Integrated Accounting Fundamentals Notes PDF

INTERIM-FINALS TOPICS **Accounting for Merchandising Business** - **Non-Operating Activities** - - - - - **Operating Cycle for a Merchandiser** - **Gross Invoice Price** - - - **Sales** - - -  **Forms of Income Statement** - - -...

INTERIM-FINALS TOPICS **Accounting for Merchandising Business** - **Non-Operating Activities** - - - - - **Operating Cycle for a Merchandiser** - **Gross Invoice Price** - - - **Sales** - - -  **Forms of Income Statement** - - - - - - - **Inventory Systems** **Perpetual Systems** - - - - - - **Advantage** - - - **Periodic Inventory System** - - - - - - **Recording Business Transaction** - - +-----------------------------------------------------------------------+ | **Perpetual System** | +=======================================================================+ | Nov 2 Dr Merchandise Inventory 500 | | | | Cr. Cash 500 | +-----------------------------------------------------------------------+ | **Periodic System** | +-----------------------------------------------------------------------+ | Nov 2 Dr Purchases 500 | | | | Cr. Cash 500 | +-----------------------------------------------------------------------+ - - +-----------------------------------------------------------------------+ | **Perpetual System** | +=======================================================================+ | Nov 2 Dr Merchandise Inventory 500 | | | | Cr. Accounts Payable 500 | +-----------------------------------------------------------------------+ | **Periodic System** | +-----------------------------------------------------------------------+ | Nov 2 Dr Purchases 500 | | | | Cr.Accounts Payable 500 | +-----------------------------------------------------------------------+ **Credit Terms** - - - +-----------------------------------------------------------------------+ | **Perpetual System** | +=======================================================================+ | Nov 12 Dr. Accounts Payable 500 | | | | Cr. Merchandise Inventory 10 | | | | Cr. Cash 490 | +-----------------------------------------------------------------------+ | **Periodic System** | +-----------------------------------------------------------------------+ | Nov 12 Dr. Accounts Payable 500 | | | | Cr. Purchase Discount 10 | | | | Cr. Cash 490 | +-----------------------------------------------------------------------+ - - +-----------------------------------------------------------------------+ | Dec 2 Accounts Payable 500 | | | | Cash 500 | +-----------------------------------------------------------------------+ **Purchases [with] Returns and Allowances** - - - - - +-----------------------------------------------------------------------+ | **Perpetual System** | +=======================================================================+ | Nov 5 Dr. Accounts Payable 30 | | | | Cr. Merchandise Inventory 30 | +-----------------------------------------------------------------------+ | **Periodic System** | +-----------------------------------------------------------------------+ | Nov 12 Dr. Accounts Payable 30 | | | | Cr. Purchase Returns and Allowances 30 | +-----------------------------------------------------------------------+ **FREIGHT COSTS** **FOB -** Free on Board **FOB Shipping Point**- Buyers pays freight costs. - **FOB Destination Point-** Seller pays freight costs. - **Freight Prepaid** - **Freight Collect** - Under FOB, **'freight collect'** means the buyer is responsible for freight charges after goods have been loaded onto the vessel, while **'freight prepaid'** means that the seller bears the cost of shipping till that point. "**WHO OWNS THE GOODS SHOULDERS THE FREIGHT"**  - +-----------------------------------------------------------------------+ | **Perpetual System** | +=======================================================================+ | Nov 24 Dr. Merchandise Inventory 500 | | | | Cr. Cash 500 | +-----------------------------------------------------------------------+ | **Periodic System** | +-----------------------------------------------------------------------+ | Nov 12 Dr. Freight In 500 | | | | Cr. Cash 500 | +-----------------------------------------------------------------------+ **Value Added Tax (VAT)** **Value added Tax based on TRAIN Law** - - - - - **OUTPUT VAT** - - **INPUT VAT** - - **VAT ILLUSTRATED** Assume Andrea's Closet, a VAT-registered company bought goods on account on July 1 for P22,400 from Leni's ARTe Stroe which is also a vat-registered company. On July 10, Andrea sold the goods to a cash customer for P33,600. Remember that the invoices are VAT inclusive which means that it is equal to 112%. Purchases and sales should be recorded at cost or sales price without the VAT. Entries will appear as follows in ANdre's books: **SPECIAL JOURNALS** - - - **Used of Special Journals and the General Journal** - - - - - The type of special journals used depends largely on the types of transactions that occur frequently in a business enterprise. **Sales Journal** - - - Example - -  **Purchase Journal** - - - - - - - - - **SAMPLE PROBLEM** Efrem Booking had the following merchandise transactions in September 2019 (all merchandise purchases are inclusive of 12% VAT): - - - - - - **Cash Receipts Journal** - - - - **Transaction recorded in the Cash Receipts Journal** - - - - - - **Illustrative Problem** Assume the following transactions: - - - - -  **Cash Payments Journal** - - **General Journal Transactions** - - - - When special journals are used, we still need a general journal for adjusting, closing, and any other transactions for which no special journal has been set up. **Effects on General Journal** - - - - **Subsidiary Ledgers** - - -  **Advantages of using subsidiary ledgers are that they:** - - - - **Controlling Account** - - **Subsidiary Ledgers** - - **Accounts Receivable Ledger** - **Payroll Accounting** **Definition of Terms** - - - - - - **Basic Labor Laws** - - - - - - - - - **Benefits Inclusion (SSS & EC)** - - - - - **Social Security System** - - - - - - **Employee's Compensation Program** - - - **National Health Insurance Program** - - - **Pag-IBIG Fund (Pagtutulungan sa Kinabukasan:Ikaw, bangko, Industria at Gobyerno)** - - - **SSS Contributions** - - - **Revised Schedule of SSS Contributions** - - - **Employees' Payroll Deductions and Employer's Payroll Expenses** **2.** Philhealth benefits- Effective January 2024 to 2025, the monthly premium contributions shall be at the rate of 5.0% computed straight based on the **monthly basic salary.**  **Pag-IBIG Fund (Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya, at Gobyerno)** Effective Feb 2024, contributions are as follows: - - - - - **Withholding Taxes** - - - -  **Remember:** - a. b. c. d. **Payroll System** - - - **Employee Earnings Record** - - **Remittances** - - - **Internal Control over Payrolls** - **Classification of Costs** I. A. 1. 2. 3. B. 4. 5. II. 1. 2. 3. **III. In relation to manufacturing departments** 1. 2. **IV. As to their nature** 1. 2. **V. As to relation to an accounting period** 1. 2. **VI**. **Costs for Planning, Control, and Analytical Processes** 1. 2. 3. 4. 5. 6. 7. **Manufacturing Costs -** also called inventoriable costs or product costs. - - - - - - - - - - **Non-Manufacturing Costs** - - **Product Costs VS. Period Costs** **Product costs** include direct materials, direct labor, and manufacturing overhead. - **Period Costs** include all selling costs and administrative costs. - **Cost Classified as to Variability** **Fixed Cost** **2 categories** 1. 2. **Variable Cost -** Total variable costs vary in direct proportion to the volume of production but the variable cost per unit remains constant as volume changes within the relevant range. **Mixed Cost -** Has components of both fixed and variable. It varies with the level of production but not in direct relation to it. 2 types 1. 2. **Cost as to their Nature** **Common Costs** - - **Joint Cost** - - **Costs as to relation to Accounting Period** **Capital Expenditure** - **Revenue Expenditure** - **Costs for Planning , Control, and Analytical Process** 1. 2. 3. 4. 5. 6. **Controllable VS. Noncontrollable** - - **Materials Inventory** - -