FACULTY OF BUSINESS AND MANAGEMENT

BACHELOR OF BUSINESS ADMINISTRATION (HONS.)

INTERNATIONAL BUSINESS

BA246

TITLE : ACCOUNTING INFORMATION OF KEDAI BUKU FOKUS.

SUBJECT : ACC406 – INTERMEDIATE FINANCIAL ACCOUNTING AND

REPORTING.

LECTURER’S NAME : SIR SHAZALI BIN SHAHARUDIN

STUDENT’S NAME : ZULHANIS BINTI ZOLEKAFELI (2019475804)

NUR ALYA BATRISYIA BINTI VIRA (2019476034)

NUR ALIAA AFIQAH BINTI ZUBAIDI (2019488668)

NUR RASHIDAH BINTI MUHAMMAD ASRI

(20198315888)

GROUP: BA2461B

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ACKNOWLEDGEMENT

Primarily, I would thanks to God for being able to complete my

assignment with ease until success. Then, I would love to say my gratitude to
my lecturer Sir Shazali Bin Shaharudin who gave me guidelines that is major
contributor towards the completion this assignment. Moreover, I would express
my thankful and grateful to both of my parents who have been besides me
through thick and thin, gave me motivation in physically and mentally and
support me financially in order to complete this assignment. Lastly, I would
thank to all of members of this group who contribute together that helps in
many ways that make this group assignment complete within the time given.

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 TABLE OF CONTENT

NO. CONTENT PAGE

1. Introduction 4
2. Background of The Organization 5
3. Classification of Business Items 6 – 10
4. Characteristics of The Business 11
5. The Recording Process of The Business 12 & 13
6. Strength and Weaknesses of The Business 14 & 15
7. Conclusion 16
8. References

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1.0 INTRODUCTION

The assignment assigned for us to do a research on how a certain business

use the accounting principles and how the owner applies it on his business in order
to prepare financial position statement. We want to know whether the business in our
research apply and use the correct accounting system. Therefore, we have decided
to do a research on a sole trading or sole proprietorship business called Kedai Buku
Fokus. This business offers various of service and product such as office stationery,
all kind of book, sport and art equipment, computer accessories, magazines,
newspaper, printing and photostat services, laminating services, binding services, fax
services, and stamp services. Since one of member are often visit this store so we
have decided to choose Kedai Buku Fokus.

Our group’s research aim is to know on how the business is formed. We also
want to know about the background of the business contains the owner’s name, the
types of the business and its characteristics. Based on our interview, we know that
Kedai Buku Fokus is a sole proprietorship and was register under Registration of
Businesses Act 1956 since 2017. This business caters to a lot of group of people,
schools and individuals.

Encik N.Maruthaiyan, the owner who manage the business after his
retirement decided to involve in this area of business because he knows he will gain
more profits much better that other types of businesses. This type of business is had
less competitors and have high demand. Another thing that we have known based on
this assignment is the person who organised the business need to pay personal
income tax based on profits made. Also, he needs to make the accounting much
simple. The objective of sole proprietorship is mainly on making profits.

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2.0 BACKGROUND OF THE ORGANIZATION

Kedai Buku Fokus started its operation in 2017. Encik N.Maruthaiyan, 56

years old is the owner of the business start the business after retired from being a
sub agent. In the middle of 2017, Encik N.Maruthaiyan make loan with the bank. He
used RM 90,000 as beginning capital. The business located at No. 5, Jalan Besar
Lukut, Kedai Buku Fokus, 71010 Lukut, Port Dickson, Negeri Sembilan.

He started the business by selling office stationery only. After he gains profit
from the business, he expands his service by delivering goods that have been paid
by schools or office. He also offered printing, photostat, laminating, and much more.
Encik N.Maruthaiyan be an agent for Berjaya Company that sells stamp that
designed based on customer’s need.

The types of the business run by Encik N.Maruthaiyan is sole proprietorship..

The business operates every day from 9 am to 9 pm and will be closed on special
events such as Hari Raya Aidilfitri, Hari Deepavali, Chinese New Year and other
events. The cost is calculated by divided it into three part which is capital, wage and
profit.

The company get its stocks from its suppliers which is from Syarikat
Perniagaan Ricky Sdn Bhd. The business assets such as the printing machine,
laminate machine, van and others. The estimated value of asset of Kedai Buku
Fokus right now is around RM 67,000. The profit earned by the company in for one
month is around RM 14,000 to RM 35,000 and the expense on workers ‘s wages is
around RM1100 to each worker.

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3.0 CLASSIFICATION OF BUSINESS ITEMS

Business items can be classified into assets, liabilities, drawing, capital, revenues and
expenses.

3.1 Assets

Assets can be defines as the things that are owned by a business which have future
economic value that can be measured and can be expressed in currency. There are
two types of assets that is non-current assets, current assets. Non-current assets can
be categorized in to tangible and intangible assets.

Non-current assets are the resources owned by a business and were keep in the
business for more than a year and several accounting period. There are two types of
non-current asset which were tangible and intangible assets. Tangible assets are the
one having have physical features such as vehicles and machinery while intangible
assets are the assets that have no physical dimension but still have value on it. For
example, patents and trademark.

Current assets are the assets that were usually kept in a business for less than a
year. This is because these assets can easily convert into cash. For example,
account receivable and stocks.

Kedai Buku Fokus have some assets. Kedai Buku Fokus’s non-current assets such
as premise, vehicles which is a van, furniture like display cabinet, machinery like
printing machine, laminate machine, fax machine, and cashier machine. According to
its owner, the value of the non-current assets only in Kedai Buku Fokus is already
around RM 132 000.

Besides, current assets such as its account payable, inventories, cash in hand and
cash in bank is owned by Kedai Buku Fokus. Its account payable was mostly the
community of Sekolah Kebangsaan Lukut and Sekolah Menengah Kebangsaan Raja
Jumaat. Its owner said that Kedai Buku Fokus usually provide office stationeries
using credit transaction. The amount usually will be paid by the debtors after the
goods have been sold.

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2.2 Liabilities

Liabilities are the financial obligation of a business or an amount of money owed to

its creditors. Liabilities can also be classified as non-current liabilities and current
liabilities. If there are an increase of liability then it will be recorded on the credit side
of the ledger.

Non-current liabilities are the debts that maybe cannot be paid in 1 year. It will need
long period or more than one year to be paid because of the huge value. For
example, long term loan and mortgage.

In addition, current liabilities are the debts that can be paid within year in short
duration of time because of its small value which can be afford by a business. For
example, account payables, bank overdraft and accrued expenses.

Kedai Buku Fokus non-current liabilities is loan to support the business. The owner,
Encik N.Maruthaiyan informed that he makes loan cost around RM 90,000. Due to
the business income and revenues that are not consistent, the pay back for loan will
takes time.

Kedai Buku Fokus also does have current liability which is account payable. Its
account payable is their current suppliers. The suppliers are Syarikat Perniagaan
Ricky Sdn Bhd. This is where this business gets its daily and monthly stocks. The
business’s stocks for a month were bought on credit and the owner will paid it at the
end of the month. The value was around RM 20 000.

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2.3 Drawings

The act of withdrawing cash or assets from the business by the owner for personal
use is classified as drawings.

Drawings happens when withdrawing cash or goods from a business account. Also,
including anything that is considered as a business asset, such as products or
equipment that is removed from the business for personal use by the owners.

Any type of drawings will reduce the capital or owner’s equity of a business.
However, drawings are not considered a business expense.

RM 30,000 have been takes from the business for his personal use, it was the
highest amount that he takes. On the normal day, he will take around RM 500 as life
expenses. Besides, he also allowed his kids to take stationery or prints, binding,
laminating and even photostat their homeworks or assignments.

2.4 Capital

Capital can be defined as wealth in the form of money or other assets owned by a
person or organization for starting a company or investing, represented by its assets
less liabilities. Capital can also be defined as stock or ownership in a company.

Capital might be cash that were held in deposit accounts, tangible machinery like
machinery, storage buildings, and more.

When Kedai Buku Fokus established, the beginning capital was RM 90 000. After a
few years, Encik N.Muthaiyan brought some of his own assets into the business such
as vehicle.

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2.5 Revenues

Revenues represent the monetary value of certain goods and services that have
been supplied to the customers. Owner’s equity will increase if the revenues is
increase. Revenues can be classified into operating revenues and non-operating
revenues.

Operating revenues are the revenues that were earned from the main business
activity. For example, a boutique gains its revenues when clothes that offered sold.

Non-operating revenues are the revenues received from unrelated or different from
main activity of the business.

Kedai Buku Fokus received operating revenues from its daily business transaction.,
This business able to achieve around RM 500 to RM 1,200 each day which make
their operating revenues for a month around RM 35,000.

Kedai Buku Fokus also received non-operating revenues when some of the assets
were sold. The owner obtains non-operating revenues when he able to sell one of
business old photostat machine for RM 1,500.

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2.6 Expense

Expense is the cost incurred in or required for something in return and used to
generates the revenue. Expenses can be classified into operating expenses and non-
operating expenses.

Operating expenses are expenses which are directly involved in the business
everyday operations such as selling and distribution expenses, general and
administrative expenses and financial expenses.

While non-operating expenses have the opposite meaning that is, the expenses
which are not directly involved in daily business transaction. For example, lawsuit
settlement expense.

Operating expenses in a month for Kedai Buku Fokus is worker’s salary for RM 2,200
, insurance expense RM 900, utility expense for RM 160 and general expense for
RM 125.

Kedai Buku Fokus’s non-operating expenses loss on disposition of assets,

interest expense and tax expense.

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4.0 CHARACTERISTIC OF THE BUSINESS

The type of business entered by Kedai Buku Fokus is a sole proprietorship company.
Sole proprietorship can be easily established. A sole proprietorship can easily be
distinguished from other business type because the business usually has the word
‘enterprise’ behind its name, but there are some of the business did not use the word
enterprise just like Kedai Buku Fokus.

As a sole proprietorship, the business is registered in Suruhanjaya Syarikat Malaysia

(SSM) under Registration of Businesses Act 1956 since 2017. Kedai Buku Fokus have only
one owner who is Encik N.Maruthaiyan. The business opening capital comes from bank loan
make by the owner. The business was handled by Encik N.Maruthaiyan with the help of his
workers.

Next, Kedai Buku Fokus is a business that provides various products and services to
individuals, school, and companies. Recently, Kedai Buku Fokus is taking tender to provide
its service to a school in Port Dickson, Negeri Sembilan which is Sekolah Kebangsaan Lukut
and Sekolah Menengah Kebangsaan Raja Jumaat.

Kedai Buku Fokus assets and liabilities are unlimited, it means the owner of the
business liable for all the liabilities. If Encik N.Maruthaiyan does not have abilities to pay
back the debts, his properties can be take. Assets and liabilities of the business depends on
profit or loss earns by the owner.

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5.0 The Recording Process of The Business

The accounting cycle is a collective process that contains identifying, analysing, and
recording the accounting events of the business. When a transaction occurs, the
series of step starts, and it will end with its inclusion in the financial statements.

5.1 Source Documents

First, a source document is the original document record containing the details of a
business transaction. It captures the key information about a transaction, such as the
date, names of the parties involved, amounts paid, and the substance of the
transaction. For example, the invoice by supplier is a company’s source document for
the recording of goods purchased supported by the company’s purchase order and
receiving ticket. Kedai Buku Fokus only use a certain of documents such as
purchase order, bank statements and invoices in his transaction business while other
documents were rarely applied.

5.2 Books of Prime Entry / Journal

A book of prime entry or journal is a detailed account that records all the financial
transactions of a business. The function for it is used for future reconciling and
transfer to other official accounting records. The types of journal in accounting is
general journal, purchase journal, sales journal, cash receipts journal, cash payment
journal, return outwards journal, and return inwards journal. Kedai Buku Fokus did
not practice recording the event occurs in appropriate journal because there was no
accountant appointed, the owner just manages the business himself which is he just
write down the list of its in his note book manually.

5.3 Ledgers
Ledger or much more familiar as T-accounts, contains credits on the right side debits
on the left side. Also, there is another format of presenting ledger is a three-column
ledger account. The owner of Kedai Buku Fokus, Encik N.Maruthaiyan also did not
record the transaction occurs in the ledger, he only writes it down on normal
notebook.

5.4 Trial Balance

Trial balance is an accounting report that is a list of all the general ledger accounts,
both revenue and capital. The balances of all ledgers are compiled into debit and
credit account column totals that are equal. The business always prepares a trial
balance periodically, usually after a year. Due to Encik N.Maruthaiyan does not

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record the transaction of his business in the appropriate journal and also ledger, he
cannot prepare the trial balance.

5.5 Adjusted Entries

Adjusted entries can be explained as the journal entries used to identify income or
expenses that occurred but are not accurately displayed in the business records. It
can be use at the end of an accounting period to make sure debits and credits are
balance, such as in accruals and prepayments, depreciation and inventory
adjustments. Encik N.Maruthaiyan said that he rarely do adjustment in his business
but sometimes when he need it he used his note book just to write down the changes
in the adjustments and recalculate the value again.

5.6 Adjusted Trial Balance

Buku Fokus did not practice any proper accounting system since from the business
started. Due to that, the business also does not have adjusted trial balance.

5.7 Financial Statement

The financial statement of the business can be used as a measurement of

the business’s performance after the operations either it was a success or failure.
Due to limited time, Encik N.Maruthaiyan can’t practice this statement. His business
also can’t afford to appoints someone who are qualified in preparing the financial
statement for him. Thus, he needs to calculate the transaction monthly that occured.

5.8 Reversing Entries

The last step in the accounting cycle is reversing entries. Reversing entries or known
as reversing journal entries, used to reverse or cancel out any adjusting
journal entries made from the end of the previous accounting period. It was an
optional journal, but It essential in keeping track of the expense so that the
transaction will be allocated properly between the two periods. Encik N.Maruthaiyan
the owner of Kedai Buku Fokus did not practices this entries in his business.

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6.0 Strength and Weaknesses of The Business

6.1 Strength

i. Simplest Form.
Sole proprietorship that is Encik N.Maruthayiyan entered are the easiest and
simplest form of the business. It was easy to manage and not much hassle.

ii. Assets of The Business

Assets that owned by Kedai Buku Fokus that contains non-current assets and
current asset such as, the vehicle which is van, furniture like display cabinet,
machinery like printing machine, laminate machine, fax machine, and cashier
machine. The business gains a high amount that is about RM 302 000.

iii. The Beginning Capital

Encik N.Maruthaiyan brought in RM 90,000 from bank loan that he make to start
the business and support funds and investment. It was a sufficient amount to the
business due to able to buy other assets in expanding the business.

iv. Customer

Kedai Buku Fokus has regular customer that helps in consistent cash flow. For
example, tender with Sekolah Kebangsaan Lukut and Sekolah Menengah
Kebangsaan Raja Jumaat that usually buy things in a big scale.

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6.2 Weakness

i. Does not use systematic accounting method and principles.

The business did not practice a proper accounting system to record its transaction so
that the business able track down revenues, loses and their financial position.
Because of that, Encik N.Maruthaiyan need to spend time to calculate the profit or
loss of his business.

ii. The number of workers is not enough.

The business has only two workers who are in charges in daily operations of the
business. In the future, this problem can cause difficulties for Kedai Buku Fokus
operates smoothly.

iii. Customer.
The number of the regular and royal customer of Kedai Buku Fokus are in a small
group only, that is people around the community.

iv. Promotion and offer.

Encik N.Maruthaiyan need to do a promotion and offer activities to make sure an

increasing number of the business’s revenues. The business has a good potential to
do more promotional activities since the competitor are not higher around the location
of the business.

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7.0 Conclusion

In conclusion, applying the accounting concept in the business is an essential as it

provides quantitative information to the overview of the business performance. Accounting is
a service activity. Keeping our accounting records clean and up to date is very important in
making sure our business relevant in today business environment that are much more
complex and dynamic.

Proper accounting gives more benefits to the business as it helps in evaluating the
performance of business, helps business to be statutory compliant, build business goal
setting and helps to manage and monitor cash flow. In order to manage a business smoothly
in daily business activities accounting is a must as it can helps in its future growth of the
business. So, Kedai Buku Fokus need to apply accounting system in our managing of
business.

In my opinion, Encik N.Maruthaiyan need to find and appoints someone who have
qualifications, knowledge and skills in helping him applying accounting system properly in
the management of the business to ensure that Kedai Buku Fokus have a good
management and finance system. This will give not only short-term benefits but also long-
term benefits to Kedai Buku Fokus to run smoothly for a long time. Besides, the business
needs to boost more revenues by increasing its non-operating transactions. Last but not
least, the owner also needs to do various of the promotion activities so, the business lasted
for a long time.

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 REFERENCES

Buku : Nama akhir ( penulis ), tahun ( 2019 ), tajuk lengkap ( condong ). Tempat
diterbitkan ( Malaysia ) : syarikat penerbitan

Laman Web : Nama akhir ( penulis ), Tarikh/ tahun sahaja ( 2019, November ). Tajuk
artikel (condongkan). Retrieved from (http:// www.)

Nama akhir ( diinterview ) : Encik N.Maruthaiyan, November 9, 2019

Abd Rauf, Fatimah, Abu, Amla & Mahmud, Radziah (2015). Financial Accounting for Non-
Accounting Students (Fifth Edition). Malaysia: Syarikat penerbitan

. For example: (J. Smith, personal communication, May 17, 2008

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