beast  here .

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Can You Find The 13 Book Titles Hidden in This Text?

By J. D. Biersdorfer May 13, 2024

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Welcome to Title Search, the Book Review’s hidden-text puzzle. This edition celebrates sports, and the titles of 13 such books — including history, biography and memoir — are hidden below within an unrelated text passage. As you read along, tap or click the words when you think you’ve found a title (including any punctuation like question and exclamation marks). Correct answers stay highlighted. When you uncover each title, the answer section at the bottom of the screen grows to create a reading list with more information and links to the books.

A new literary quiz lands on the Books page each week and you can match wits with previous puzzles in the Book Review Quiz Bowl archive .

It had already been a season on the brink of true disaster for the proud Tigers fans and today wasn’t going well. The opposing pitcher struck eight men out in the first three innings and the Tigers had only just managed to find a way to first base after a “ball four” call.

“Can’t anybody here play this game?” sighed Barkley, the manager, to Coach Prime in the dugout. “I know they’re going all in, but we need to move forward here.”

Prime ignored him, as he was watching the guy who had taken two bases after a massive outfield error and was coming home to score. “Oh, this big cat has at least one life left,” he replied.

Explore More in Books

Want to know about the best books to read and the latest news start here..

The complicated, generous life  of Paul Auster, who died on April 30 , yielded a body of work of staggering scope and variety .

“Real Americans,” a new novel by Rachel Khong , follows three generations of Chinese Americans as they all fight for self-determination in their own way .

“The Chocolate War,” published 50 years ago, became one of the most challenged books in the United States. Its author, Robert Cormier, spent years fighting attempts to ban it .

Joan Didion’s distinctive prose and sharp eye were tuned to an outsider’s frequency, telling us about ourselves in essays that are almost reflexively skeptical. Here are her essential works .

Each week, top authors and critics join the Book Review’s podcast to talk about the latest news in the literary world. Listen here .

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Book Review: ‘Challenger’ is definitive account of shuttle disaster and missteps that led to tragedy

This cover image released by Avid Reader shows “Challenger: A True Story of Heroism and Disaster on the Edge of Space” by Adam Higginbotham. (Avid Reader via AP)

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When the Challenger space shuttle exploded a little over a minute after its launch in 1986, it pierced the dreams of millions about who watched the tragedy unfold live on television. It also eventually exposed the weaknesses of a space program that had been revered by many.

In “Challenger: A True Story of Heroism and Disaster on the Edge of Space,” Adam Higginbotham provides the most definitive account of the explosion that took the lives of the seven-person crew. He also meticulously explores the missteps and negligence that allowed the tragedy to occur.

Bookmarked between two other tragedies that struck NASA — the 1967 Apollo launchpad fire that killed three astronauts and the 2003 Columbia shuttle disaster that killed seven — Higginbotham’s book traces the history of the nation’s shuttle program leading up to the Challenger explosion.

Higginbotham manages to temper his account of the excitement the shuttle program generated — recounting how “everyday life seemed to come to a standstill” during the launch of the Columbia shuttle in 1981 — with the warning signs of technical flaws that were overlooked or outright ignored over the years.

In clear and accessible language, Higginbotham explains the mechanics of the shuttle and its problems without sacrificing any of the pace that carries readers forward. The pace is so brisk that readers will be surprised when they realize the vivid account of the Challenger launch doesn’t occur until well after halfway through the book.

Higginbotham provides just as dramatic of a retelling of the aftermath of the shuttle’s crash, from the search for the wreckage and astronaut remains to the investigation and hearings on the disaster.

The book delivers a compelling, comprehensive history of the disaster that exposed, as Higginbotham writes, how “the nation’s smartest minds had unwittingly sent seven men and women to their deaths.”

AP book reviews: https://apnews.com/hub/book-reviews