BUSINESS ACCOUNTING FOR NON-ACCOUNTING STUDENTS

DOUBLE ENTRY
FOR

INVENTORY

TRANSACTIONS EFFECTS ACCOUNT
INVOLVED
Sales of Sales Credit Sales
goods revenue
Purchased increase account
of goods
Purchase Debit Purchases
expense account
increase

Sales return Sales Debit Return
revenue inwards account
decrease

Purchase Purchase Credit Return
return expense outwards
decrease account

145

INVENTORIES

Example 1:

2021

Jan 13 Purchased goods worth RM3500 on credit from Raihan
Enterprise

Journal Entries

Dr Purchases account RM3,500

Cr Raihan Enterprise account RM3,500

Ledger entries

Date Particulars Purchases account RM
RM Date Particulars
2021 Raihan 3,500
Jan 13 Enterprise

Date Particulars Raihan Enterprise account RM
3,500
RM Date Particulars

2021 Purchases
Jan 13

146

INVENTORIES

Example 2:

2021
Jan 20 Returned goods worth RM300 to Raihan Enterprise

Journal Entries RM300
Dr Raihan Enterprise account RM300

Cr Return outwards account

Ledger entries

Raihan Enterprise account

Date Particulars RM Date Particulars RM

2021 Return outwards 300
Jan 20

Date Particulars Return outwards account RM
300
RM Date Particulars

2021 Raihan Enterprise
Jan 20

147

INVENTORIES

Example 3:

2021
Jan 4 Credit sales worth RM1500 to Nizam.

Journal Entries

Dr Nizam account RM1,500

Cr Sales account RM1,500

Ledger entries

Date Particulars Nizam account RM
Sales RM Date Particulars
2021 1500 RM
Jan 4 1500

Date Particulars Sales account Particulars
Nizam
RM Date

2021
Jan 4

148

INVENTORIES

Example 4:

2021
Jan 18 Nizam returned defective goods worth RM200

Journal Entries RM200
Dr Return inwards account RM200

Cr Nizam account

Ledger entries

Date Particulars Return inwards account RM
RM Date Particulars
2021 Nizam 200
Jan 18

Date Particulars Nizam account RM
200
RM Date Particulars

2021 Return inwards
Jan 18

149

DISCOUNT

TRADE DISCOUNT CASH DISCOUNT

Trade discount is an A cash discount is an
allowance given by the allowance given by the
seller to the buyer to seller to the buyer to
encourage the buyer to
buy in bulk purchases make prompt payment.
(large quantities).
The amount of debt
The amount of price reduction given by
reduction given by seller to creditor to its clients from
buyer from sales of receivable of debt.
inventory.
This type of discount
This type of discount does should be recorded in all
not created in account so accounting records and
thus should not be thus should appear in
appeared anywhere in financial statements.
accounting records or
financial statements. Can be divided into
two types;
a) Discount revenue
b) Discount allowed

150

DISCOUNT

Discount Discount
Allowed Received

❖ Discount given to the ❖ Discount given by

buyer. the seller

❖ Deducted from sales. ❖ Deducted from

purchases.

❖ Recorded in the ❖ Recorded in the
Statement Of Statement Of
Comprehensive Comprehensive
Income.
Income.

❖ Dr Discount allowed ❖ Dr Account Payable
Cr Account
Cr Discount
receivable
Received

151

How do we
calculate
discounts?

Date Transaction

June Bought 5 pairs of roman blind worth RM395 and 3 units of wall
5 cabinet worth RM725 by credit from Ako Furniture Sdn Bhd.
Received 20% discount.

8 Sold 10 units of flatwoven rug worth RM500 to Zamani Enterprise
by credit. Issued 20% discount.

17 Paid Ako Furniture Sdn Bhd in full by cheque. A 5% discount was
received.

20 Zamani Enterprise paid half of his debt by cash. A 5% discount was
allowed.

152

How do we
calculate
discounts?

Transaction Calculation
date
Step 1 RM395.00 Amount of total
June 5 + RM725.00 purchases before
discount.
Step 2 RM1120.00
Step 3 Trade discount
RM1120.00 X 20%
= RM224.00 Amount of total
purchase after
RM1120.00 discount
- RM 224.00

RM 896.00

Transaction Calculation
date
Step 1 RM500.00 X 20% Trade discount
June 8 = RM100.00
Amount of total
Step 2 RM 500.00 sales after discount
- RM 100.00

RM 400.00

Transaction Calculation
date
Step 1 RM896.00 X 5% Cash discount
June 17 = RM44.80 (Discount received)
Amount of debt
Step 2 RM 896.00 paid after discount
- RM 44.80
153
RM 851.20

How do we
calculate
discounts?

Transaction Calculation
date
Step 1 RM400/2=RM200.00 Cash discount
June 20 RM200.00 X 5% (Discount allowed)

Step 2 = RM10 Amount of debt
paid after discount
RM 200.00
- RM 10.00

RM 190.00

154

Ledger Account
with discount

2021 Ako Furniture Sdn Purchases account
June 5 Bhd 896.00

Ako Furniture Sdn Bhd account

2021 Bank 851.20 2021 Purchases 896.00
June 17 June 5

17 Discount received 44.80

Zamani Enterprise account

2021 Sales 400.00 2021 Cash 190.00
June 8 June 20 10.00
200.00
20 Discount allowed

Balance c/d

Sales account Zamani Enterprise 400.00

2021
June 8

Bank account Ako Furniture Sdn 851.20
Bhd
2021
June 17

Discount received account

2021 Ako Furniture Sdn 44.80
June 17 Bhd

155

Ledger Account
with discount

2021 Zamani Enterprise Cash account
190.00

June 20

2021 Zamani Enterprise Discount allowed
10.00

June 20

156

CARRIAGE

CARRIAGE INWARDS CARRIAGE OUTWARDS

The cost of transport paid The cost of transport
to bring the goods bought
to the business premises paid to deliver the goods
sold to the buyer’s
premises.

Expenses to the business. Expenses to the business.

Recorded in the Recorded in the
Statement Of Statement Of
Comprehensive Income Comprehensive Income
as part of the cost of as operating expenses.
goods purchased.

157

2021 En Mart, the owner of Emart Trading invested cash RM20,000 into the
Jan 1 business.

5 Furniture amounting to RM2000 was purchased on credit from DCO
Furniture Bhd.

Journal Entries

2021

Jan 1 Dr Cash account RM20,000

Cr Capital account RM20,000

5 Dr Furniture RM2,000

Cr DCO Furniture Bhd RM2,000

Ledgers

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

Date Particulars Capital account Particulars RM
Cash 20,000
. RM Date

2021
Jan 1

Furniture account

Date Particulars RM Date Particulars RM
DCO Furniture Bhd
2021 2,000
Jan 5

DCO Furniture Bhd account

Date Particulars RM Date Particulars RM
2,000
2021 Furniture
Jan 5 158

2021 En Mart took cash of RM100 for personal use.
Jan 9 The business paid a cheque for RM100 for office stationaries

10

Journal Entries

2021 RM100
Jan 9 Dr Drawings account RM100

Cr Cash account

10 Dr Office stationaries account RM100 RM100
Cr Bank account

Ledgers

Drawings account

Date Particulars RM Date Particulars RM
Cash
2021 100 RM
Jan 9 100

Date Particulars Cash account Particulars
Capital Drawings
2021 RM Date

.Jan 1 20,000 2021
Jan 9

Office Stationaries account

Date Particulars RM Date Particulars RM

2021 Bank 100
Jan 10

Date Particulars Bank account Particulars RM
RM Date Office stationaries 100

2021 159
Jan 10

2021 The business paid the full amount owing for the furniture purchased on the
Jan 13 5th of January 2021 by paying with a cheque.

25 The business paid cash of RM80 for miscellaneous expenses.

Journal Entries

2021 RM2,000
Jan 13 Dr DCO furniture Bhd account RM2,000

Cr Bank account

25 Dr Miscellaneous expenses account RM80
Cr Cash account RM80

Ledgers

Date Particulars Bank account Particulars RM
RM Date Office stationaries 100

2021 DCO furniture Bhd 2,000
Jan 10

13

DCO furniture Bhd account

Date Particulars RM Date Particulars RM
2,000
2021 Bank 2,000 2021 Furniture
Jan 5
.Jan 13

Miscellaneous expenses account

Date Particulars RM Date Particulars RM

2021 Cash 80
Jan 25

Date Particulars Cash account Particulars RM
Capital RM Date Drawings 100
2021
Jan 1 20,000 2021 Miscellaneous 80 160
Jan 9 expenses

25

BALANCING
OFF THE

ACCOUNTS

You might have noticed that the above accounts
were closed with balance c/d (ending balance) in
the current month and start with balance b/d
(beginning balance) in the following month.
Those balance c/d and balance b/d were
obtained via the process of balancing-off
accounts.
Let’s use the ledger of cash in hand account as
an example to discuss on how should this
process be done.

161

DEBIT BALANCE

All asset and expenses accounts will
have a debit balance.

CREDIT BALANCE

Under normal circumstances, capital,
liabilities and income accounts will
have a credit balance.

ZERO BALANCE

When the total debit of an account is
equal to the total credit. The account
will have a zero balance

162

STEPS IN
BALANCING OFF

ACCOUNTS

4. Enter the ending balance 1. Total up both
(balance c/d) of account to sides of account
the opposite side of account
on the following month, Stage 1
Balance b/d.

Cash

2021 Capital 500000 2021 Bank 400000
Apr 10 Sales 13000 Apr 11 Office rent
5000
25 13 850
107150
30 Utility expenses 513000

Balance c/d

513000

May 1 Balance b/d 107150

Stage 4 Stage 3 Stage 2

3. Add up both sides of 2. Enter this difference
account to get the total. both amount on the smaller side
debit and credit sides of of account
account are now equal

163

STEPS IN
BALANCING OFF

ACCOUNTS

Stage 1: Total up both sides of account. In this
example the total debit of RM513,000 is more than
the total credit of RM405,850. The difference of
RM107,150 is thus should be on the credit side of
account.
Stage 2: Enter this difference amount on the
smaller side of account. In this example it should be
entered on the credit side of account. The amount
of RM107,150 is the account’s ending balance
(balance c/d)

164

STEPS IN
BALANCING OFF

ACCOUNTS

Stage 3: Add up both sides of account to get
the total. You should find that both debit and
credit sides of account are now equal.

Stage 4: Enter the ending balance (balance
c/d) of account to the opposite side of account
on the following month.
The opposite entry is actually the account’s
beginning balance.
Note that credit ending balance (balance c/d)
of current month will becomes debit beginning
balance (balance b/d) on the following month,
while debit ending balance (balance c/d) of
current month will becomes credit beginning

balance (balance b/d) on the following month.

165

EXAMPLE

Anas Sdn Bhd ia a new established company which start the business on
April 2020. The company is selling floor tiles. The following is the business
transaction for the month of April.

Date Transaction

April 10 Start a business with RM500,000 cash and RM250,000 vehicle..

11 Transferred RM400,000 of cash into the business bank account.

13 Paid office rent deposit of RM5,000 by cash.

15 Bought office furniture RM10,000, computers RM8,000 and printers RM2,500
by cheque.

17 Purchased goods RM135,000 on credit from Dutch Floor Bhd.

22 Sold goods on credit to Jentayan Tinggi Ltd RM50,000.

25 Sold goods for cash to Mr Aqil RM13,000.

28 Received cheque RM20,000 from Jentayan Tinggi Ltd.

30 Paid salaries RM10,500 by cheque and RM850 utility bills by cash.

166

Cash account RM
400,000
RM
5,000
2020 Capital 500,000 2020 Bank 850
Apr 10 Sales 13,000 Apr 11
Office rent 107,150
25 13 Utility expenses 513,000
Balance c/d
30 RM
30 250,000
250,000
May 1 Balance b/d 513,000
107,150 RM
500,000
Vehicle account 250,000
750,000
RM 250,000

2020 Capital 250,000 2020 Balance c/d RM
Apr 10 250,000 5,000
Apr 30 5,000

May 1 Balance b/d 250,000

Capital account

RM

2020 Balance c/d 750,000 2020 Cash
Apr 30 750,000 Apr 10 Vehicle

10

750,000

May 1 Balance b/d

Office rent account

RM

2020 Cash 5,000 2020 Balance c/d
Apr 13 5,000
Apr 30

May 1 Balance b/d 5,000

167

Bank account

RM RM
10,000
2020 Cash 400,000 2020 Office furniture
Apr 11 Jentayu Tinggi Ltd 8,000
Apr 15 2,500
10,500
20,000 15 Computers 389,000
15 Printers 420,000
420,000 30 Salaries
389,000 RM
Balance c/d 10,000
10,000
May 1 Balance b/d
RM
Office furniture account 8,000
8,000
RM
RM
2020 Cash 10,000 2020 Balance c/d 2,500
Apr 15 10,000 2,500
Apr 30
168
May 1 Balance b/d 10,000

Computers account

RM

2020 Cash 8,000 2020 Balance c/d
Apr 15
8,000 Apr 30
8,000
May 1 Balance b/d

Printers account

RM

2020 Bank 2,500 2020 Balance c/d
Apr 15 2,500
Apr 30

May 1 Balance b/d 2,500

Purchases account

RM RM
10,000
2020 Cash 10,000 2020 Balance c/d 10,000
Apr 15 10,000
Apr 30 RM
8,000
May 1 Balance b/d 10,000 8,000

Dutch Floor Group account RM
8,000
RM 8,000

2020 Cash 8,000 2020 Balance c/d RM
Apr 15 8,000
8,000 Apr 30 8,000
8,000
May 1 Balance b/d

Sales account

RM

2020 Cash 8,000 2020 Balance c/d
Apr 15 8,000
Apr 30

May 1 Balance b/d 8,000

Jentayan Tinggi Ltd account

RM

2020 Cash 8,000 2020 Balance c/d
Apr 15 8,000
Apr 30

May 1 Balance b/d 8,000

169

Salaries account

RM RM
8,000
2020 Cash 8,000 2020 Balance c/d 8,000
Apr 15 8,000
Apr 30 RM
850
May 1 Balance b/d 8,000 850

Utility expenses

RM

2020 Cash 850 2020 Balance c/d
Apr 30
Apr 30

850

May 1 Balance b/d 850

170

EXERCISES

QUESTION 1

Transactions extracted from Bob Enterprise, a company that sells bikes for the
month of May 2021 are shown as follows:

2021 Started a business with RM2, 500 cash in hand and RM12, 000 cash at bank.

May 1

5 Bought bicycles on credit from Mimi Motor RM8, 500, less 5% trade discount
6 A bicycle was sold on credit to Maju Trading RM600.
9 Bought bicycle’s tyres by cash from Zizi Bhd RM1, 500.
11 Paid worker’s salaries by cash RM1, 600
14 Bought component parts of bicycle by cash RM3, 550
17 Sold a few bicycles by cash RM6, 500.
19 Sold bicycles on credit to Yahya Vehicle RM4, 500
25 The owner gave a bicycle of RM450 to his son as a birthday gift.
27 Paid Mimi Motor RM3, 500 by cash

You are required to post the above entries into relevant ledgers.

171

QUESTION 2

Record the following transactions of Johan for the month of December 2020 into
relevant ledgers

2020 Started a business with RM 8000 in the bank.

Dec 1

3 Paid motor expenses RM 200 by cash.
5 Bought goods on credit from Perniagaan Intan RM 5000.
8 Sold goods on credit to Lee Enterprise RM 2700.
14 Sold goods for cash RM 4000.
15 Paid rental of RM 500 by cash.
20 Paid wages RM 700 by cash.
22 Received cash from Lee Enterprise RM 2400.
25 Paid a cheque RM 2800 to Perniagaan Intan.
27 Johan withdrew RM 500 goods for personal use.

30 Put cash in hand of RM 3500 into the bank.

You are required to post the above entries into relevant ledgers.

172

QUESTION 3

On 1 April 2020, Azman commenced business as a nursery operator and
landscaping designer at Sabak Bernam. His business transaction are as follows:

2020 1 Started business with cash in hand RM2000 and cash at bank RM15000.

April

4 Bought a computer and printer for office use RM3000, paid by cheque.
6 Cash sales RM2500
11 Sent an invoice to Jabatan Kerjasama for landscaping designing RM3500.
13 Azman took RM350 cash from office to pay for her own utility bills.
14 Purchased seeds RM100 by cash.
17 Sold plant and potteries to Aliza RM500.
19 Aliza settled all her debt RM500 by cheque.
25 Returned some defective pots to Camelon Hills Pottery RM350.
27 Bought a lorry RM60000 for business use. Paid RM5000 by cheque as down payment

and the balance will be paid by installment to Malayan Banking Berhad.
28 Paid salaries by cheque RM3000.

29 Advertised her business and payment was made by cash RM250.

30 Paid miscellaneous expenses RM150 by cash.

You are required to post the above entries into relevant ledgers.

173

QUESTION 4

Fahmi a furniture distributor had the following transactions in June 2021.

2021 1 Started business with cash in hand RM2000 and cash at bank RM60000

June

4 Purchased cupboards and paid by cheque RM20000
5 Bought a stationary by cash RM150.
9 Sold furniture to Rika Furniture Enterprise RM10500.
11 Paid rent with cheque RM2500.
14 Purchased sofa set from Ladaza Furniture Trading on credit RM22000.
15 Fahmi took a cupboard worth RM550 for his child use.
18 Returned unsuitable goods to Ladaza Furniture Trading RM2500.
21 Purchased shelves, tables and chairs and paid by cheque RM1550.

22 Paid commission to salesman by cash RM850.

23 Cash sales RM1500.

24 Purchased book shelves from Shopree Furniture Enterprise RM15500 at listed price
with trade discount 10%.

25 Full settlement of Ladaza Furniture Trading account by cheque and received discount
RM800.

26 Rika Furniture Enterprise settled all the debts by cheque and received discount
allowed of 10%.

27 Cash sales RM1000.

29 Paid salary by cheque RM1500.

You are required to post the above entries into relevant ledgers.

174

QUESTION 5

On 1st January 2020 Nazim the owner of Great Family Supermarket at Sungai Besar had the following

assets and liabilities:

RM

Cash at bank 100000

Inventory 15200

Cash in hand 5000

Land in building 50000

Debtors - Do 5500

Re 2500

Creditors - Dahlia 5300

Rose 7500

During the month of January 2020 Green Family Supermarket had the following transactions:

2020 2 Sold goods on credit to Re RM8000.
3 Purchased goods on credit from Vistana Enterprise RM7500
Jan 6 Paid Dahlia the amount owing less 5% discount by cash.
9 Cash sales RM2100.
12 Received a cheque RM2350 from Re and allowed discount RM150.
15 Credit sales to Do RM1600.
17 Re returned damaged goods worth RM650.
19 Paid Rose RM7330 by cheque and received discount RM170.
22 Purchased goods by cheque RM3500.
23 Received an invoice for goods purchased from Rose RM6500.
24 Paid salaries by cheque RM4500.
25 Paid miscellaneous expenses by cash RM350.
27 Cash sales RM3700 and banked in the amount on the same day.
29 Sent a credit note to Do for goods damaged in transit RM350.
30 Sent an invoice to Re for goods listed at RM5800 less trade discount 5%.

You are required to post the above entries into relevant ledgers. 175

Fatimah Abd Rauf, Amla Abu, Radziah Mahmud (2020).
Financial Accounting for Non –accounting Students, Sixth
Edition, Kuala Lumpur: McGraw-Hill Education.

Emmawati Misrun, Sharida Zaina Shafie (2018). Principles Of
Accounting, First Edition, Selangor: Oxford Fajar Sdn Bhd.

Heng Seai Kie (2013). Fundamentals Of Accounting, First
Edition, Selangor: Oxford Fajar Sdn Bhd.

Business
Accounting

For Non Accounting Students

Business Accounting is an E book for students taking a paper in Business
Accounting. This subject is taken by undergraduate students pursuing a
course in Diploma in Secretarial Science, Diploma in Islamic Banking and
Diploma in hospitality and Tourism. Theories and applications related to
the subject are presented in a through yet easy to understand. This

E-book cover four (4) chapter. The chapters are Introduction to

Accounting, Accounting Classification and Accounting Equation,
Accounting Process and Book of Accounts, Double Entry Principle and
Balancing Off

Hey Takeaways

• Based on the latest polytechnic syllabus, tailored for foundation,
diploma on the principle of Accounting.

• Closes with review questions and application exercises for every chapter to
help students check their understanding of the topic learnt.

• Provides simple worked examples with step by step calculations to
enable students to grasp accounting applications easily

Nurhafizah Hamidon holds a Degree in Accountancy (Honour) from Universiti
Teknologi Mara (UiTM) and Diploma in Accountancy from the same university.
She began her teaching career in Politeknik Sultan Idris Shah and is presently
still a lecturer at Politeknik Sultan Idris Shah (PSIS), Sabak Bernam Selangor.
She has 14 years’ teaching experience in Business Accounting.

Sharida Zaina Shafie holds a Master’s in Technical and Vocational Education
from Universiti Tun Hussein Onn Malaysia (UTHM) and an honours Degree in
Accounting from Universiti Utara Malaysia (UUM). She began her teaching
career in Kuala Langat Community College and is presently a lecturer at
Politeknik Sultan Idris Shah (PSIS), Sabak Bernam Selangor. She has 17 years’
teaching experience in Business Accounting.

Yusnizah Selamat holds a Degree in Accountancy (Honour) from Universiti
Teknologi Mara (UiTM) and Diploma in Accountancy from the same university.
She began her teaching career in Politeknik Sultan Abdul Halim Mu'adzam
Shah (POLIMAS) and is presently a lecturer at Politeknik Sultan Idris Shah
(PSIS), Sabak Bernam Selangor. She has 13 years’ teaching experience in Busi-
ness Accounting.