Identify the

reasons for
keeping business
records
Record keeping is important in a business for it
is the only way to inform the
entrepreneur how the business is doing. In
order to analyze the ‘health’ of your
business you need data! Therefore, a
systematic process of gathering data and
recording it should be set up.
Direction: Draw a if the word/group of words is
an essential part of a business record and leave
the number blank if not.
1. Official Receipt 6. Calendar
2. Purchase Order 7. Sales Invoice
3. Year Book 8. Cash
Allowance
4. Balance Sheet 9. Delivery
Receipt
5. Sales Report 10.
Employees Records
WHAT ARE BUSINESS RECORDS?
A business record is a document (hard copy or digital)
that records business dealing. Business records include
meeting minutes, memoranda, employment contracts,
and
accounting source documents. It must be retrievable at a
later date so that the business dealings can be accurately
reviewed as required. Since business is dependent upon
confidence and trust, not only must the record be
accurate and easily retrieved, the process surrounding its
creation and retrieval must be perceived by customers
and the business community to consistently deliver a full
and accurate record with no gaps or additions.
 MPORTANCE OF KEEPING GOOD RECORDS
1) Monitor the Progress of the Business
The good records need to monitor the progress of a business.
Records can show whether the business is improving, which items are
elling, or what changes the need to make. Good records can increas
the likelihood of business success.
2) Prepare the Financial Statements
The good records need to prepare accurate financial statements.
These include income (profit and loss) statements and balance sheet
These statements can help in dealing with the bank or creditors
and help manage the business.
a) An income statement shows the income and expenses of the
business for a given period of time.
b) A balance sheet shows the assets, liabilities,
and equity in the business on a given date.
3) Identify sources of Income
The money or property will received from many sources.
The records can identify the sources of income. This
information will help to separate business from non-
business receipts and taxable from non-taxable income.
4) Keep Track of the Deductible Expenses
Keep the record especially the expenses will greatly
needed when preparing the tax return.
5) Keep Track as the Basis in Property
The basis is the amount of the investment in property
for tax purposes. The basis will be used to figure the
gain or loss on the sale, exchange, or other disposition
of property, as well as deductions for depreciation,
amortization, depletion, and casually losses.
TYPES OF RECORDS FOR ACCOUNTING AND TAX PURPOSES
 Business expenses
 Credit card statements
 Bank statements
 Annual tax returns
 Quarterly tax filings
 Payroll
 Inventory
 Sales
 Income
 Petty cash
 Vehicle use log
 Travel log
 Cash register tapes
 Credit card sales receipts
 Invoices
 Cancelled checks
 Check stubs
OTHER RECORDS
 Purchase order
 Employment applications
 Emails and other business communications
 Inventory logs
 Personnel records
 Accident reports
 Article of incorporation
 Permits
 Licenses
 Trademark registrations and patents
Financial forms/records usually have set standards of reporting and
any differences are very minimal. Samples obtained from an
existing similar project will definitely prove helpful for your design
requirements. (p. 219 A Business Planning by Jorge Cuyugan 1996)
These are:
1. Accounts Receivables – these are valuable not only to
decision on extension of credits but also to make accurate
billing and maintenance of good relations with customers.
These records will reveal how effective is your firm’s credit
and collection policies.
2. Inventory Records – these records will be used to control
your inventory items. In addition, they could also be used to
supply information for your firm’s purchasing, maintenance of
economic supply of sticks and
computing turnover ratios.
3. Accounting Payable – these liability record show
what your firm owes, facilitates obtaining of available
cash discounts and informs youwhen payments are due.
4. Sales Records – these could be used in the analysis
of the
effectiveness in advertising and promotions of your
products, market coverage
and profitability. They also serve as a basis for computing
your salesmen’s
compensation.
5. Production Records – these records provide a basis
for your product costing and detect lost profits/costs as a
result of idle manpower/machineries.
6. Payroll Records – show the total payments you pay
your employees and provide a basis for computing some
legal payments.
7. Cash Records – show all receipts and disbursements
made by your firm. They contain your firm’s cash flow
and petty cash balances. These records also enable you
to know when to time your loans and they may also be
used as assurances for ready cash when needed.
8. Other Accounting Records
 Insurance registers
 Leasehold records
 Investment records
SPECIFIC TYPES OF ACCOUNTING RECORDS
1. Journals
a. Sales Journal (Sales Book) – these are used to record
your company’s sales.
b. Purchase Journal (Purchase Book) – these are used to
record your company’s purchase.
c. Cash Receipts Journal (Cash Receipts Book) – these
are used to record your company’s cash receipts.
d. Cash Payments Journal (Cash Payments Book or Cash
Disbursement Book) – these are used to record your
company’s payments in cash.
e. General Journal – these are used to record your
company’s transaction mentioned in a, b, c and d.
2. Ledgers
a. Accounts Receivable Ledgers – contain
your company’s
individual trade with customers
(accounts).
b. Accounts Payable Ledgers – contain
your company’s individual
accounts with creditors.
c. Plant Ledgers – contain your
company’s list of all fixed assets
1.How effective in your opinion was John at record
keeping?
____________________________________________________
____________________
2. Identify the records that John should maintain to
meet the requirements of the KRA.
________________________________________________
3. In the your opinion, what methods could John
employ to improve his system?
_____________________________________________
Collect five different business
records/receipts that you have already seen
or you already have. Paste it on an A4 size
bond paper then write a description on each
business record/receipt (what type of
business record is it, their uses, and why it is
important to keep those business
records/receipt).
Direction: Choose the correct answer. Write the letter of your
answer in a separate sheet of paper.
1. Why it is important to keep the record of expenses especially
when preparing the tax return?
A. To identify sources of income.
B. To monitor the progress of the business.
C. To keep track as the basis in property.
D. To keep track of the deductible expenses.
2. What is the reason why it is needed to record sources of
income?
A. To figure the gain or loss on the sale, exchange or other
disposition of property as well as deductions for depreciation.
B. It will help to separate business from non-business receipts and
taxable from non-taxable income.
C. To show what your firm owes, facilitates obtaining of available
cash discounts and informs you when payments are due.
3. The following are types of records for accounting and
tax purposes except?
A. Invoices
B. Ticket Stubs
C. Annual Tax Returns
D. Vehicle Use Log

4. Which of the following is a transaction business

record?
A. Sales Journal
B. Sales Invoice
C. Cash Receipts
D. Official Receipts
5. These could be used in the analysis of the
effectiveness in advertising and promotions of
your products, market coverage and profitability.
A. Sales Records
B. Cash Records
C. Payroll Records
D. Production Records
Direction: Analyze each statement then write TRUE if
the statement is correct and write FALSE if the statement
is wrong.
1. A business record must be retrievable at an earlier date
so that the business dealings can be accurately reviewed
as required.
2. Good records can decrease the likelihood of business
success.
3. Financial statements can help in dealing with the bank
or creditors and help manage the business.
4. The records can identify the sources of income.
5. Financial records usually have set standards of
reporting and any differences are very minimal.