JOURNA

REVENUE &
EXPENSES
LEDGER
PRINCIPLES
DEBIT &
CASH &
BANK OF
ACCOUNTIN
CREDIT

FINANCIAL STUDY
ASSETS STATEMEN NOTES
&
LIABILIT
IES
T
G

BY : RAJA SAFUAN

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 Learning Outcomes
At the end of this lesson, students will
able to:

A A
Understanding the accounting
definition and forms of business in
B
Understanding the accounting B Malaysia.

concepts and principles.

C C
Understanding the accounting
components.
D
Understanding the accounting D
equation and recording
treatment.

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 WHAT IS ACCOUNTING ?
Accounting is defined as the art of identifying, recording, classifying,
analyzing, and reporting all the business transaction in monetary terms
for preparation of Financial Statements.

Recording Analyzing
Record all the daily Analyze the business
business transaction transaction data. Ex:
into journal total purchases
Identifying Classifying Reporting
Identify the relevant Classify the business Report the analysis
business transactions. transaction based on result to the user of
Ex Purchases & Sales its nature Financial Statement

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What is Bookeeping

Bookkeeping is the recording, on a day-

A to-day basis, of the financial
transactions and information pertaining
to a business.

It ensures that records of the individual

B financial transactions are correct, up-
to-date and comprehensive.

C Accuracy is therefore vital to the

process

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 ACCOUNTING VS
BOOKEEPING
BOOKEEPING ACCOUNTING

Definition Bookeeping is mainly related to identifying, Accounting is the process of summarizing,

measuring and recording financial transaction interpreting, and communicating financial
transactions which were classified in the ledger
account

Decision making Management can't take a decision based on Depending on the data provided by the
the data provided by bookkeeping accountants, the management can take critical
business decision

Objective The objective of bookkeeping is to keep the The objective of accounting is to gauge the
records of all financial transactions proper and financial situation and further communicate the
systematic information to the relevant authorities

Preparation of Financial statements are not prepared as a part Financial statements are prepared during the
Financial Statements of this process accounting process

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 ACCOUNTING VS BOOKEEPING

BOOKEEPING ACCOUNTING

Skills Required Bookkeeping doesn't require any Accounting requires special skills
special skill set due to its analytical and complex
nature

Analysis The process of bookkeeping does Accounting uses bookkeeping

not require any analysis information to analyze and interpret
the data and then compiles it into
reports

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 Separate
Entity
Historical
Accrual 01 Cost
08 02

Going Money
concern 07 Accounting
POWERPOINT 03 measurement
Concepts
TEMPLATE concept

06 04
Fair Consistency
Presentation 05
Objectivity

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BUSINESS ENTITY
 The business and its owner(s) are two separate existence entity.
 Any private and personal incomes and expenses of the owner(s) should not be treated as the incomes and
expenses of the business.
 Insurance premiums for the owner’s house should be excluded from the expense of the business
 The owner’s property should not be included in the premises account of the business
01
HISTORICAL COST
 Assets should be shown on the balance sheet at the cost of purchase instead of current
value
 The cost of fixed assets is recorded at the date of acquisition cost. The acquisition cost
02
includes all expenditure made to prepare the asset for its intended use.
 It included the invoice price of the assets, freight charges, insurance or installation costs
MONEY MEASUREMENT
 All transactions of the business are recorded in terms of money
 It provides a common unit of measurement
 Market conditions, technological changes and the efficiency of management 03
would not be disclosed in the accounts

GOING CONCERN
 The business will continue in operational existence for the foreseeable future
 Financial statements should be prepared on a going concern basis unless management
either intends to liquidate the enterprise or to cease trading, or has no realistic alternative
but to do so.
04
 Possible losses form the closure of business will not be anticipated in the accounts

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OBJECTIVITY
 The accounting information should be free from bias and capable of independent verification
 The information should be based upon verifiable evidence such as invoices or contracts.
 The recognition of revenue should be based on verifiable evidence such as the delivery of
goods or the issue of invoices.
05
FAIR PRESENTATION
 Financial statements should be prepared to reflect a true and fair view of the
financial position and performance of the enterprise 06
 All material and relevant information must be disclosed in the financial statements .

CONSISTENCY
 Companies should choose the most suitable accounting methods and treatments, and consistently
apply them in every period
 Changes are permitted only when the new method is considered better and can reflect the true and
fair view of the financial position of the company
 The change and its effect on profits should be disclosed in the financial statements.
07
ACCRUAL
 Revenues are recognized when they are earned, but not when cash is received

08
 Expenses are recognized as they are incurred, but not when cash is paid
 The net income for the period is determined by subtracting expenses incurred from revenues earned.
 Expenses incurred but not yet paid in current period should be treated as accrual/accrued expenses under
current liabilities

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 2
SHAREHOLDE
R
MANAGEME Need accounting
NT information to access
business capabilities to
Need information for provide good return
planning, policy making

4
and evaluation

1 OWNER
Need accounting
EMPLOYEES information for future
Interested in the stability of business decision
the business to provide making and expansion
employment, fringe benefits
and promotion opportunities

INTERNAL
USERS 3
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 EXTERNAL USERS

CUSTOMERS

01 Interested in long-tem stability of the business and continuance of the

supply of particular products

GOVERNMEN
02 Need information about various businesses for statistics and formulation
of economic plan
T

POTENTIAL
03 Need information about the profitability, dividend yield and price
INVESTORS
earnings ratio in order to assess the quality and the price of shares of
a company

LENDER

04 Need information about theSprofitability and solvency of the

business in order to determine the risk and interest rate of loans

SUPPLIER AND TRADE CREDITORS

05 Need information about the liquidity of business in order to access the
ability to repay the amounts owed to them

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FORMS OF BUSINESS
INFOGRAPHI
CS
FORM

01
SOLE TRADER /
PROPRIETORSHI
OPTION
P

FORM

02
PARTNERS
HIP
OPTION

FORM

03
LIMITED
LIABILITY
OPTION
COMPANY

FORM

04
CO-
0RPERATION
OPTION

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 PROPRIETORSHIP VS PARTNERSHIP VS
Aspects Proprietorship COMPANY
Partnership Limited Company

A type of business, in which A business form in which minimum Have 2 types.

only one person is the owner 2 until 20 persons (Professional 1) Sendirian BHD ,minimum
as well as operator of the partnership , Ex lawyer, members limit is 2 and maximum is
business. Accountant, max 50 persons) 50.
Definition which is agree to carry on business 2) Berhad (BHD), the minimum of
. members (shareholders) are 2 and
maximum of unlimited amount of
members.

Company Act 2016 Partnership Act 1961 Company Act 2016

Governing Act

Known as sole trader or sole Individually knows as partners and Shareholder (provider of fund)
Owner proprietor. collectively known as firm

Owner have a full control and Active partner take a part in control Shareholder, as a owner have a full
Management & management over the & management of business. Silent control and management over the
control business partner did not involve in the business
business management

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 CONTINUE
Aspects Proprietorship Partnership Company

Sources of Solely contribute by the owner Contribute by the partners Contribute by the shareholder
capital
Profit & loss are borne solely by Profit & loss are divide among the Receive profit in term of dividend
Profit and loss the owner partners according to agreement/ paid, restricted to amount of share
profit ratio. subscribe.
Uncertain Depend on desire and capacity of the Depend on desire and capacity of
Duration
partners the management
Annual General Not mandatory Not mandatory Mandatory
Meeting (AGM)
Tax Income tax Income tax Company tax

Unlimited liability. Unlimited liability Limited liability, either limited by

Liability
share or limited by guarantee
(Unlimited liability = The third parties, example lenders or creditors have a right to claim owner’s property, if
Note
business unable to pay it)

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 ACCOUNTING COMPONENTS

ASSET

LIABILITY

OWNER EQUITY

REVENU
E

EXPENSES

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 ASSETS
Assets can be defined as objects or entities, whether tangible or
intangible, that the company owns that have economic value.

 Current assets are items that are completely consumed,

sold, or converted into cash in 12 months or less. Example,
inventories, debtors, trade receivables, bank, cash, prepaid
expenses and accrued revenue.

 Non-current assets @ Fixed assets are tangible assets with

a life span of at least one year and more than 12 months.
Example, machinery, buildings, land, share, fixtures & fitting
and vehicles.

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 LIABILITIES

Liabilities are the debts, or financial obligations of a business

- the money the business owes to others.

 Current liabilities are debts that are paid in 12 months or

less, and consist mainly of monthly operating debts.
Example of current liabilities are creditor, trade payables,
bank overdraft and short term loan.

 Non-Current liabilities also known as Long Term

Liabilities are debts that are paid in 12 months or more.
Example long term loan, bank loan and promissory note.

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 OWNER EQUITY

 Owner's equity represents the owner's investment or

property in the business.

 It is derived from total equity minus the owner's

draws or withdrawals from the business plus the net
income (or minus the net loss) since the business
began.

 Example of owner equity is capital.

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 REVENUE

 Revenue is a money the business earns from

selling a product or service, generated from
business operation.

 Example of revenue are sales from goods,

commission received, rental receives and
interest on fixed deposit.

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 EXPENSES

 Expenses are expenditures, often monthly, that allow a

company to operate.

 Examples of expenses are office supplies, utilities, rental,

insurance, maintenance, repair of vehicle, interest, salary,
entertainment and travel

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 ACCOUNTING
EQUATION

Asset = Liability + Owner’s Equity

Asset = Liability + Owner’s Equity + Net Profit

Asset = Liability + Owner’s Equity + Revenue – Expenses

Asset + Expenses = Liability + Owner’s Equity + Revenue

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 MAKE
IDENTIFY ADJUSTING
1 TRANSACTIO 5 ENTRIES
NS
CREATE
ACCOUNTING 3
POST TO THE
GENERAL
7
FINANCIAL
STATEMENT
LEDGER
CYCLE

CALCULATE MAKE
4 UNADJUSTED 8 CLOSING
TRIAL ENTRIES
RECORD BALANCE CREATE
2 TRANSACTIO 6 ADJUSTED
NS INTO TRIAL
JOURNAL BALANCE

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Debit & Credit
Assets + Expenses = Liabilities Owner’s Equities + Revenue
+
RM40 RM60 = RM20 RM50 RM30
RM100 = RM100

Assets + Expenses = Liabilities Owner’s Equities + Revenue

+
=
Debit Credit
Formula develop from the equation:
Assets increase = DR Liabilities increase = CR
Assets decrease = CR Liabilities decrease = DR
Expenses increase = DR Owner equity increase = CR
Expenses decrease = CR Owner equity decrease = DR
Revenue increase = CR
Revenue decrease = DR
Journal
In accounting and bookkeeping a journal is a record
of financial transactions in order by date.
A journal is often defined as the book of original
entry.
All the transaction from sources documents will
record into journal.
There 2 type of journal:
◦ General journal
◦ Special journal
General journal
To record all the business transaction which are unable to
record into special journal.
Example of transaction such as:
1. Starting the business
2. Drawings from the owner.
3. Adjustment transaction.
4. Sale or purchase any non-current / fixed assets through credit.
5. To record liquidation of business.
Special journal
There are 6 types of special journal:
1. Sales journal – to record any transaction sales of goods
through credit.
2. Purchases journal – to record any transaction purchases of
goods through credit.
3. Sales return journal – to record any sales return transaction
from customers.
4. Purchases return journal – to record any purchases return
transaction to suppliers.
5. Cash receipts journal - to record any transaction sale of
goods or any receipts through cash or bank.
6. Cash payment journal - to record any transaction purchases
of goods or any disbursements through cash or bank.
Journal entries- General journal
General journal
Date Particular Credit
Debit (RM)
(RM)
2018
Jan 1 Dr Cash in hand 2000
Motor vehicles 3000
Cash in bank 5000
Cr Capital 10,000
(Start the business with the assets above)

8 Dr Drawings 500
Cr Purchases 500
(Drawings of goods for personal purpose)
 Journal entries- Special journal
Sales journal
Date Particular Discount Allowed Total (RM)
2018
Jan 3 Ahmad - 2000
6 Fatimah - 3000
31 Sales account (Cr) - 5000

Purchases journal
Date Particular Discount Received Total (RM)
2018
Jan 1 Mahmud Enterprise - 1000
6 Amirah Enterprise - 2000
31 Purchases account (Dr) - 3000
 Journal entries- Special journal
Sales return journal
Date Particular Discount Allowed Total (RM)
2018
Jan 10 Ahmad - 500
14 Fatimah - 250
31 Sales return account (Dr) - 750

Purchases return journal

Date Particular Discount Received Total (RM)
2018
Jan 12 Mahmud Enterprise - 400
20 Amirah Enterprise - 250
31 Purchases return account - 650
(Cr)
 Journal entries- Special journal
Cash receipts journal
Discount
Date Particular Cash (RM) Bank (RM)
Allowed
2018
Jan 7 Commission receive - 600
24 Sales - 250
31 Cash receipts account (Dr) - 250 600

Cash Payment journal

Discount
Date Particular Cash (RM) Bank (RM)
Received
2018
Jan 18 Salary - 400
27 Purchases - 700
31 Cash disbursement account - 700 400
(Cr)
Ledger
A ledger is a group of accounts maintained
systematically by a business
The original format of a ledger is in the form of
a T- account, therefore sometimes a ledger is
know as a T- account.
Cash account
Date Particular RM Date Particular RM
2021 2021
Jan 1 Capital (Ex) 10,000 Jan 1 Purchases (Ex) 5,000
3 Sales (Ex) 3,000 3 Salary (Ex) 2,000
31 Balance c/d 6,000
13,000 13,000
Feb 1 Balance b/d 6,000
Trial Balance
Trial balance is a list of accounts and their balances in
the ledger accounts at the end of a given accounting
period.
Trial balance is considered the basic procedure to
check whether each transaction is recorded in the
journal and transferred to the ledger correctly.
 ABC Enterprise
Trial Balance as a 31 December 2020
Particular Debit (RM) Credit (RM)
Capital 28,000
Sales 5,000
Purchases 4,000
Motor Vehicle 15,000
Buildings 30,000
Debtors @ Trade Receivables 2,000
Creditors @ Trade Payables 3,000
Inventories 1,000
Bank Loan 20,000
Salary 4,000
Commission Received 800
Insurance 800
56,800 56,800
EXAMPLE:
16 March – Purchase goods (INVENTORIES) RM2,000
cash (CASH) from Mr. Ahmad.
DR Purchase RM2,000
CR Cash RM2,000

17 March – Paying utilities (EXPENSE) bill RM1,000

through cheque (ASSET- BANK).
DR Utilities RM1,000
CR Bank RM1,000
THANK YOU FOR

ATTENTION

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