Amount paid to employees as compensation for the service they rendered in connection to general and administrative activities. Debited for -salaries paid to employees for the period Credited for -closing to Income and Expense summary account Salaries Expense Spa Amount paid to employees as compensation for the service they rendered Debited for -salaries paid to employees for the period Credited for -closing to Income and Expense summary account Spa Supplies Expense This account represents the portion of the supplies used in the spa Office Supplies Expense This account represents the portion of office supplies used Other Supplies Expense This account represents the portion of other supplies used not related to spa and on the office Depreciation Expense Store Equipment This is the amount transferred to expenses from the date of acquisition of the store equipments Depreciation Expense Spa Equipment This is the amount transferred to expenses from the date of acquisition of the equipment used in the spa operation of the business. Depreciation Expense Office Equipments This is the amount transferred to expenses from the date of acquisition of the office equipments Depreciation Expense Furniture and Fixtures This is the amount transferred to expenses from the date of acquisition of the furniture and fixtures Depreciation Expense Leasehold Improvements This is the amount transferred to expenses from the date of acquisition or installation of the leasehold improvements. Utilities Expenses This amount represents expenses incurred on light, water and telephone used during operations. Rent Expense This amount represents the fees paid to lessor by the lessee. PAG-IBIG Contribution Expense This amount paid to PHILHEALTH as contribution for employees. SSS Contribution Expense The amount paid to Social Security System as contribution for employees. Employee Compensation Expense The amount paid by the owners to employees. Advertising Expense The amount paid to all promotional activities subscribed by the business in endorsing the new business to people. Organizational Cost The cost incurred in forming and organizing the business. Taxes and Licenses Business taxes, licenses and other fees due to the government. Miscellaneous Expense The amount paid for any expense that cannot be identified in any of the expense accounts mentioned above.
Internal Control System As a business enterprise, simple or complex in operation, it is necessary to organize the supervision of all transactions and operations of the business. It is important to observe and maintain control on bookkeeping and accounting records within which includes the control of cash receipts and disbursements. Since cash is a liquid asset, proper handling and control of transactions involving cash should be managed properly to minimize unauthorized payments and to eliminate error and the consequence of fraud. Employees must be cautiously selected before being hired and trained to maintain tremendous results in all their duties and responsibilities. Authorized personnel should be trained continuously and properly oriented regarding safeguarding of assets and maintaining the efficiency and effectiveness of business operations. To achieve these objectives, each business concern must develop and implement a system adapted to its needs. The complete plans and procedures designed to meet the needs for controlling operations is called Internal Control. Internal control comprises the organizational plan and all coordinates method and measures adapted within a business to safeguard its asset, checks the accuracy and reliability of its accounting data promote operational efficiency and encourage adherence to prescribe managerial policies. Internal control is composed of policies, procedures, techniques, physical devices, documentation and people. These components interact to assure the achievement of objectives related to: Safeguarding assets Assurance against the incurrence of improper liabilities Assurance of the fairness and reliability of accounting data Achievement of operational efficiency Adherence to prescribed managerial policies Minimizing unauthorized or improper use of managerial resources Developing procedures and standards that would improve the business operations To systematize operational activity and promote an effective and efficient control against fraud and other irrelevant business activities INTERNAL CONTROLS Petty Cash Fund The business will have a petty cash fund worth Php 10,000 Imprest Fund System will be used in maintaining the fund Expenses to be covered by the petty cash fund will only be Php1,000 or less Replenishment of the fund is made when balance is lower than Php1,000 Replenishment will be done by the cashier All replenishments must be documented using a replenishment voucher All expenses to be paid through the fund will be documented in a petty cash fund disbursement voucher All vouchers are pre-numbered Change Fund The business will have a daily change fund balance of Php5,000 in 1, 5, 10, 20, 50 and 100 denominations At the end of the day, the cashier will separate Php5,000 in the same denominations for the next days change fund Cash on Hand When deposits are not made to bank especially after the evening operation, cash will be kept in a cash vault installed in the office The cash to be kept must be remitted to the finance officer, and only the finance officer is allowed to open and close the vault. Cash vault will be secured through a number combination only known to the finance officer Cash Disbursements All disbursements except those from petty cash fund should be made by checks All checks should be pre-numbered All checks are signed only after they are prepared Long outstanding checks should be properly followed and controlled When checks are presented for signatures, accompanying invoices and other necessary papers must be submitted Only the finance officer signs the checks Invoices and other papers are to be stamped PAID at the time corresponding checks are signed Inventories Purchase orders should all be executed in writing All purchase orders should be sequentially pre-numbered Purchase orders must be properly approved for price, quantity and suppliers The bookkeeper should receive a copy of purchase orders and a copy of receiving report Invoices should be matched with purchase orders, receiving reports, memos and expense items Receiving reports should be sequentially numbered and controlled Invoices must be properly stamped to prevent duplicate payments Shortages and damaged goods should be reported immediately upon the discovery There should be a physical count at the end of every quarter Fixed Assets Addition to fixed assets must be properly authorized and approved by the managing partner Additions to fixed assets originated by requisition or appropriation must show the probable cost, description, accounts to be charged, reason for addition An inventory of fixed assets is to be compared with control account periodically A written approval is to be required prior to the sale of fixed asset There should be a consistent depreciation policy from year to year There should be physical count of fixed assets at least once a year Payroll Employment must be properly authorized to insure that compensations are given only to bona fide employees Pay increases and decreases should be formally authorized to insure that payments are made at a correct pay rate Total time for each employee should be approved by the managing partner Payroll payment should be by checks Payroll checks should only be released during Saturdays Payroll checks should be pre-numbered Employees should acknowledge receipt of checks Payroll should be reviewed periodically by the partners