FINANCIAL ACCOUNTING 1

DPA 10013 FINANCIAL ACCOUNTING 1

CHAPTER 2:
ACCOUNTING CLASSIFICATION

&
ACCOUNTING EQUATION

COURSE LEARNING
OBJECTIF (CLO):

At the end of the topic, students should
be able to:

CLO 1

Construct precisely

complete accounting

cycle in accordance with

the approved accounting

standards (C3 , PLO 1)

CHAPTER 2:
ACCOUNTING CLASSIFICATION &

ACCOUNTING EQUATION

CLASSIFICATION: ACCOUNTING EQUATION:

1. Assets Assets = Liability +
2. Liability Owner’s Equity
3. Owner’s

Equity
4. Expenses
5. Revenue

ACCOUNTING CLASSIFICATION

Transaction :

A transaction is a completed agreement between a buyer
and a seller to exchange goods, services, or financial assets.

 Example: Credit :
i. Bought machine in cash RM 3200 from Jason Bhd
ii. Paid rent in cash RM 1000 Jual dan Beli barang
iii. Sold good by credit RM 5750 to Faizatul secara hutang
iv. Cash sales RM 1650 Example:
i. Sold goods on credit
Goods : ii. Purchase goods on

Business goods (barang-barang perniagaan) credit

Example:
i. Kedai Basikal – basikal adalah barang niaga
ii. Kedai Bunga – ?????
iii. Kedai barang-barang elektrik - ????
iv. Kedai peralatan sukan - ????

STAKEHOLDER OF BUSINESS

Supply YOU CUSTOMER
goods to (A/c Receivable)
business ARE
ALWAYS Client
SUPPLIER HERE /buyer
(A/c
BUSINESS’S
Payable) OWNER

SALE & PURCHASE DC ADE LER

Debit Credit
A L
D E
E R

Purchase of Sale of Goods
Goods

SUPPLIER CUSTOMER

BUSINESS’S
OWNER

Credit Cash Credit Cash

e.g: e.g: e.g: e.g:
Purchase goods RM 400 by credit Purchase goods on cash RM 500 Sales goods on credit to Musa RM Sales goods cash RM 650
from Abu 250
Dr Purchase RM 500 Dr Cash RM 650
Dr Purchase RM 400 Cr Cash RM 500 Dr A/c Receivable Musa RM 250 Cr Sales RM 650
Cr A/c Payable Abu RM 400
Cr Sales RM 250

SALE RETURN & PURCHASE RETURN/ DC ADE LER
RETURN INWARDS & RETURN OUTWARDS
Debit Credit
A L
D E
E R

Purchases Return Sales Return

SUPPLIER CUSTOMER

BUSINESS’S
OWNER

e.g: e.g:
Return damage goods to Abu RM 50 Musa return the damage goods RM 100

Dr A/c Payable Abu RM 50 Dr Sale Return RM 100
Cr Purchase Return RM 50 Cr A/c Receivable Musa RM 100

CASH & BANK/CHEQUE

Received Cash /Bank / Cheque Payment of Cash / Bank / Cheque

BUSINESS’S
OWNER

e.g: e.g:
Sales of good by cash RM 150 Paid electricity by cash RM 270

Dr Cash RM 150 Dr Electricity RM 270
Cr Sales RM 150 Cr Cash RM 270

e.g: DC ADE LER e.g:
Received cheque for rent RM 360 Paid salary of workers by cheque RM 3500

Dr Bank RM 360 Debit Credit Dr Salary RM 3500
Cr Rent received RM 360 A L Cr Bank RM 3500
D E
E R

ACCOUNTING EQUATION

Equation must be balance

Question = Liabilities + Owner’s Equity
=? + RM 380 000
Asset = RM 52 000 + RM 150 000
RM 450 000 = RM 190 000 +?
= RM 90 000 +?
? = RM 78 000 + RM 225 000
RM 980 000
RM 700 000

?

Asset + Drawing + Expenses = Liability + Equity + Revenue

(A +D +E = L + E + R)

DC ADE LER

DEBIT CREDIT

Asset Liability
Drawing Equity
Expenses Revenue

ACCOUNTING EQUATION

Asset + Drawing + Expenses = Liability + Equity + Revenue

(A +D +E = L + E + R)

QUESTION 1

The following transactions relate to the sole proprietorship of Salwa Enterprise.

2020 Transactions
Jan

1 Salwa started the business with RM 50,000 cash.

5 Paid shop rental of RM 600 cash and deposited RM 30,000 cash into bank

7 Purchased equipment for business worth RM 10,000 by cash

8 Cash purchased of RM 700
10 Credit purchase from Abu RM 20,000

11 Sold RM 3,000 of goods on credit to Jamal

15 Paid Abu RM 10,000 by cheque

25 Paid electricity and water bill of RM 250 by cash

You are required to demonstrate the effect of following transaction into accounting equation by
using the format (apply “+ “as increase and “– “as decrease) as below:

Anwser

Date ASSET EFFECTS ON: CREDIT REVENUE
DEBIT
2020 + Cash DRAWING EXPENSES = LIABILITY EQUITY

Jan 1 50000 + Rental + Capital
600 50000

5 - Cash 600

- Cash
30000

+ Bank
30000

EFFECTS ON:

Date ASSET DEBIT EXPENSES = LIABILITY CREDIT REVENUE
DRAWING EQUITY

2020 Jan 1 + Cash 50000 + Capital 50000

5 - Cash 600 + Rental 600

- Cash 30000
+ Bank 30000

7

8

10

11

15

25

Total

QUESTION 2

On 1 January 2020, Mr Zubir started a business selling sports equipment. The following are the transactions that occurred during January 2020.

January
1 Started business with cash in hand of RM 10,000 and cash at bank RM 50,000
3 Brought in motor vehicle RM 12,000 and furniture RM 1,000 for business use

7 Purchased stationery RM 150 by cash
10 Purchased sport rackets on credit of RM 10,000 from Jaya Enterprise

12 Cash sales of RM1, 800.
17 Credit sales to Ms Mahzam valued at RM 8,000
23 Withdraw RM 3,000 cash from ATM machine to purchase computer for business use

24 Paid premise rental of RM 700 in cash
29 Paid Jaya Enterprise’ debts by cheque and received 10% discount
31 Additional capital in form of cash RM 4,000
31 Ms. Mahazam paid her debts by cheque after deducting discount received of 10%
You are required to demonstrate the effect of following transaction into accounting equation by using the format
(apply “+ “as increase and “– “as decrease) as below:

EFFECTS ON:

Date ASSET DEBIT EXPENSES = LIABILITY CREDIT REVENUE
DRAWING EQUITY
2020 Jan 1

CLASS ACTIVITY

FORM A GROUP OF 3 MEMBERS
ANWSER THE QUESTION IN 20 MINUTES

The end

Thank
you