What are the Books of Account?

All business establishments and taxpayers are required to keep a record of their day to day business transactions in order to know the result of their operations. The said record is referred to as “book of accounts”.

Whenever a business establishment or taxpayer applies for certificate of registration (COR) with the BIR, it also required to register the book of accounts. Also, the books of account should also be registered annually on or before January 31 of each year.

Registration of book of accounts can be any of the following type

Manual Books of Account
Manual books of account are the traditional journal, ledger and columnar books you can buy in the book and office supplies store. Recording in the manual books of account is handwritten. This is the most of popular type of books of account for small enterprises since it is less costly and easy to register with the BIR.
Loose-leaf Books of Account
Loose-leaf books of account are printed and bounded journals and ledgers. Recording can be done using Microsoft Excel.
Computerized Books of Account
Computerized book of account is an accounting program that facilitate efficient and fast record keeping.

Books of Accounts – Minimum Requirements

The type of books the business will maintain depends on many factors such as the size of the business and financial capacity. However, regardless of the type of book of accounts the company would maintain, below are the minimum requirement:

General Journal
General journal is referred to as the book of original entry. It records business transaction in order of date using the principle of “debit and credit”.
General Ledger
General ledger is referred to as the book of final entry.  It summarized all the journal entries of an account to get the ending balances.
Cash Receipt Journal
Cash receipt journal is a special journal used to record cash sales and/or collection of receivables.
Cash Disbursement Journal
Cash disbursement journal is a special journal used to record cash payments of expenses and/or payables.
Sales Journal
Sales journal is a special journal used to record sales on credit (receivable from customer)
Purchase Journal
Purchase journal is a special journal used to record purchases on credit (payable to supplier)

Books of Accounts for Service Business

For business or taxpayer engaged in sale of services, it is required to maintain at least four which are the following:

  1. General journal
  2. General ledger
  3. Cash receipt journal
  4. Cash disbursement journal

Books of Accounts for Businesses  Engaged in Sales of Goods or Properties

For business or taxpayer engaged in sale of goods or properties, it is required to maintain at least six, which are the following:

  1. General journal
  2. General ledger
  3. Cash receipt journal
  4. Cash disbursement journal
  5. Sales journal
  6. Purchase journal

PS

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Disclaimer: The content of this article may become outdated because of changes in the rules and regulations over time. It does not substitute the need for inquiring professional advice.

Comments

  1. jaycee castillo says:

    Hello,
    Just want to inquire,
    We’ve lost our book of accounts due to flood during “habagat” before, we will file a business closure this month,We found out it is one of the requirements. We are planning to have an affidavit of loss. is there any penalty or fees for that when we submit it to BIR? Thanks in advance MPM.

    • Hi Ms Jaycee Castillo, thank you for your comment. You need to file a notarized affidavit of loss to the BIR. The penalty will depend if you can justify the cause of loss. But based on the schedule of penalty from the BIR, failure to keep/preserve records required by law or regulations are subjected to penalty ranging from P200.00 to P50,000.00 depending on the gross annual sales or receipts.

  2. Doris C. Esperanza says:

    Hi Ma’am, I’m very much confused of creating journal, I had a small business Gen, Merchandise actually and we are required to do accounting i had a little knowledge but unfortunately I’m not familiar what are entries for that column and what book should I used? Hope you can help me thanks a lot…