ELEMENTS OF THE

ACCOUNTING
SYSTEM
ACCOUNTING
- Provision of financial information regarding
the financial position and results of operation
of the cooperative for making better
managerial decisions
Source
Documents

ORs
CVs
Invoices
JVs

3
Source Documents
 Official Receipts (ORs)
Original - payee
Duplicate - Bookkeeper

• Cash/Check Voucher (CVs)

Original - Bookkeeper
Duplicate - Treasurer

 Invoices
Original - payee
Duplicate - Bookkeeper
Source Books of
Documents Original Entry

CRB
ORs
CDB
CVs
JB
Invoices
PB
JVs
SB

5
Books of Original Entry
 Cash Receipts Book - all transactions
involving receipts of cash; Source document
– Official Receipts
 Cash Disbursements Book – all transactions
involving payments of cash or the issuance of
checks; Source document – Cash/Check
Vouchers
Books of Original Entry
 Purchases Book – all goods bought on
account which are intended for sale and/or
issuance to members; Source document –
seller’s invoices
 Sales Book – all goods sold/issued to
members on account; Source document –
Sales Invoices
 Journal Book– all non-cash transactions;
Source document – Journal Voucher
Source Books of
Documents Original Entry

CRB
ORs CDB
CVs JB
PB, SB
Invoices
JVs

Subsidiary
Ledgers

8
Subsidiary Ledgers
 Receivables
 Payables
 Share Capital
 Fixed Assets
 Inventories
 Cash in Bank, if various
Source Books of Book of Final
Documents Original Entry Entry

ORs CRJ
General
CVs CDJ
Ledger
GJ
Invoices PJ, SJ
JVs

Subsidiary
Ledgers

10
General Ledger
Transactions posted in the Books of Original
Entry are summarized at the end of the
month and posted in the General Ledger
Source Books of Book of Final
Documents Original Entry Entry

ORs CRB
General
CVs CDB
Ledger
JB
Invoices PB, (GL)
JVs SB

Subsidiary

Ledger
(SL)

Trial Balance
AJE 12
Trial Balance
 A preliminary Trial Balance based on GL
balances is prepared
 Adjusting entries, including those made by
the external auditor are posted to the GL
 A final Trial Balance shall then be prepared
Source Books of Book of Final
Documents Original Entry Entry

ORs CRB
General
CVs CDB
Ledger
JB
Invoices PB
JVs SB

Subsidiary
Ledgers

Financial
Statements
Trial Balance
AJE 14
Financial Statements
 Statement of Financial Condition (Balance
Sheet)

 Statement of Operations (Income Statement)

Financial Statements
 Should be prepared monthly
 Year-end FS should be audited/signed by an
independent auditor
 Interim FS needs to be signed only by the
Manager, AIC Chairman, and BOD Chairman
 Individual FS per business/project should be
prepared on a monthly basis

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EXAMINATION OF THE
JOURNALS
Cash Receipts Journal
 Entries are written in ink
 ORs are consecutively numbered and
recorded
 Items in the ORs issued are properly posted in
their respective accounts
 Numbers in the ORs are accounted for. For
cancelled ORs, the originals remain intact or
attached to the duplicates/triplicates
Cash Disbursements Journal
 Items are written in ink
 Numbers in the CVs are accounted for
 Vouchers are properly processed and
approved based on existing policies
 Items in the CVs issued are properly posted
in their respective accounts
Purchases Journal
 Purchases are covered and supported with
duly approved Purchase Orders, at least 3
Canvass Sheets, and Supplier’s Invoice
 Receiving Reports are properly controlled
and numbered sequentially
Sales Journal
 Daily Sales Summary Report are properly
verified
 Signed by the proper authorities
 Compared against the daily totals on Cash Sales
Invoices and Charge Sales Invoices
General Journal
 Numbers in the JVs are accounted for
 JVs are properly authorized

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CASHIERING
 Receipts
 Disbursements
 Cash in Bank
 Accountable forms
 Safekeeping of cash / Vault operation

The Treasurer is responsible to the cooperative

for all cash received and subsequent
deposits thereof to the bank
Receipts
 The Treasurer should issue ORs for all cash
received
 Other employees authorized to issue
receipts:
 Sales Clerk – for over-the-counter sales; issues
Cash Sales/Charge Sales Invoice and prepares
Daily Sales Summary Report
 Operator – for services rendered; issues Service
Invoice and prepares Daily Service Summary
Report
Receipts
 Collector – for loans, accounts receivables, or
cash-on-delivery (COD) sales; issues Cash
Acknowledgement Receipt and prepares Daily
Collection Report
 Employees authorized to issue temporary
receipts should turn over daily collections
together with the unused documents to the
Treasurer who will issue the corresponding
ORs
Receipts
 The Treasurer shall be responsible for the
control and checking of the usage of
temporary receipts. He shall initial at the
back of the stub of the last document issued
and sign the reports prepared by the
concerned employee.
Disbursements
 Imprest Fund System – all collections should
be deposited intact on a daily basis or as the
need arises
 Petty Cash Fund - set up to take care of minor
(petty) disbursements
 Revolving Fund – set up for immediate cash
operating requirements such as Revolving Fund
for palay trading.
 For a seasonal activity wherein the intervals take a
longer period, the RF should be reverted to the
General Fund
Disbursements
 Disbursements in excess of those payable through
PCF/RF should be made through checks or
withdrawal slips.
 The approving authorities and limits shall be based
on the policy
 Each check prepared is covered by a pre-numbered
Cash Voucher (CV)
 All CVs shall be properly supported. The
Bookkeeper reviews and checks the validity of the
CVs and its supporting documents.
Disbursements
 Upon payment/release of checks, CVs shall be
stamped “PAID” together with all the supporting
documents, with the date of payment indicated
therein.
 CVs must be signed by the payee or his authorized
representative to acknowledge receipt of payments.
If thru representative, an authorization letter shall be
attached.
 The Treasurer must require the payee to issue an
OR or other evidences in exchange for the check.
Petty Cash Fund (PCF) /
Revolving Fund (RF)
 A Petty Cash Voucher (PCV) is required for
disbursements from the PCF and Revolving Fund
Voucher (RFV) for RF
 PCVs and RFVs must be approved by the manager
or chairman before any payment is made.
 Supporting documents should be attached to the
PCV/RFV
 After payment, the PCV/RFV are numbered and
stamped “PAID” with the date of payment noted
thereon in ink.
Petty Cash Fund (PCF) /
Revolving Fund (RF)
 The funds are in the custody of the treasurer/cashier
or any designated custodian. Access to and
responsibility for each of the funds are limited to the
respective custodian.
 Each of the fund is kept in a separate box. If one
custodian is responsible for two or more funds,
these should be physically segregated.
 At any given time, the total cash on hand and the
unreplenished disbursements should be equal to the
amount of the fund.
Petty Cash Fund (PCF) /
Revolving Fund (RF)
 Each payment from the fund is limited to a
certain amount in accordance with the
policies approved by the Board. Any
disbursement more than this amount is made
by check / withdrawal slip.
 Encashing of checks from the fund is
prohibited
Petty Cash Fund (PCF) /
Revolving Fund (RF)
 The fund custodian requests for replenishment
when the fund runs low and insufficient to cover
expenses by preparing a Replenishment Summary
for PCF/RF

AND every end of the month so that expenses will be

properly taken up

 No cash advance shall be allowed from the funds

Cash Book
 Cash Books for Cash on Hand and Cash in
Bank should be updated on a daily basis
Cash in Bank
 Duly authorized and in the name of the
cooperative
 All checks are issued in the proper numerical
sequence, payable to a specific person or
entity, and whenever possible, checks must
be “crossed”
 Pre-signing of checks is discouraged to avoid
the risk of the check being negotiated in case
it is lost/stolen
Cash in Bank
 Post dated checks issued to suppliers /
creditors should be carefully monitored but
should not be recorded as outright
disbursements. Thus, no CV should be
issued upon issuance of checks but only on
the date of the check
 Voided, spoiled, or cancelled checks shall be
marked “Cancelled” and attached to the
corresponding checkbook for subsequent
inspection and reconciliation
Cash in Bank
 A Bank Reconciliation Statement should be
prepared monthly by the Bookkeeper to
determine the accuracy of the Cash in Bank
balance against accounting records.
 All debits/credits as reflected in the bank
statement/passbook should be properly
accounted for
Cash in Bank
 Unused check booklets are accountable
forms and shall be under the custody of the
accounting unit. Under no circumstances
such check booklets be made available to
any authorized person.
Accountable Forms
 All unused ORs and CVs shall be in the
custody of the Bookkeeper / Manager
 Issuance should be properly accounted.
Logbook with details as to serial nos., batch /
booklet date, date of receipt/issuance, and
signature of the person who received should
be maintained.
Safekeeping of Cash / Vault
Operation
 Cash must be kept in a safe place – Cash
Box, Cash Safe, Cash Vault
 If with vault:
 Separate persons in charged of outer lock/grill
and inner combination (joint custody)
 Back-up envelope containing the combination and
spare keys should be kept in a secured place
outside the vault, duly sealed, and signed across
the flap
Safekeeping of Cash / Vault
Operation
 Combination should be changed at least every
two years, or when there is an employee turnover,
or once the back-up envelope is opened
Audit
 From time to time, the AIC should conduct a
surprise cash count of the Cash on Hand,
Cash in Bank, PCF, and RF.
 Inventory of accountable forms shall be
included in the audit
 A report is then prepared and submitted to
the BOD, copy furnished the Manger,
regarding the results of the count.
Financial Policies
 Policy on cash shortage/overage
 Bonding of Treasurer and persons with cash
holding
 Approving authorities and limits
 PCF / RF

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Thank You