Tutorial 1 Introduction to Accounting 1 LTJ 2018

Tutorial 1

Section A

1. Define accounting. Explain the stages involved in your answer.

Accounting is the process of providing data/information to the respective users Types Amount (RM)
to help them make business decisions. It involves collection, recording, Assets bank 20000
summarising and communicating financial information/data. cash 2000
inventories 19000
2. What is the difference between accounting and bookkeeping? Motor vehicles 80000
receibales 18000
3. What do you understand about the Accounting Equation? 139000
4. Discuss why accounting data must be classified and summarised.
Liabilities Loan from bank 50000
5. Complete the gaps in the following table:
payables 15000
Assets (RM) Liabilities (RM) Equity (RM)
65000
82,000 32000 50,000
Equity Opening capital 92000
85000 15,000 70,000
Less drawing (5000)
105,000 38,000 67000
Less loss Add profit (13000)
156,900 0 156900 Capital/closing capital 74000
73,000 38000 35,000 139000

7. State what are the correct classifications for the following items? Are
6. Classify the following items into assets, liabilities and equity, then, find
they debit or credit items?
out the amount of capital:
Correct classification Dr / Cr
 Bank RM20,000
Discount received income Cr
 Cash RM2,000
(saved money) Dr cash, cr income
 Drawings RM5,000
account
 Loan from bank RM50,000
 Inventories RM19,000
Commission received income cr
 Motor vehicles RM80,000
Receivables asset dr
 Loss RM13,000
Cash from owner equity cr
 Payables RM15,000 Sales/revenue Income/revenue cr
 Receivables RM18,000 Inventory sold (cost) income cr
Remainder good:closing
You may use the following format for your answer: inventory
Last year’s remainder
Tutorial 1 Introduction to Accounting 2 LTJ 2018

Goods: opening 11. Mr John started his tailoring business on 1 January. He has no
inventory accounting knowledge and requires your help in doing up the accounts of
New purchases for the his business. He has provided the following information for the whole year
year: purchases from 1 January to 31 December.
Opening inventories 10k RM
Purchases 110k Bank balance A 75,000
Less: closing inventory Cash balance A 1,030
10k (balance=asset) SFP Sales R 86,660
Amount owing by Alex A 500
Unfinished good in Amount owing by Jessy A 250
progressing Amount owing by Gordon A 750
Cost of inventories sold R 5,150
=inventory sold (cost) Shop rental E 6,000
100k (actual goods sold Equipment A 15,000
at cost) Electricity and water E 3,880
Cost of goods sold 100k Air-conditioners A 6,000
Insurance claim income cr Amount owing to Coco Textiles L 1,500
received Interest received R 300
Carriage inwards expenses dr Bank and cash withdrawn for home use equity 12,000
Advertising expenses dr Commission paid to Kent (introduced new customers) E 2,000
Office stationery expenses dr Inventories balance A 2,900
Payables liabilities cr
Cash to owner Equity (drawings) dr Required:
Salaries expenses dr (a) Find out how much profit Mr John’s business has made for the year,
Electricity expenses dr using the Profit Determination Equation.
Rental expenses dr (86660+5150+300)-(6000+3880+2000)= 80230
(b) Find out how much capital was injected by Mr John into his business
Discount given (less expenses dr
on 1 January, using the Accounting Equation.
income)
A=101430
Insurance paid expenses dr
L=1500
Bank interest paid expenses dr
E=12000
Carriage outwards expenses dr
CLOSING CAPITAL=A-L=99930
Commission paid expenses dr OPENING CAPITAL=CLOSING+E=111930
8. Discuss the main users and their uses of accounting information.
9. Discuss the various forms of businesses.
10. Discuss the advantages and disadvantages of each type business.
Tutorial 1 Introduction to Accounting 3 LTJ 2018

Section B: Extra exercise questions (for students’ own practice) Question 2

Alan extracted the following transaction for the month of May:
Question 1
Bibi contributed RM60,000 to start a new business on 1 March, selling 1 Started the business with cash RM1,000 and bank account of
school and college textbooks. The following are transactions that occurred RM19,000 as capital.
in the month of March: 3 Bought computer RM3,600 from Syarikat Cerah Sdn. Bhd. on credit
 Paid by cheque RM20,000 for fixtures and fittings term.
 Paid by cheque RM6,000 for office equipment (i.e. computer, printer and 7 Purchased goods RM6,000 from Daya & Co on credit term.
fax machine) 9 Received cheque RM2,600 from sales on cash term.
 Purchased inventories totalling RM30,000, of which RM15,000 was paid 12 Issued a cheque RM3,000 for purchases of goods on cash term.
by cheque and the balance will be paid 2 months later 16 Issued a cheque RM5,700 to Daya & Co., as settlement of purchases
 Sales totalling RM12,000, all deposited into the bank account
above, after deducting a discount received of RM300.
(inventories sold were costing RM9,000) 17 Sales of goods RM4,000 to Era Enterprise on credit term.
 Paid staff salaries by cheque RM1,000
21 Fatimah withdrew cash RM200 for family use.
 Paid shop rental by cheque RM2,000
 Paid utilities by cheque RM500
24 Issued a cheque RM2,000 to Syarikat Cerah Sdn. Bhd. as partial
 Paid telephone by cheque RM300
settlement of amount owing.
 Paid printer ink and A4 paper by cheque RM600
27 Received cheque RM3,800 from Era Enterprise, as settlement of sales
 Withdrew RM3,000 cheque for personal use
above, after deducting discount allowed of RM200.
Required: 28 Miscellaneous expense RM280 paid by cash.
(a) Into which account was Bibi’s capital contribution of RM60,000
deposited? Calculate the balance of this account at the end of March. Required:
(b) Calculate the inventories balance at the end of March. Prepare the journal entries to show the double entries of all the transactions
(c) Prepare a listing based on the Profit Determination Equation for the above.
month of March.
(d) Prepare a listing based on the Accounting Equation as at the end of
March.
Tutorial 1 Introduction to Accounting 4 LTJ 2018

Question 3
Prepare the journal entries to show the double entries of the following
transactions of Gogo Trading in the month of March:

1 Started business with RM59,000 in the bank and RM1,000 cash.

2 Bought stationery by cheque RM750.
3 Bought goods on credit from Smart Warehouse RM10,100.
4 Sold goods for cash RM3,400.
5 Paid insurance by cash RM290.
7 Bought a computer on credit from Tech Trader RM4,000.
8 Paid miscellaneous expenses by cash RM50.
10 Sold goods on credit RM6,300 to Bina Construction.
14 Paid wages by cash RM350.
17 Paid rent by cheque RM2,250.
20 Received cheque RM4,000 from Bina Construction.
21 Paid Tech Trader by cheque RM4,000.
23 Bought goods on credit from Savemart RM2,500.
25 Sold goods on credit to Flora Trader RM6,450.
31 Paid Savemart by cheque RM1,250.