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Filipino Institute

Free Lesson · Bookkeeping: Recording Money In and Money Out

Free sample lesson · Bookkeeping · about 40 minutes
No login needed. A real lesson in the FI format: goal, learn, example, practice with answers.

Goal

By the end of this lesson I can record daily transactions in a cash book, find the closing balance, and explain the basic accounting equation.

1. Warm-up (5 minutes)

List everything you spent money on yesterday and everything you received. Do the totals match the money left in your wallet or GCash?

2. Learn

Bookkeeping is recording every money transaction, with proof (receipt or invoice), on the day it happens.

The accounting equation: Assets = Liabilities + Owner’s Equity. What the business owns equals what it owes plus what the owner put in (and earned).

A cash book has columns: Date · Description · Receipt no. · Cash in · Cash out · Balance.

Balance = previous balance + cash in − cash out.

3. Worked example: Aling Nena’s sari-sari store, 3 November

Description In (₱) Out (₱) Balance (₱)
Opening cash 2,000
Morning sales 1,850 3,850
Bought stock from supplier (OR 1123) 1,200 2,650
Afternoon sales 2,140 4,790
Paid electricity bill 950 3,840

Closing balance: ₱3,840. At the end of the day, count the cash. If the count is different, write down the difference and find the reason – never just “fix” the number.

4. Try it yourself

Opening cash ₱5,000. Sales ₱3,200. Paid rent ₱2,500. Sales ₱1,750. Bought packaging ₱480.

  1. What is the balance after rent?
  2. What is the closing balance?
  3. Total cash in? Total cash out?
  4. A business has ₱80,000 assets and ₱30,000 liabilities. What is owner’s equity?
  5. Why should every entry have a receipt number?
Show answers
  1. 5,000 + 3,200 − 2,500 = ₱5,700.
  2. 5,700 + 1,750 − 480 = ₱6,970.
  3. In: ₱4,950. Out: ₱2,980. (Check: 5,000 + 4,950 − 2,980 = 6,970.)
  4. 80,000 − 30,000 = ₱50,000.
  5. It proves the transaction happened and lets anyone check it later (for taxes, audits or mistakes).

5. Real-life practice (10 minutes)

Keep a cash book for your own spending for three days. At the end, compare the balance with the real money you have.

6. Check your understanding

Write the accounting equation and the formula for a running balance from memory.


Like this lesson? Continue with the Basic Bookkeeping short course or prepare for the Professional Certification in Bookkeeping. Create a free My FI account · More free lessons · Questions: [email protected]

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