13. Record the following transaction in the appropriate journal 14. Record the following transaction into relevant journal 42
15. The followings are the transaction from Mini Market Fresh for month May 2022. You are required to record transactions given above into appropriate journal. 16. Nabila, a sole proprietor started his business on 1 July 2022. The following were transactions occurred in July 2022. You are required to record the above transaction in the appropriate journals 43
C RECORD TRANSACTION INTO CASHBOOK 1. Explain the terms recorded in the Cashbook as follows a. Discount Received b. Discount Allowed c. Dishonored cheque 2. The following information was extracted from the book of Anantras Sdn Bhd for month June 2022. You are required to convert this transaction in the Cashbook 3. Prepare cash book and forward the balances to the following month 44
5. Record all the following transactions of Ahmad Don Hotel into the Cash Book. Balance off and forward the balance to the following month 4. Enter the following transactions in the cashbook 45
7. From the following transactions write up TWO column cashbooks for Hafiz & Co 6. From the following particulars, record them into Three Column Cash Book 46
8. On 1st July 2021, the debit balances in the cashbook of Fabulous Tour were: Cash RM419 and Bank RM3,685 The followings were the transaction for month of July 2021 July 1 Received cheque from Wood Travel RM296, after discount allowed RM100 2 Paid wages cash RM102 5 Paid Ameera RM211 by cheque in full settlement for total debt of RM224 7 Received RM146 cash for sale of damaged stocks 12 Paid to Jarvis Rm1,023 by cheque in full settlement of his account of RM1,051 14 Paid wages in cash RM104 15 Received cheque for RM500 from Atlas & Company 22 Paid RM21 in cash for postage stamps 24 Paid wages in cash RM102 25 Withdrew RM200 from bank for personal used 26 Paid to Moore RM429 by cheque 27 Paid wages in cash RM105 28 Received RM317 cash from Razali in full settlement of his account of RM325, paid into bank the same day You are required to prepare three column cash books for the month of July 2021 and balance it at 31 July 2021. 47
9. On 1st Oct 2022, Zanita Empire has debit balance of cash RM3,000 and bank RM15,780. During the month of October, followings business transaction were recorded 2022 October,1 Received cheque from Cash Sales RM2,960 2 Paid wages cash RM1,020 3 Paid Supplier Vincent RM2,800 by cheque in full settlement for total debt of RM2,950 7 Received RM3,000 cash for sale of damaged stocks 15 Paid to Supplier Tok Abah s RM7,023 by cheque in full settlement of his account of RM7,500. 14 Paid wages in cash RM1,040 15 Received cheque for RM5,300 from MimiLana 22 Paid RM130 in cash for stationery 24 Paid wages in cash RM1,020 25 Withdrew RM2,000 from bank for personal use 26 Paid to Faizal Warehouse RM4,300 by cheque 27 Paid wages in cash RM1,050 28 Received RM3,500 cheque from Nona Manis in full settlement of her account of RM3,600. You are requried to prepare three column cash book for the month of July 2021 and balance it at 31 July 2021. 48
10. On April 2023, Atiqah Ventures cashbook showed debit balance of cash RM1,500 and bank RM12,500. During the month of January, followings business transaction were recorded April, 2023 1 Deposited cash RM500 to business bank account 7 Purchase office furniture for cash RM700; cash sales RM2,000 9 Received from Mr. Shabir a cheque for RM2,550 in part payment of his account 12 Paid by cheque for goods purchased to Mr. Gulzar worth RM1,000 18 Drew from bank for owner personal use RM200 21 Sold merchandise to Zeshan Bros. for RM1,500 who paid by cheque which was deposited in the bank 24 Paid to Mr. Salman RM900 by cheque 29 Paid salaries by cash RM950 30 Drew from bank for aircond maintenance RM450 by cheque You are requried to prepare three column cash book for the month of April 2023 and balance it at 30 April 2023. 49
TOPIC 4 LEDGERS
4.1. WHAT IS A LEDGER? an opening balance (balance b/d), record each transaction as either a debit or credit in separate columns, and the ending or closing balance (balance c/d) A ledger is a book or collection of accounts in which account transactions are recorded. Each account has: Example 1: Account A ; Ledger Account with debit balance Example 2: Account B ; Ledger Account with credit balance 50
4.2. TYPES OF ACCOUNTS Ledger accounts can be divided into five main categories: i. Assets ii. Liabilities iii. Equity iv. Revenues v. Expenses ledger categories Assets - Assets are properties or resources used to help operate a business - Assets are divided into two main categories: Non-Current Assets (fixed asset) and Current Assets. - A debit balance Account - Characteristics of non-current assets and current assets 51
Assets Characteristics Examples Account Balance Noncurrent Assets a) Asset life is longer than one accounting period b) Can be used repeatedly c) Fixed Value i. Land ii. Premises iii. Motor Vehicles iv. Machinery/ Plant & Machinery v. Office Equipment vi. Fixtures & Fittings vii. Furniture Debit balance Current Assets a) Asset life is less than one accounting period b) Easily converted into cash c) Value is not fixed i. Cash ii. Bank iii. Debtors/Account Receivables iv. Inventories/Stocks v. Prepaid Expenses vi. Accrued Revenues Debit balance 52
Liability Characteristics Examples Account Balance Non-current Liabilities Debts that must be paid off after one accounting period i. Loan ii. Debentures iii. Mortgage Credit balance Current Liabilities Debts that must be paid off within one accounting period i. Creditors/ Account Payable ii. Bank overdraft Debit balance Liabilities - Liabilities are debts owed by a business entity to external parties - Liabilities are divided into two main categories: Non-Current Liabilities and Current Liabilities. - A credit balance Account - Characteristics of non-current assets and current assets 53
Equity Characteristics Account Balance Capital Cash or assets brought into the business by the owner Credit balance Drawings a) Cash @ bank/goods/assets taken by the owner for personal use b) Reduction of owner’s equity Debit balance Business performance (profits or loss) a) Calculated through the Statement of Profits and loss A/c b) If profits, owner’s equity will increase c) If losses, owner’s equity will decrease Debit (loss) or Credit (profits) balance Equities - The business owner will invest a certain amount of money or assets into the business as the initial capital - Equities is the business’ debts to the business owner based on the amount invested by the business owner - The total amount of owner’s equity will be determined by capital, drawings and business performance (profits or loss) - A credit balance Account - Characteristics of owner’s equity 54
Revenues - Income earned from business activities through the selling of goods or providing services - Examples: sales, commission received, interest received, rental received, discount received - Revenues will increase the profits and capital of a business entity - A credit balance Account - Example: 55
Expenses -Expenses are money that are paid or will be paid to operate a business -Examples: purchases, salaries, wages, commission paid, interest paid, rental paid, discount given -Expenses will decrease the profits and capital of a business entity -A debit balance Account -Example: 56
Fixed Assets Current Assets Definition Examples TOPIC 4: PRACTICAL EXERCISE A EXPLAIN DOUBLE-ENTRY CONCEPT AND RULES FOR RECORDING ASSETS, LIABILITIES, OWNER'S EQUITY, REVENUE AND EXPENSES 1. Define double entry concept _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 2. Differentiate between fixed assets and current assets and give 3 examples for each asset. 57
Revenues Expenses Definition Examples Account Type Normal Balance Debit Credit Assets Expenses Drawings Liabilities Capital Revenues 3. Differentiate between revenues and expenses and give 3 examples for each 4. Tick (/) the correct normal balance for each of the following type of account. 58
Items Asset/Liability Loan to Amer Bank Overdraft Motor Vehicles Debtors Creditors Office Equipment Loan from Maybank Building Inventory Cash at Bank Cash in Hand Fixtures & Fittings 5. Classify the followings items as “Asset” or “Liability” 59
Account Account Types Debit Credit Water & Electricity Telephone Bills Depreciation Drawings Land and Building Interest Received Interest Paid Commission Received Salaries Capital Sales Purchases Opening Inventories Advertising Expenses Loan from CIMB Cash In Hand Premises Printing 6. Fill in the table correctly 60
GENERAL JOURNAL Date Particulars Debit (RM) Credit (RM) 2022 Dec 1 Premise Motor Vehicles Office Equipment Bank Cash Creditor Momo Trading Creditor Lee Min Ho Loan Capital (asset,liabilities and equity on this date) 300,000 150,000 10,000 30,000 3,800 9,900 14,000 200,000 269,900 493,800 493,800 3 Purchases Capital (owner brought in iventory to business) 8,000 8,000 5 Office Equipment ITz Technology (bought computer on credit) 3,000 3,000 8 Drawings Purchases (took goods for own use) 500 500 16 Purchases Momo Trading (purchase goods on credit) 5,725 5,725 19 Kembara Travel Sales (sold goods on credit) 6,000 6,000 22 Return Inwards Kembara Travel (customer return defect goods) 330 330 25 Momo Trading Return Outwards (Returned goods to supplier for wrong item) 400 400 31 Drawings Motor vehicle (owner took one of the cars for personal use) 50,000 50,000 Post all the following entries B RECORD TRANSACTION USING DOUBLE-ENTRY CONCEPT 1. 61
2. On 1st April 2021, Danial commences a coffee shop business at Malacca City. Danial’s business transaction in April 2021 were as follows; April, 2021 1 Started business with cash in hand RM1,000, cash at bank RM60,000 6 Bought a Coffee Machine RM12,500, paid by cheque 8 Purchased milk and sugar from Supplier Lina RM1,500 and paid by cheque 9 Purchased raw coffee from Coffee Beanz RM3,500 on credit 11 Cash Sales RM3,000 13 Danial took RM450 cash from office to pay for his own utility bills 15 Cash Sales RM4,800 17 Sold drinks to Anita Kitchen on credit RM5,600 18 Purchase raw coffee from Coffee Beanz RM2,600 20 Paid rental RM2,500 by cheque 22 Returned some expired coffee to Coffee Beanz RM250 23 Paid Coffee Beanz RM2,000 by cheque 25 Anita Kitchen paid all of her debt by cheque 26 Paid salaries RM8,000 by cheque 27 Cash Sales RM8,000 29 Paid advertisement cost RM400 cash 30 Paid miscellaneous expenses RM250 by cash 62
August, 2022 1 Started business with cash in hand RM5,000 and deposited RM20,000 into the company’s bank account 3 Bought some goods on credit from Limah Bhd. RM2,250 7 Cash sales for RM1,500 10 Paid rent by cheque RM1,750. 15 Sold goods on credit to Norman Bhd RM2,350. 18 Goods were returned to Limah Bhd. RM250. 20 Bought lorry on credit from Motor Maju Trading RM25,000 25 Paid to Limah Bhd. RM2,000 by cheque. 28 Receive cheque from Norman Bhd. RM1,150. 3. You are required to record all the above transaction to relevant ledger accounts. Anas and Adibah started a business, AA Enterprise on the 1st August 2021. The following are the transactions occurred during August 2021. Record to the ledger. 63
2021 December 1 Started business with RM5,000 cash in hand and cash at bank RM40,000 4 Purchased goods of RM1,200 by cheque 6 Transferred cash from bank for business use RM2,300 8 Bought furniture RM5,000 on credit from Kedai Perabot Saliha 10 Sold goods RM7,500 on credit to Ah Chong 14 Owner took goods RM400 for personal use 16 Sold goods RM1,700 cash 17 Ah Chong returned goods worth RM500 due to wrong item 18 Received cheque from Ah Chong RM2,800 20 Owner brought his own cash worth RM8,000 for business use 21 Paid rental by cash RM1,800 23 Paid utility by cheque RM800 27 Cash sales and banked in RM1,000 29 Received commission by cash RM2,000 4. The following transaction were extracted from the books of Purnama Trading for the month of December 2021. You are required to record all the above transaction to relevant ledger accounts. 64
5. Transactions that occurred during September 2022 for Ryan Bakery are as follow: Date Transactions Sept 2022 1 Bought trade goods RM200 by credit from Fatihah Wholesaler. 4 Cash sales of RM345. 6 Bought trade goods from Kedai Seng Lee RM360 by credit. 10 Cash sales RM725. 14 Sold trade goods by credit RM560 to Airil Enterprise. 15 Buy office stationery RM120 by cash. 16 Sold trade goods by credit worth RM275 to Aleya Cookies. 19 Aleya Cookies return damage item worth RM80. 22 Paid insurance premiums of RM480 by cash. You are required to record the above transactions into the respective accounts. 65
6. The following transaction were extracted from the books of Sunshine Bakery Sdn Bhd as at the month of October 2021. October 2021 1 The owner starts the business with cash of RM70,000 as capital. 3 Bought office equipment by cash RM10,000. 4 Transfer cash of RM30,000 to bank. 10 Purchases of RM1,000 by cash. 15 Cash sales of RM2,000. 17 Purchases on credit from Syarikat Hakim RM2,000, Syarikat Choo RM5,000 and Syarikat Rajoo RM3,000. 19 Credit sales to Ramlah RM4,000. 20 Withdrew cash from bank of RM1,000 for personal use. 21 Withdrew goods of RM800 for personal use. 25 Paid Syarikat Choo by cheque of RM3,000. 26 Paid wages by cheque of RM800. 27 Paid electricity bills of RM100 by cash and salary of RM300 by cheque. 28 Received cheque from Ramlah RM3,000. 30 Cash sales of RM900. You are required to record the above transactions in the appropriate accounts. 66
7. The following transactions were extracted from the books of Beserah Keropok on 31 December 2022. Date Transactions Dec 2022 1 Adi the owner of company brought in the following assets as a capital of the business: Cash RM20,000 Vehicles RM8,000 Furniture RM1,800 2 Purchased goods by credit from First Touch RM9,500. 3 Sold goods by cash RM7,600. 5 Paid utilities bills RM600 by cash. 6 Sold goods by credit to Alia RM1,900. 11 Paid to First Touch RM4,750 by cash. 13 Paid general expenses by cash RM150. 18 Received cash payment from Alia RM950. 20 Purchased goods by cash RM2,800. 25 Paid salary by cash RM1,000. You are required to categorize all the transactions into the appropriate ledger account. 67
8. Below are transactions for the month of March 2022 for Grand Ventura Restaurant. Date Transactions March 1 Started business with RM5,000 cash. 2 Bought goods by cash RM80. 5 Bought goods on credit from LuLu Kitchen RM200. 8 Sold goods by cash amount RM300. 9 Returned goods to LuLu Kitchen RM70. 13 Paid insurance by cash RM100. 14 Paid LuLu Kitchen by cash RM100. 19 Bought office furniture on credit from Lim Trading RM350. 20 Sold goods on credit to Koperasi Mesra RM150. 25 Paid salary by cash RM250. You are required to categorize the above transaction in the relevant account and balance off the account. 68
9. The following accounting balances are taken from the accounting books of View Chin Trading on July 2021. Date Transactions July 2021 1 Cash in hand RM620 Cash at bank RM1,080 Debtor – DutaMas Bhd. RM970 Creditor – Tasek Biru Bhd. RM840 3 Sent invoice to DutaMas Bhd. RM590. 8 Paid debt to Tasek Biru Bhd. by cheque RM500. 13 Received cheque from DutaMas Bhd. RM790 after deducted discount RM10. 14 Paid salary RM300 by cheque. 19 Purchased furniture from Cavenzi Furniture worth RM1,970 on credit. 20 Purchased goods from Tasek Biru Bhd. worth RM930 on credit. 21 Received credit note from Tasek Biru Bhd. worth RM80 for goods returned. 22 Cash sales RM350. 29 Paid utility bills RM87 by cash. You are required to categorize all the transactions in the relevant ledger account. 69
10. The following information is taken from the accounting book of Cafe Garden Catering in November 2022. Date Transactions Nov 2022 1 Cash in hand RM5,000 Cash at bank RM15,000 Debtor – Adam RM7,000 Creditor – Adlin RM4,500 3 Credit purchase of RM3,000 from Adlin. 4 Cash sales of RM2,000. 5 Paid Adlin RM1,500 by cheque. 6 Sold goods worth RM4,000 on credit to Adam. 13 Withdrew RM1,000 cash from bank for own use. 19 Adam returned goods worth RM700. 25 Paid employee salaries of RM2,000 by cheque. 26 Adam paid debt of RM7,000 by cheque. You are required to record all the transactions in the relevant account. 70
11. The following transactions were extracted from the books of Soleh Sdn. Bhd. as at 30 June 2019. Date Transactions 2019 June 1 The owner started a business with the following assets as a capital: Cash RM20,000 Motor Vehicles RM8,000 Equipment RM1,800 2 Purchase goods on credit from Syarikat Mada RM9,500. 3 Sales goods by cash RM7,600. 4 Paid insurance premium by cash RM600. 5 Sales goods on credit to Hazami RM1,900. 6 The owner withdrew cash for personal use RM500. 13 Paid Syarikat Mada RM4,750 by cash after deducting discount of RM250. 18 The owner withdrew cash for personal use RM2,500. 19 Received cash from Hazami RM950. 27 Purchase goods by cash RM2,800. You are required to categorize all the transactions in the relevant ledger account and balance off. 71
TOPIC 5 TRIAL BALANCE
5.1. WHAT IS TRIAL BALANCE If the amount are not balanced or not equal, this means that errors or mistakes occurred when entries were made into the account. Thus, further checking All account with debit balance s will be listed in the debit side while accounts with credit balances will be listed in the credit side. The total debit amount must be equal to the total credit amount. A trial balance is a statement prepared based on account balances in the ledgers at the end of accounting period. 72
Account Balance Column in Trial Balance Types of accounts Debit Credit Debit √ Assets , Expenses, **Drawings Credit √ Capital, Liabilities, Revenues 5.2. PURPOSES OF TRIAL BALANCE Trial balances are prepared in order to; 1) Check the accuracy of calculations. 2) Verify the accuracy of double- entries 3) Verify the accuracy of postings from the book of original entry to ledgers 4) Prepare financial statements 73
5.3. FORMAT TRIAL BALANCE Company ABC Sdn Bhd Trial Balance as at 31 December 2022 74
TOPIC 5: PRACTICAL EXERCISE 1. Identify the correct answer for the followings account 75
RM RM Cash in hand 6,000 Furniture & Fitting 12,000 Motocars 18,000 Land & Building 300,000 Sales 200,000 Creditor 70,000 Salaries 25,000 Capital 100,000 Cash at bank 20,000 Machinery 140,000 Debtors 40,000 Purchases 70,000 Stocks 13,000 Mortgage Loan 150,000 General expenses 600 Advertising 2,000 Insurance 1800 Drawings 15,000 Repairs of Building 1500 Bad Debts 800 2. The followings are all the account balances of Maju Mundur Enterprise. Prepare trial balance. 3. Refer Question 1 to 11 in Topic 4. Prepare trial balance accordingly. 76
TOPIC 6 FINANCIAL STATEMENTS
6.1. WHAT IS FINANCIAL STATEMENTS Information from a trial balance is used to prepare business financial statements in order to evaluate the performance and position of the business Financial Statements Financial statements comprise of: i. Statement of Comprehensive Income (SOCI) ii. Statement of Financial Position (SOFP) iii. Cash flows Statements iv. Statements of Changes in Equity v. Notes to the Financial Statement 77
6.2. PURPOSES OF FINANCIAL STATEMENTS Financial statements are prepared at the end of accounting year in order to; 1) To show all the final financial belonging and liabilities of a business (SOFP) 2) Shows the expenses incurred during the business operations along with the incomes owned by the business within an accounting period (SOCI) 3) To show the financial performance of the business whether it profits or loss (SOCI) 4) Information in the financial statements will be used in a decision making process of the users. 6.3. STATEMENTS OF COMPREHENSIVE INCOME (SOCI) SOCI can be divided into 2 sections I.GROSS PROFITS SECTION I.NET PROFITS SECTION 78
I.GROSS PROFITS SECTION GROSS PROFITS = NET SALES - COST OF GOODS SOLD NET SALES = SALES - SALES RETURN/RETURN INWARDS COST OF GOODS SOLD PURCHASE COST = NET PURCHASE + PURCHASE EXPENSES = OPENING STOCKS + PURCHASE COST - CLOSING STOCKS NET PURCHASE PURCHASE EXPENSES = PURCHASE - PURCHASE RETURN/RETURN OUTWARDS = WAGES ON PURCHASE + IMPORT DUTY + PACKAGING + CARRIAGE INWARDS + FREIGHT INWARDS + INSURANCE ON PURCHASE + CUSTOM DUTY 79
II.NET PROFITS SECTION NET PROFITS (POSITIVE)/ LOSS (NEGATIVE) = GROSS PROFITS + OTHER INCOME - EXPENSES OTHER INCOME = DISCOUNT RECEIVED + RENT RECEIVED + COMMISSION RECEIVED + INTEREST RECEIVED + BAD DEBT RECOVERED + DECREASE IN PROVISION FOR DOUBTFUL DEBT EXPENSES = SALARIES + WAGES + INSURANCE + RENT + DISCOUNT/DISCOUNT ALLOWED + COMMISSION + INTEREST + BAD DEBT + DEPRECIATION + FREIGHT OUTWARDS + CARRIAGE OUTWARDS + DEPRECIATION + INCREASE IN PROVISION FOR DOUBTFUL DEBT + MAINTENANCE + WATER & ELECTRICITY + GENERAL EXPENSES + PRINTING + STATIONERY + TELEPHONE + TRAVELLING + PETROL + ADVERTISING + RATES + TAXES 80
FORMAT SOCI 81
6.4. STATEMENTS OF FINANCIAL POSITION (SOFP) SOFP can be divided into 2 section. Both section should state the same amount. i. Total Assets Section ii. Total Equity & Total Liabilities Section a) TOTAL ASSET = NON CURRENT ASSET + CURRENT ASSET b) NON CURRENT ASSET = LAND + PREMISE/BUILDING + MACHINERY + MOTOR VEHICLES + FURNITURE + OFFICE EQUIPMENT + FIXTURES & FITTINGS + INVESTMENTS c) CURRENT ASSET = CLOSING STOCKS + DEBTORS/ACCOUNT RECEIVABLES + BANK + CASH + ACCRUED REVENUES + PREPAID EXPENSES a) TOTAL EQUITY & TOTAL LIABILITIES = TOTAL EQUITY + TOTAL LIABILITIES b) TOTAL EQUITY = CAPITAL + NET PROFITS (@ - NET LOSS) - DRAWINGS c) TOTAL LIABILITIES = NON CURRENT LIABILITIES + CURRENT LIABILITIES d) NON CURRENT LIABILITIES = LOAN + DEBENTURES + MORTGAGE e) CURRENT LIABILITIES = CREDITORS + OVERDRAFT BANK + ACCRUED EXPENSES + PREPAID REVENUES 82
FORMAT SOFP 83
TOPIC 6: PRACTICAL EXERCISE QUESTION 1 The following are the balances from the ledger of Ainaa Beauty as at 30 June 2022 Closing stock at 30 June 2022 worth RM20,000 You are required to prepare: a) Statement of Comprehensive Income for the year ended 30 June 2022 b) Statement of Financial Position as at 30 June 2022. 84
QUESTION 2 The following Trial Balance was prepared in the book of Zaquan Hakeem Coffee Sdn Bhd Closing inventories at 31 October 2022 worth RM44,780 at cost and RM46,000 at market price. You are required to prepare: a) Statement of Comprehensive Income for the year ended 31 October 2022 b) Statement of Financial Position as at 31 October 2022 85
QUESTION 3 The following Trial Balance was prepared in the book of Qusa Curry House Closing stock at 31 December 2021 worth RM2, 130 at cost and RM2, 750 at market price. You are required to prepare: a)Statement of Comprehensive Income for the year ended 31 December 2021 b)Statement of Financial Position as at 31 December 2021 86
QUESTION 4 The following Trial Balance was prepared in the book of Uzma Hotel & Resort Stock as at 31 December 2021 was valued at RM10,800 at cost and RM10,080 at market value. You are required to prepare: a) Statement of Comprehensive Income for the year ended 31 December 2021 b) Statement of Financial Position as at 31 December 2021 87
QUESTION 5 Qhaireeza runs a small grocery shop. The following balances were extracted from her books in 31 December 2021 Inventory on 31 December 2021 was valued at RM9,850 You are required to prepare: a)Statement of Comprehensive Income for the year ended 31 December 2021 b)Statement of Financial Position as at 31 December 2021 88