Books of accounts are also known as accounting books. These books record all your business transactions from the profits to operating expenses. The financial records in these books should be organized and should serve as the basis for preparing your financial statements.
Whatever data you have in these books thanks to meticulous bookkeeping is a crucial and helpful tool in making business decisions. It serves as the official record that allows you to have a financial overview and control over your business. Check out these common questions regarding books of accounts so you can confidently keep track of your books.
1. What are the types of books of accounts and how many should my business have?
The types of books of accounts you should have depends on whether your business offers services or goods. If your business is engaged in the sale of services, you should have a cash receipts journal, cash disbursements journal, general journal, and general ledger.
If your business is engaged in the sale of goods, you should have the cash receipts journal, cash disbursements journal, sales journal, purchases journal, general journal, and general ledger.
Notably, even freelancers must have their own accounting books. Some BIR district offices allow them to maintain two sets of books of accounts while some Revenue District Offices issue them only one.
2. Should my manual books of accounts be stamped by BIR?
You can buy your books of accounts in any bookstore. Just look for a columnar book, ledger, or journal. It doesn’t have to be an expensive notebook. However, to have make your books of accounts official, you need to go to the Bureau of Internal Revenue and have them stamped. It should be done within 30 days after you have secured your COR or Certificate of Registration from the BIR.
3. What should I record in each book and how do I record them?
Cash Receipts Journal records all the cash you received and is supported by the official receipts you have issued.
Recording an entry in the cash receipts journal is done when you issue a receipt. Make sure you have the columns for at least the following:
- Date
- Customer’s Name
- Receipt Number
- Amount
- Output VAT
Cash Disbursement Journal records all your expenses and purchases paid in cash. It is supported by cash invoices from your suppliers. It must include the following columns:
- Date
- Supplier’s Name
- Particulars
- Invoice/Reference/Receipt Number
- Amount
- Input VAT
Sales Journal records all the sales transactions made on credit and is supported by credit sales invoices. When goods are delivered to your customers, you will have to issue a credit sales invoice. It must include the following columns:
- Date
- Customer’s Name
- Credit sales invoice number
- Particulars
- Amount
- Output VAT
Purchases Journal records transactions/purchases made on credit and is supported by credit sales invoices. If credit terms exist between you and your supplier, record the unpaid amounts in this journal. It must include the following columns:
- Date
- Supplier’s name
- Supplier’s Credit Sales Invoice
- Particulars
- Amount
- Input VAT
General Journal records all other transactions aside from the transactions recorded in the other books of accounts. It must include the following columns:
- Date
- Account
- Particulars
- Debit
- Credit
General Ledger contains a summary of all the entries recorded in the different books of accounts. It serves as the basis of all the information in your tax returns and financial statements. Ensure that you have a section for all your chart of accounts. It must include the following columns:
- Date
- Source Books
- Credit
- Debit
4. Is there another way to maintain books of accounts other than using manual books?
Aside from using manual books which are pre-printed books you can buy in bookstores, there are looseleaf books and CAS or Computerized Accounting System. Looseleaf Books are worksheets prepared using a computer and are printed afterward. The CAS is an accounting software that is registered with the BIR.
5. Do I need to submit my books of accounts to the Bureau of Internal Revenue?
For manual books, submit them to the BIR when it becomes full. For looseleaf books, printed copies should be submitted to BIR on or before January 15 of the following year. For CAS, the records should be saved in a CD-ROM (text format), It has to come with a notarized affidavit ensuring the accuracy of the number of invoices and receipts. Other accounting records should be submitted in a soft copy which should be submitted on or before January 30th of the following year.
Every business must have their own books of accounts as mandated by the law. If you have trouble updating your books of accounts, give our team a call. We can do that for you with our full-scale accounting services. Alternatively, we can also audit your books to check the entries and computations.
