BUSINESS ACCOUNTING FOR NON-ACCOUNTING STUDENTS

ANSWER FOR
EXERCISE 1

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ANSWER FOR
EXERCISE 1

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GENERAL JOURNAL

• Recording opening entries
• Recording credit purchases of non-current asset
• Recording sales of non-current assets
• Recording drawings of goods & non-current

assets
• Recording additional capital

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GENERAL JOURNAL

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NARRATION

Narration is a short explanation of every
transaction
Narration is not required in ledger,
whereas it is required in a Journal. It is the
brief explanation that provides the details
of Journal entry and helps understand the
account debited or credited.

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GENERAL JOURNAL

Starting an existing firm’s accounting records for a new accounting
period

Date Particulars Folio Debit (RM) Credit
(RM)
2020 Building 80,000
Jan 1 Furniture 10,000 20,000
Inventories 5,000 8,000
Bank 15,000 85,500
Account Receivable 3500 113,500

Loan-Ambank 113,500
Account Payable
Capital

(Assets, Liabilities and
Owners Equity on this
date)

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GENERAL JOURNAL

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GENERAL JOURNAL

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GENERAL JOURNAL

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GENERAL JOURNAL

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GENERAL JOURNAL

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KNOW THE
FUNCTION OF

LEDGERS

LEDGERS
What is a ledger??
• Ledger is a book, set of loose cards or file that

contains accounts

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TYPES OF
LEDGER

1. Purchase or Account
Payable Ledger

2. Sales or Account Receivable
ledger

3. General Ledger

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PURCHASES OR
ACCOUNTS PAYABLE

LEDGER

Purchases or Accounts Payable Ledger

Function/use : A ledger for suppliers
personal accounts

Posting for credit purchase:

From the various accounts payable’s personal accounts in
the purchase journal and the total purchases are debited
from the purchases account in the general ledger.
•Posting for return outwards:

From the various accounts payable’s personal
accounts in the returns outward journal and the total
returns are credited to the returns outwards account

in the ledger.

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PURCHASES OR
ACCOUNTS PAYABLE

LEDGER

Purchases or Accounts
Payable Ledger

Function/use : A ledger for
suppliers personal
accounts

Posting for payments
made:

From the various accounts
payable’s personal accounts
in the cash payment journal
and the total amount paid

are credited to the bank
account in the general

ledger

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ACCOUNT PAYABLE

Accounts Payable a/c- Shahida

April RM April Purchas PJ1 200
RIJ1 100 10 es
19 Return
outwards

28 Bank CPJ1 100

200 200

Accounts Payable A/c- Azwan

April RM April

25 Return RIJ1 150 20 Purchase PJ1 500
500
outwards s

26 Bank CPJ1 350

500

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SALES OR ACCOUNT
RECEIVABLE
LEDGERS

• Sales or Account Receivable ledgers
Function/use : A ledger for accounts receivable personal
accounts
• Posting for credit sales:
From the various accounts receivable’s personal accounts in
the sales journal and the total sales are credited to sales
account in the general ledger.
• Posting for return inwards:
From the various accounts receivable’s personal accounts in
the returns inward journal and the total returns are debited
to the returns inwards account in the ledger.

• Function/use : A ledger for suppliers personal
accounts

• Posting for payments made:

From the various accounts receivable’s personal accounts
in the cash receipts journal and the total amount received
is debited to the bank account in the general ledger

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SALES OR ACCOUNT
RECEIVABLE LEDGERS

Accounts Receivable a/c- Azman

April RM April
11 Sales
SJ1 300 16 Return RIJ1 200
23 inwards CRJ1 100

Bank

300 300

Accounts Receivable a/c- Ibrahim

April RM April
21 Sales
SJ1 700 22 Return RIJ1 250
inwards CRJ1 350

25 Bank

30 Balance 100
700 c/d 700

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GENERAL LEDGER

• Function/use : A ledger for all other accounts,
that is other than account receivables and

• account payable personal accounts
• Posting for total credit purchases: from

purchases journal
• Posting for total credit sales: from sales journal
• Posting for total return outwards: from return

outwards journal
• Posting for total return inwards: from return

inwards journal
• Posting for total payments made: from cash

payment journal
• Posting for total payments received: from cash

receipt journal

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CASH BOOK

• Function/use : A ledger for suppliers personal
accounts

• Cash book is considered a book of prime entry.
Instead of recording receipts and payments of
money in the cash receipts and payments journal a
business can record such transactions in the cash
book.

• Cash book can either be a two column or three
column cash book. The two column cash book
consist of cash and bank only whereas three column
cash book has column for cash, bank and discount.

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TWO/THREE
COLUMN

CASH BOOK

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TWO & THREE
COLUMN CASH

BOOK

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THREE COLUMN
CASH BOOK

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EXAMPLE
CASH BOOK

• Encik Danial se up a business under the name of Danial
Enterprise on 1 January 20x3. The following transaction
during the month of Mac 20x3. You Are required to prepare
Three Column Cash book for Danial Enterprise.

1 The debit balance in cash are RM 2000 and Bank RM
30,000

1 Encik Danial invested an additional RM 20,000 cash
into the business

2. Transfer cash of RM 8,000 into the bank account
7. Purchase goods worth RM 6000 by cheque
11 Danial took RM 200 cash for personal use
18 Paid rental RM 1800 by cheque
20 Paid Zahazan Berhad RM 8000 by cheque after

deducting cash discout RM 70
25 Made cash Sales RM 2400

28 Paid RM 300 for purchase stationery by cash

29 Received cheque for RM 5000 From Naha Berhad after
deducting cash discount RM 90

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ANSWER FOR
EXAMPLE

CASH BOOK

Three Coloumn Cash book

Debit Folio Disco Cash Bank Date Particulars Fol Discount Credit
unt io Received
Date Particulars allow 2000 cash bank
ed
8000
Mac 1 Balance 30,000 Mac 2 Bank c 6000
1 b/d
20000 7 purchas 200
Capital e 1800
Drawing 8000
Cash c 8,000 11
Sales Rental 16200 27200
Naha 2400 18
Zahazan 24400 43,000
90 5000 20 70
Statione
25 ry 70
Balance
c/d

April Balance 80 24400 43,000
1 b/d 16,200 27,200

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EXERCISES

QUESTION 1

Write down the function of each of the following book of
prime entry

a) Sales Journal
b) Purchase Journal
c) Return Inwards Journal
d) Return Outwards Journal
e) Cash book
f) General Journal

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QUESTION 2

Identify the source document that should be used for the
following business activity

Business Activity Source document

1. Bought goods by cheque

2.Good delivered to a customer

3.Sold goods on credit to a
customer

4.Pais commission by cash

5.Extra transportation cost charged
by supplier

6.Return goods to supplier

7.Bought goods on credit

8.Paid telephone bill by cheque

9.Received goods from customer
due to defective goods

10. Put in additional capital in the
form of cash at bank

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QUESTION 3

The following are the transactions of Diamond
Enterprise for the month of July 2020

Date Transactions
2020
July Purchase goods on credit from Tanjung

6 Trading RM20,000. Trade discount given 15%.

Sold goods on credit to Permata Enterprise
15 RM10,000. Trade discount is 10%.

Returned broken goods to Tanjung Trading
21 RM500 at the listed price.

Received defect goods from Permata
28 Enterprise RM2000.

You are required to state all the transactions in
appropriate Journal.

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QUESTION 4

Purnama Enterprise a sole trader in clothing, In
February 2021, the business has following transactions.

Date Transaction
2 Issued Invoiced for sales worth RM 20,000 to Ismail , RM 15,000 to Safiyyah
4 Received invoiced from Surana RM 5000 for purchase of cotton
8 Credit Sales: Summaya Butik RM 15, 000, Zamuda Butik RM 5000
9 Paid RM 200 to Babariah by cheque number 22141 for a box of needle and RM 600
cash ti Rafie for photostat
12
Defected goods returned to Surana

14 Purchased on credit RM3000 from Arked Man Rm 4000
16 Ismail return defected cloth worth RM 250
17 Summaya butik terurned defected cloth RM 170
19 Received RM 200 cash from Datin Ramona for altering her cloth
21 Return cloths to Arked Man RM 450

You are Required to prepare Special journal ,
General Journal and Cash Book

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QUESTION 5

The following transaction during the month of July For
Mansor Enterprise 20x3. You Are required to prepare
Three Column Cash book for Mansor Enterprise.

1 The debit balance in cash are RM 3000 and Bank RM
35,000

1 Encik Danial invested an additional RM 40,000 by
cheque into the business

2. Paid duty stamp RM 60 by cash
8. Purchase goods worth RM 5000 by cheque
15 Took RM 300 cash for personal use
19 Paid rental RM 800 by cheque
21 Paid Naemah Berhad RM 9000 by cheque after

deducting cash discout RM 170
24 Made cash Sales RM 2500
27 Paid RM 300 for purchase stationery by cheque
28 Received cheque for RM 5000 From Zamnan Berhad

after deducting cash discount RM 120

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CHAPTER 4:
DOUBLE ENTRIES
PRINCIPLES AND
BALANCING OFF

4.1 Explain the double entries principles for
assets, liabilities, capital

4.2 Double entries principles for expenses and
revenues

4.3 Double entries principles for inventories
4.4 Trade discount and cash discount
4.5 Balancing off the accounts

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DOUBLE ENTRY

Double-entry bookkeeping
is an accounting method
where you equally record a
transaction in two or more
accounts. A credit is made
in at least one account, and
a debit is made in at least
one other account.

The double-entry
bookkeeping method is
based on the idea that every
business transaction has
equal and opposite effects
on at least two accounts.

Double-entry accounting
can help you:
• Make better financial
decisions
• Catch and reduce
bookkeeping errors
• See a clear snapshot of
company finances
• Maintain accurate
accounting records

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DOUBLE ENTRY RULE
FOR ASSET, LIABILITIES

& CAPITAL

Account

Debit Credit

To record an increase in To record a decrease in

assets asset

To record a decrease in To record an increase in

liabilities liabilities

To record a decrease in To record an increase in

capital capital

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ASSET

The double entry rule for assets:

Assets account

Debit Credit

To record an increase in assets To record a decrease in asset

Example 1:

2021
Jan 1 Purchase Office Equipment worth RM5,500 by cheque

Journal Entries RM5,500
Dr Office Equipment RM5,500

Cr Bank

Ledger entries

Date Particulars Office equipment account RM
Bank RM Date Particulars
2021 5,500
Jan 1

Date Particulars Bank account Particulars RM
Office equipment 5,500
RM Date
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2021
Jan 1

ASSET

Example 2:

2021
Jan 19 Purchase furniture worth RM3,000 by cash from Maju
Furniture Sdn Bhd.

Journal Entries

Dr Furniture RM3.000

Cr Cash RM3,000

Ledger entries

Date Particulars Furniture account RM
Cash RM Date Particulars
2021 3000
Jan 19

Date Particulars Cash account Particulars RM
Furniture 3000
RM Date

2021
Jan 19

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LIABILITIES

The double entry rule for liabilities:

Liabilities account

Debit Credit

To record a decrease in liabilities To record an increase in liabilities

Example 1:

2021

Jan 20 Purchase computer worth RM4,900 on credit from Bell
Enterprise

Journal Entries RM4,900
Dr Computer account RM4,900

Cr Bell Enterprise account

Ledger entries

Date Particulars Computer account RM
Bell Enterprise RM Date Particulars
2021 4,900 RM
Jan 20 4,900

Date Particulars Bell Enterprise account 133

RM Date Particulars

2021 Computer
Jan 20

LIABILITIES

Example 2:

2021

Feb 1 Purchase a delivery van worth RM60,000 from Perotiga Sdn
Bd. Paid RM10,000 by cheque and the balance will be paid next
month.

Journal Entries

Dr Delivery van account RM60,000

Cr Bank account RM10,000
RM50,000
Cr Perotiga Sdn Bhd account

Ledger entries

Delivery Van account

Date Particulars RM Date Particulars RM

2021 Perotiga Sdn Bhd 50,000 RM
Feb 1 10,000
Bank 10,000
1

Date Particulars Bank account Particulars
Delivery Van
RM Date

2021
Feb 1

Date Particulars Perotiga Sdn Bhd account RM
50,000
RM Date Particulars
134
2021 Delivery Van
Feb 1

Capital will increase if
the owner brings in
any assets into his
business.

If the owner takes or
withdraws any asset
from the business for
his own use the
capital will decrease.

Separate account
known as drawings
account will be
created to record
these withdrawals.

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CAPITAL

The double entry rule for capital:

Liabilities account

Debit Credit

To record a decrease in capital To record an increase in capital

Example 1:

2021
Jan 1 The owner of a business deposited RM20,000 into the business bank
account

Journal Entries

Dr Bank account RM20,000

Cr Capital account RM20,000

Ledger entries

Date Particulars Bank account Particulars RM
Capital RM Date
2021 20,000 RM
Jan 1 20,000

Date Particulars Capital account 136

RM Date Particulars

2021 Bank
Jan 1

CAPITAL

Example 2:

2021
Jan 9 The owner of a business withdrew RM500 from the business bank
account for his own use

Journal Entries RM500

Dr Drawing account RM500
Cr Bank account

Ledger entries

Date Particulars Drawing account RM
Bank RM Date Particulars
2021 500 RM
Jan 9 500

Date Particulars Bank account Particulars
Capital Drawing
2021 RM Date
Jan 1
20,000 2021
Jan 9

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EXPENSES REVENUE

Expenses are the Revenue which is part
value of all assets of income, is the sale
that have been used value of goods and
to get those income. services that have
been provided to
The double entry rule customers.
for expenses is the
same as that for The double entry rule
assets. for income is the same
as that for capital and
liabilities.

138

DOUBLE ENTRY RULE
FOR EXPENSES
& INCOME

Account

Debit Credit

To record an increase in To record a decrease in

expenses expense

To record a decrease in To record an increase in

income income

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EXPENSES

The double entry rule for expenses:

Expenses account

Debit Credit

To record an increase in expenses To record a decrease in expenses

Example 1:

2021
Jan 7 Paid advertising worth RM450 by cash

Journal Entries RM450
Dr Advertising account
RM450
Cr Cash account

Ledger entries

Date Particulars Advertising account RM
Cash RM Date Particulars
2021 450
Jan 7

Date Particulars Cash account Particulars RM
Advertising 450
RM Date
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2021
Jan 7

EXPENSES

Example 2:

2021
Jan 31 Paid salaries amounting RM6,500 by cheque.

Journal Entries RM6,500
Dr Salaries account RM6,500

Cr Bank account

Ledger entries

Date Particulars Salaries account RM
Bank RM Date Particulars
2021 6,500
Jan 31

Date Particulars Bank account Particulars RM
Salaries 6,500
RM Date

2021
Jan 31

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INCOME/
REVENUE

The double entry rule for income/revenue:

Income account

Debit Credit

To record a decrease in income To record an increase in income

Example 1:

2021
Jan 8 Received rent of RM1,000 by cheque.

Journal Entries

Dr Bank RM1,000

Cr Rent received RM1,000

DLaetedger enPtraiertsiculars Bank account Particulars RM
RM Date
2021 Rent received 1,000
Jan 8

Date Particulars Rent received account RM
1,000
RM Date Particulars
142
2021 Bank
Jan 8

INCOME/
REVENUE

Example 2:

2021
Jan 11 Received dividend worth RM450 by cash

Journal Entries

Dr Cash account RM450

Cr Dividend received account RM450

Ledger entries

Cash account

Date Particulars RM Date Particulars RM

2021 Dividend received 450 RM
Jan 11 450

Date Particulars Dividend Received account

RM Date Particulars

2021 Cash
Jan 11

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INVENTORIES

Therefore, we need to keep separate accounts for stock being
purchased and stock being sold. In fact, there are four
accounts for movements in stock and these are as follows:

Increases in stock

Purchases account - stocks of goods bought by the firm for
resale

Returns inwards account - stocks previously sold
that is returned by the customer due to the goods
being unsuitable (example: damaged, wrong type
of goods and others.)

Decreases in stock

Sales account - stocks of goods sold to customers

Returns outwards account - stocks previously
purchased by the firm which is returned to the
original supplier

The normal double entry rules apply to all these stock
accounts. Stock is an asset, therefore increases in
stocks will always be debited to the relevant account
and decreases will always be credited.

You may also see returns inwards referred to as sales returns

and returns outwards as purchases returns. 144