NOTES ADJUSTMENT

Saturday, 24 September, 2022 1:35 PM

Purchase 2000 supplies but only 500 of supplies on hand (1500) Dt Supplies Expense
Kt Supplies
Insurance premium expired Dt insurance expense
(prepaid expenses) Kt prepaid insurance
Receive for advertising services expected to be completed by Dt unearned revenue
dec 31 (unearned revenue) Kt service revenue
Perform services that were not billed to clients Dt acc receivable
(accrued revenue) Kt service revenue
depreciation Dt depreciation expenses
Kt accumulated depriciation
Debtor had gone bankrupt and unable to pay his debt Dt bad debt expenses
(hutang lapuk) Kt account receivable
Utility expenses incurred but not paid prior Dt utility expenses
Kt utility payable
Purchase a one-year malpractice insurance policy (?/12) Dt insurance expense
Kt prepaid insurance
Purchase supplies on account Dt supplies
Kt account payable
A company acquires a machine by signing a note Dt machinery
Kt note payable
Paid supplier on account Dt acc payable
Kt cash
Unearned revenue represented which is advance for services to Dt unearned revenue
be provided in three month (2/3 x ?) Kt service revenue
Fees earned but unbilled Dt acc receivable
Kt service revenue
Accrued expense Dt expense
Kt expense payable

ACCOUNT Page 1
 ACC FOR MERCHANDISING
Monday, 3 October, 2022 8:53 PM

Business document
- Official receipt (dpt cash)
- Sales/purchase invoice
- Credit memo (sales return)
- Debit memo (purchase return)
- Promissorry note
- Check
- Cash register slip

ACCOUNTING FOR MERCHANDISING BUSINESS (an enterprise that buys and sells goods to earn a profit)
- Wholesalers sell to retailers
- Retailers sell to consumer
Primary source of revenue - SALES
Different - have a finished goods inventory / need to determine the COGS

• For example, many grocery items, such as

milk, must be sold within their expiration
dates of a week or two.
In contrast, jewelry stores often carry
expensive items that are often displayed
months before being sold to customers
DIFF BETWEEN SERVICE AND MERCHANDISING IN FINANCIAL STATEMENT
- merchandise is sold
(sales), and its cost is an
expense called cost of
merchandise sold
- Merchandise on hand (not
sold) merchandise
inventory. - current asset

( SALES REVENUE - COST OF GOODS SOLD = GROSS PROFIT - OPERATING BUSINESS = NET INCOME / LOSS )

Merchandising Businesses Transactions

- Purchases ( CASH / CREDIT ) PURCHASE CASH CREDIT
- Sales ( CASH / CREDIT ) dt inventory Dt inventory
- Discounts - trade ( buy in bulk) / cash (pay within period) Kt Cash Kt acc payable
- Returns ( SALES / PURCHASE) - ALLOWANCES (ganti dgn harga)
- Transportation cost (FOB) PURCHASE CASH CREDIT
- shipping point ( paid by buyer) dt merchandise inventory, kt cash (freight in)
RETURNS / Dt cash Dt acc payable
- destination (paid by seller) dt delivery expense, kt cash (freight out) ALLOWANCES Kt inventory Kt inventory
PURCHASE Dt acc payable
INVENTORY SYSTEM DISCOUNT Kt cash/inventory
PERPETUAL (berterusan) PERIODIC (berkala) TRANSPORTATION Dt inventory
Kt cash / acc payable
- Record when sales occurs - Record COGS at the end of period
- Records continuously - Do not keep records of the goods CASH SALE Dt cash Dt cost of goods sold
- Company determine COGS on hand Kt sales Kt inventory
(record sales at selling price) (record COGS)
CREDIT SALE Dt acc receivable Dt COGS
- Kt sales Kt inventory
(record sales at selling price) (record COGS)

ACCOUNT Page 2
Inventori awal + belian - inventori akhir = kos barang dijual
BELIAN + FREIGHT IN - RETURN - PURCHASE DISCOUNT = NET PURCHASE
SALES - RETURN = NET SALES
OTHER EXPENSE + FREIGHT OUT SALES DICSOUNT

ACCOUNT Page 3
NOTES PERIODIC INVENTORY
Tuesday, 4 October, 2022 4:38 PM

"merchandise inventory" Account "Purchases" Account

- Keep track of inventory - Physical count @ end of period

1 Invested RM 350000 and equipment worth RM40000 in the business Dt cash 350k / equipment 40k
(to record initial investment) Kt capital 390k
2 Purchased on account merch RM200000. Terms 2/10 n/30 FOB Dt purchases
shipping point Kt account payable
(to record purchased goods)
Sold for cash RM5000 (to record sales) Dt cash kt sales
5 Returned worth RM75 of deffective merchandise purchased (2) Dt acc payable
(to record goods returned) Kt purchases returns and allowances
7 Sold on account RM100 to customers credit terms 3/10 2/15 FOB Dt acc receivable
destination Kt sales
(to record sales)
9 Paid the freight charges on the transaction made (2) Dt freight in
(to record payment for freight) Kt cash
10 Paid in full the purchases made (2) Dt acc payable
(to record payment of purchases) Kt cash / purchase discount
11 Made additional purchases for cash RM150k Dt purchases
(to record additional purchases) Kt cash
12 Borrowed money from the bank, issued a promissory note Dt cash
(to record obtain loan) Kt notes payable

ACCOUNT Page 4
NOTES MCQs
Thursday, 6 October, 2022 9:24 AM

Separate legal entity into share of stock Dominant body

- corporation - MASB
Balance sheet - list all AB LEH Affects owner equity Closing entries are made;
S. owner equity - Maw + UB - Am = Mak - Investment - To transfer net income/loss and
S Finan position - assets (-) liabilities - Withdrawal drawing to the owner's capital
S profit or loss - REV (-) EXP - Revenue account
S cash flow- ope (-) invest (+) finan= cash balance hb - expenses - Revenue/expense - zero balance
Normal debit (AB) / credit balance (LEH) SPL, SOE, SFP
Represents a defferal Record in chronological order
- Prepaid insurance - journal
Unearned rent 1200, failed record 600 rent earned Process of transfer ori entry to specific
- Liabilities OVERSTATE, net income account(ABLEH)
UNDERSTATE (600) - posting
Would be extended to the balance sheet columns Adjusting - process updating the accounts
- Drawing ( expense/revenue --> income at the end of the period
statement column)
Would not be included in post-closing trial balance Accrual basis (false)
- Fees earned (only ALE acc yg masuk) - Revenue when received
- expense when paid

ACCOUNT Page 5
CORRECTION OF ERRORS
Friday, 21 October, 2022 4:39 PM

(unintentional mistake)
WHEN? WHY ? WHAT ?
1. Journalising • Lack of Type 1 Type 2
knowledge/experience • Errors affecting/revealed by the • Errors NOT affecting/revealed by
→ during entries are first
(ignorance) Trial Balance the Trial Balance
made
One sided error • TWO- sided error
• Carelessness
→ posting to ledger • Total Debit balance ≠ Total Credit • Total Debit balance = Total
• Fraud* (intentional balance Credit balance
→ during balancing off
changing/ excluding/ • Might be caused by: • Might be caused by:
(for special journal) including certain or • Overcasting • Error of omission
2. Ledger additional entries) • Omission of one entry • Error of commission
• Recording two different • Error of Principle
→ during entries are made amounts • Error of original entry
→ at the time of balancing • Recording the double entry • Error of reversal of entry
in the same side of accounts. • Compensating error
→ during extraction to Trial
Balance

The total of Service revenue Dt cash 15650 Dt service revenue 50 HOW ?

account should be RM15600, not Kt service revenue 15650 Kt cash 50 - Recruitment (select person
RM15650 (overcasting).
with appropriate
RM250 paid by Joned to settle his Tak record satu Dt cash 250 background and skills)
account was not recorded in the Kt acc receivable 250 - Proper training
Cash book (omission of one entry). - Regular checking and
Purchases of supplies RM456 has Dt supplies 546 Dt cash 90 supervision
been posted in the cash book as Kt cash 546 Kt supplies 90
RM546 (transposition error in one
account → recording two
different amount).
Revenue received RM233 was Dt cash 233 Dt cash 233
debited in Cash book and also Dt revenue 233 Kt revenue 233
debited in Service revenue account
(recording the double entry in the
same side of accounts).

RM288 paid by Joned has been Dt Cash 288 Dt acc receivable Johan 288
posted to Johan’s account. Kt acc receivable Johan 288 Kt acc receivable Joned 288
(error of commission)
Revenue earned RM1,200 but not Blum rekod Dt Acc receivable 1200
yet billed was not recorded in the Kt revenue 1200
books. (error of omission)
A motor vehicle sold for RM13,000 Dt cash 13000 Dt fee revenue 13000
was credited to the Fee Revenue Kt fee revenue 13000 Kt motor vehicle 13000
account. (error of principle)
Purchases of Equipment on cash Dt cash 975 Dt equipment 1950
RM975 was debited to Cash book Kt equipment 975 Kt cash 1950
and credited to Equipment
account. (error of reversal of
entry)
Cash sales RM324 has been Dt cash 342 Dt sales 18
entered in the books as RM342. Kt sales 342 Kt cash 18
(transposition error → error of
original entry)
Both A/c Payable account and Over state Dt acc payable 200
Equipment account had been Kt equipment 200
overcast by RM200. (compensating
error)

ACCOUNT Page 6
ACC FOR COMPANIES
Thursday, 3 November, 2022 10:50 AM

STATUTORY COMPANIES REGISTERED COMPANIES

- Under act of Parliament - Registered under the
- Badan berkanun Companies Act 2016
- Cth: MARA, Malaysian
Timber Industry Board,
Water Works Authority

CCM ----> Companies Commission of Malaysia

(Berhad/Bhd)

Member are responsible

For the liabilities of company
Sdn Bhd

ACCOUNT Page 7
PARTNERSHIP

PARTNERSHIP DEFINED CHARACTERISTICS

"An association of two or more persons to - Voluntary Association
carry on as co-owners a business for PROFIT" - Pertnership Agreement
- Agreement, expressed or implied - Limited Life
- Operated for making a profit - Unlimited Liability
- Members must be co-owners - Co-ownership of property
- Mutual Agency
- Taxation
ADVANTAGES
- Easier and less costly to establish
- Partners able to operate with more
flexibility
- Income not subject to taxation at
partnership level

ACCOUNT Page 8
FINANCIAL STATEMENT
ANALYSIS
Thursday, 24 November, 2022 10:18 PM

USERS
- Internal stakeholder (employees/managers)
- Stockholders/creditors
- Supplies/customers
- Regulatory bodies
- Government taxation
FUNCTION
- MANAGER = planning/organizing business
- BANKS = to improve loan application
- VENDORS = determine credit term/credit limit
- SHAREHOLDERS = predict investment return/ future risk
BENEFITS
- Generate more meaningful information for making decision
- Analyse relationship between financial statement components and the trend
- Measure company's performance/ to predict potential risk in the future
COMPARISONS
- INTRA COMPANY = compare a company for several years before
- INTER COMPANY = compare with other company's performance
- INDUSTRIAL AVERAGE = average performance of the companies in similar industries

PERCENTAGE ANALYSIS

HORIZONTAL VERTICAL COMMON-SIZE

By percentage in related items By percentage of each component to the total within a Useful to compare the current with prior periods
single statements - All items are normally expressed in percentages

ACCOUNT Page 9
ACCOUNT Page 10
Practice subjective
Thursday, 24 November, 2022

Explain the nature of subsidiary ledgers, and give two examples.

List of individual subaccounts and amount with a common characteristic; linked to a controlling
account in the general ledger
= account receivable
= account payable

Briefly distinguish between a perpetual inventory system and a periodic inventory system.

What is meant by the term "double-entry accounting"?

Double entry accounting is a system of recording business transactions where each transaction
affects at least two accounts and requires an equal debit and credit.

i) What was the original cost of the machine?

190000+16000 = 206000
Ii) What will the book value be on December 31,2015?
(190000/16000)/2 = RM 87000

Which amount should be included in the amount of cash reported in Kowal's balance sheet at
December 31,2013? Explain your answer.

Give definition of partnership. List 2 advantages and 2 disadvantages of the partnership form of
business organization.
Partnership is an association between two or more persons who join to carry on a trade or
business for profit
Advatages = easy to start/easier to get capital
Disadvantages = business risk is share among all partners/ unlimited liability

Provide 3 internal control procedures for efficient cash management

- Handling cash is separated from recordkeeping of cash
- Cash receipt are promptly deposited in a bank
- Cash disbursement are made by check

- Excess inventory decreases this cash flow by holding the cash in goods form
- Excess inventory represents a loss of revenue especially if the products have an

ACCOUNT Page 11
 - Excess inventory represents a loss of revenue especially if the products have an
expiration date and no longer viable once the date hass passed.
Disadvantages of a partnership when compared to a sole proprietorship
- It is hard to find suitable partners where there is a possibility of conflict between partners in
the future
- Partnership is dissolved upon the death of a partner.

ACCOUNT Page 12
Multiple step profit or loss
Friday, 2 December, 2022 7:35 PM

ACCOUNT Page 13