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Hanie Sayang
Hanie Sayang

accounting

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CHAPTER TWO: ACCOUNTING CONCEPT AND PRACTICE KAL1013 BBA EXEC.(T.HAJI)
Objectives Describe the assumptions, principles and constrains related to practice of accounting State the accounting equation & define each element of the equation Explain how business transaction can be stated in term of the resulting changes in the basic elements of the accounting equation Describe the financial statement of a proprietorship and explain how they interrelate KAL1013 BBA EXEC.(T.HAJI)
OUTLINE Generally Accepted Accounting Principles Accounting assumptions Accounting principles Accounting constraints Financial Statement Transaction & Accounting Equation KAL1013 BBA EXEC.(T.HAJI)
Generally Accepted Accounting Principles KAL1013 BBA EXEC.(T.HAJI) Accounting Assumptions Accounting Principles Accounting Constraints
Accounting Assumptions KAL1013 BBA EXEC.(T.HAJI) Monetary Unit assumption Separate business Entity assumption Enables accounting to measure economic events. The activities of the owner and the company should be kept separate.
Accounting Assumptions KAL1013 BBA EXEC.(T.HAJI) Going Concern assumption Time period assumption The business will continue For the conceivable future. Final accounts are prepared at regular intervals. Known as accounting period /financial year.
Accounting Principles KAL1013 BBA EXEC.(T.HAJI) Historical Cost Principle Revenue Recognition Principle All assets must be recorded at cost. Revenue is recognized only after the goods have been delivered or service rendered to customers.
Accounting Principles KAL1013 BBA EXEC.(T.HAJI) Matching Principle Full Disclosure Principle Profit is recognized by matching the income of the period with all expenses incurred in earning such income. Financial statements should provide sufficient / relevant information to influence users decision making.
Accounting Constraints KAL1013 BBA EXEC.(T.HAJI) Materiality Principle Conservatism Principle An item is said to be material if it is sufficiently important to affect our judgment of the true position of the firm. When in doubt, choose the solution that will be least likely to overstate assets and income.
Financial Statement KAL1013 BBA EXEC.(T.HAJI) Income Statement Owners Equity Statement Balance Sheet Cash Flow Statement
Before we proceed KAL1013 BBA EXEC.(T.HAJI) Tindakan pengusaha menggunakan wang syarikat untuk perbelanjaan utiliti peribadi tidak boleh dianggap sebagai belanja utliti syarikat Di dalam meyediakan akaun syarikat, kita perlu mengandaikan bahawa syarikat akan menjalankan operasinya secara berterusan Pada dasarnya, hasil perlu direkod apabila ia diperoleh, contohnya apabila titik jualan telah berlaku tanpa mengambil kira pembayaran telah dibuat ataupun tidak oleh pelanggan
KAL1013 BBA EXEC.(T.HAJI) Syarikat perlu mendedahkan segala aktiviti ekonomi yang releven untuk proses membuat keputusan di dalam penyata kewangan Syarikat mungkin memeiliki aset-aset tertentu seperti perabut yg berusia puluhan tahun tetapi masih boleh digunakan & masih baik keadaannya. Dalam keadaan ini, syarikat mungkin merekod nilai aset tersebut tidak setara dengan nilai saksamanya. Walaubagaimanapun, nilai aset yang direkod adalah sangat kecil dan tidak memberi kesan kepada keseluruhan penyata kewangan Belanja perlu dipadankan dengan period di mana ianya dilibatkan, bukannya dibayar
KAL1013 BBA EXEC.(T.HAJI) Andaian ini menyatakan bahawa aktiviti ekonommi yang boleh diukur di dalam nilai matawang sahaja yang akan direkod Kos adalah nilai yang perlu digunakan bagi merekod nilai aset kerana ia merupakan nilai yang releven dan bolehdipercayai Pilihan perlu dibuat agar cenderung kepada keputusan yg tidak menyebabkan aset dan hasil terlebihcatat
Purpose of Financial Statements KAL1013 BBA EXEC.(T.HAJI) FRS 101 2004 : To provide information about the financial position , performance and cash flows of an enterprise that is useful to a wide range of users in making economic decisions. Show the results of managements stewardship of the resources entrusted to it.
Income Statement KAL1013 BBA EXEC.(T.HAJI) Jannah Company Income Statement For The Year Ended .. Sales Revenue xxxxx Less: Expenses (xxxx) Profit xxxx
Owners Equity Statement KAL1013 BBA EXEC.(T.HAJI) Jannah Company Statement of Owner Equity For The Year Ended .. Opening capital xxxxx (+/-) Profit / Loss xxx Additional Capital xxx xxxxx (-) Drawings (xxxx) Ending Capital xxxxxx
Balance Sheet KAL1013 BBA EXEC.(T.HAJI) Jannah Company Balance Sheet As At .. Fixed Assets xxxxxx Current Assets xxxxx Less: Current Liabilities (xxxx) Working Capital xxxx Net Assets xxxxxx Financed by: Owners Equity xxxxx Long Term Liabilities xxxxx xxxxx
Cash Flow Statement KAL1013 BBA EXEC.(T.HAJI) Jannah Company Cash Flow Statement For The Year Ended .. Cash From Operating Activities xxxx Cash From Investing Activities xxxx Cash From Financing Activities xxxx Net increase in cash xxxxx Opening balance xxx Closing balance xxxxx
Transaction & Accounting Equation KAL1013 BBA EXEC.(T.HAJI) Transactions Economic events Eg: Sell goods to customers. Pay utility bills Receive cash from sales of good Pay dividend to shareholders
Cont KAL1013 BBA EXEC.(T.HAJI) The Accounting Equation: Assets = Liabilities + Owners Equity Resources that are expected to be of benefit in the future Claims held by the owners Economic obligations (debts) payable to outsiders
Cont KAL1013 BBA EXEC.(T.HAJI) Increase and decrease in owners equity Owners Equity Investment Revenues Expenses Withdrawals
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Owner started the business with RM 40,000 cash. Assets = Liabilities + Owners Equity = RM 40,000 RM 40,000 + RM0 RM40,000 RM40,000
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Purchase office equipment with cash RM 20,000 . Assets = Liabilities + Owners Equity = RM40,000 RM40,000 + RM0 RM40,000 RM40,000 (-) RM 20,000 (+) RM 20,000
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Purchase motor vehicles on credit RM 80,000 . Assets = Liabilities + Owners Equity = RM40,000 RM40,000 + RM 80,000 RM120,000 RM120,000 (+) RM 80,000
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Receive cash from customer for service rendered RM6,000. Assets = Liabilities + Owners Equity = RM120,000 RM40,000 + RM80,000 RM126,000 RM126,000 (+) RM 6,000 (+) RM 6,000
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Pay utility bills for RM 500 . Assets = Liabilities + Owners Equity = RM126,000 RM46,000 + RM80,000 RM125,500 RM125,500 (-) RM 500 (-) RM 500
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Received invoice from advertising company for the advertisement made, RM 3,500 . No payment made. Assets = Liabilities + Owners Equity = RM125,500 RM45,500 + RM80,000 RM125,500 RM125,500 (+) RM 3,500 (-) RM 3,500
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Received loan from bank RM 50,000 . Assets = Liabilities + Owners Equity = RM125,500 RM42,000 + RM83,500 RM175,500 RM175,500 (+) RM 50,000 (+) RM 50,000
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Pay part of the amount owed to creditor for motor vehicle purchased RM 20,000 . Assets = Liabilities + Owners Equity = RM175,500 RM42,000 + RM133,500 RM155,500 RM155,500 (-) RM 20,000 (-) RM 20,000
Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Owner took out RM 10,000 for his own use. Assets = Liabilities + Owners Equity = RM155,500 RM42,000 + RM113,500 RM145,500 RM145,500 (-) RM 10,000 (-) RM 10,000
KAL1013 BBA EXEC.(T.HAJI) Thank You

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Topic 2

  • 1. CHAPTER TWO: ACCOUNTING CONCEPT AND PRACTICE KAL1013 BBA EXEC.(T.HAJI)
  • 2. Objectives Describe the assumptions, principles and constrains related to practice of accounting State the accounting equation & define each element of the equation Explain how business transaction can be stated in term of the resulting changes in the basic elements of the accounting equation Describe the financial statement of a proprietorship and explain how they interrelate KAL1013 BBA EXEC.(T.HAJI)
  • 3. OUTLINE Generally Accepted Accounting Principles Accounting assumptions Accounting principles Accounting constraints Financial Statement Transaction & Accounting Equation KAL1013 BBA EXEC.(T.HAJI)
  • 4. Generally Accepted Accounting Principles KAL1013 BBA EXEC.(T.HAJI) Accounting Assumptions Accounting Principles Accounting Constraints
  • 5. Accounting Assumptions KAL1013 BBA EXEC.(T.HAJI) Monetary Unit assumption Separate business Entity assumption Enables accounting to measure economic events. The activities of the owner and the company should be kept separate.
  • 6. Accounting Assumptions KAL1013 BBA EXEC.(T.HAJI) Going Concern assumption Time period assumption The business will continue For the conceivable future. Final accounts are prepared at regular intervals. Known as accounting period /financial year.
  • 7. Accounting Principles KAL1013 BBA EXEC.(T.HAJI) Historical Cost Principle Revenue Recognition Principle All assets must be recorded at cost. Revenue is recognized only after the goods have been delivered or service rendered to customers.
  • 8. Accounting Principles KAL1013 BBA EXEC.(T.HAJI) Matching Principle Full Disclosure Principle Profit is recognized by matching the income of the period with all expenses incurred in earning such income. Financial statements should provide sufficient / relevant information to influence users decision making.
  • 9. Accounting Constraints KAL1013 BBA EXEC.(T.HAJI) Materiality Principle Conservatism Principle An item is said to be material if it is sufficiently important to affect our judgment of the true position of the firm. When in doubt, choose the solution that will be least likely to overstate assets and income.
  • 10. Financial Statement KAL1013 BBA EXEC.(T.HAJI) Income Statement Owners Equity Statement Balance Sheet Cash Flow Statement
  • 11. Before we proceed KAL1013 BBA EXEC.(T.HAJI) Tindakan pengusaha menggunakan wang syarikat untuk perbelanjaan utiliti peribadi tidak boleh dianggap sebagai belanja utliti syarikat Di dalam meyediakan akaun syarikat, kita perlu mengandaikan bahawa syarikat akan menjalankan operasinya secara berterusan Pada dasarnya, hasil perlu direkod apabila ia diperoleh, contohnya apabila titik jualan telah berlaku tanpa mengambil kira pembayaran telah dibuat ataupun tidak oleh pelanggan
  • 12. KAL1013 BBA EXEC.(T.HAJI) Syarikat perlu mendedahkan segala aktiviti ekonomi yang releven untuk proses membuat keputusan di dalam penyata kewangan Syarikat mungkin memeiliki aset-aset tertentu seperti perabut yg berusia puluhan tahun tetapi masih boleh digunakan & masih baik keadaannya. Dalam keadaan ini, syarikat mungkin merekod nilai aset tersebut tidak setara dengan nilai saksamanya. Walaubagaimanapun, nilai aset yang direkod adalah sangat kecil dan tidak memberi kesan kepada keseluruhan penyata kewangan Belanja perlu dipadankan dengan period di mana ianya dilibatkan, bukannya dibayar
  • 13. KAL1013 BBA EXEC.(T.HAJI) Andaian ini menyatakan bahawa aktiviti ekonommi yang boleh diukur di dalam nilai matawang sahaja yang akan direkod Kos adalah nilai yang perlu digunakan bagi merekod nilai aset kerana ia merupakan nilai yang releven dan bolehdipercayai Pilihan perlu dibuat agar cenderung kepada keputusan yg tidak menyebabkan aset dan hasil terlebihcatat
  • 14. Purpose of Financial Statements KAL1013 BBA EXEC.(T.HAJI) FRS 101 2004 : To provide information about the financial position , performance and cash flows of an enterprise that is useful to a wide range of users in making economic decisions. Show the results of managements stewardship of the resources entrusted to it.
  • 15. Income Statement KAL1013 BBA EXEC.(T.HAJI) Jannah Company Income Statement For The Year Ended .. Sales Revenue xxxxx Less: Expenses (xxxx) Profit xxxx
  • 16. Owners Equity Statement KAL1013 BBA EXEC.(T.HAJI) Jannah Company Statement of Owner Equity For The Year Ended .. Opening capital xxxxx (+/-) Profit / Loss xxx Additional Capital xxx xxxxx (-) Drawings (xxxx) Ending Capital xxxxxx
  • 17. Balance Sheet KAL1013 BBA EXEC.(T.HAJI) Jannah Company Balance Sheet As At .. Fixed Assets xxxxxx Current Assets xxxxx Less: Current Liabilities (xxxx) Working Capital xxxx Net Assets xxxxxx Financed by: Owners Equity xxxxx Long Term Liabilities xxxxx xxxxx
  • 18. Cash Flow Statement KAL1013 BBA EXEC.(T.HAJI) Jannah Company Cash Flow Statement For The Year Ended .. Cash From Operating Activities xxxx Cash From Investing Activities xxxx Cash From Financing Activities xxxx Net increase in cash xxxxx Opening balance xxx Closing balance xxxxx
  • 19. Transaction & Accounting Equation KAL1013 BBA EXEC.(T.HAJI) Transactions Economic events Eg: Sell goods to customers. Pay utility bills Receive cash from sales of good Pay dividend to shareholders
  • 20. Cont KAL1013 BBA EXEC.(T.HAJI) The Accounting Equation: Assets = Liabilities + Owners Equity Resources that are expected to be of benefit in the future Claims held by the owners Economic obligations (debts) payable to outsiders
  • 21. Cont KAL1013 BBA EXEC.(T.HAJI) Increase and decrease in owners equity Owners Equity Investment Revenues Expenses Withdrawals
  • 22. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Owner started the business with RM 40,000 cash. Assets = Liabilities + Owners Equity = RM 40,000 RM 40,000 + RM0 RM40,000 RM40,000
  • 23. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Purchase office equipment with cash RM 20,000 . Assets = Liabilities + Owners Equity = RM40,000 RM40,000 + RM0 RM40,000 RM40,000 (-) RM 20,000 (+) RM 20,000
  • 24. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Purchase motor vehicles on credit RM 80,000 . Assets = Liabilities + Owners Equity = RM40,000 RM40,000 + RM 80,000 RM120,000 RM120,000 (+) RM 80,000
  • 25. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Receive cash from customer for service rendered RM6,000. Assets = Liabilities + Owners Equity = RM120,000 RM40,000 + RM80,000 RM126,000 RM126,000 (+) RM 6,000 (+) RM 6,000
  • 26. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Pay utility bills for RM 500 . Assets = Liabilities + Owners Equity = RM126,000 RM46,000 + RM80,000 RM125,500 RM125,500 (-) RM 500 (-) RM 500
  • 27. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Received invoice from advertising company for the advertisement made, RM 3,500 . No payment made. Assets = Liabilities + Owners Equity = RM125,500 RM45,500 + RM80,000 RM125,500 RM125,500 (+) RM 3,500 (-) RM 3,500
  • 28. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Received loan from bank RM 50,000 . Assets = Liabilities + Owners Equity = RM125,500 RM42,000 + RM83,500 RM175,500 RM175,500 (+) RM 50,000 (+) RM 50,000
  • 29. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Pay part of the amount owed to creditor for motor vehicle purchased RM 20,000 . Assets = Liabilities + Owners Equity = RM175,500 RM42,000 + RM133,500 RM155,500 RM155,500 (-) RM 20,000 (-) RM 20,000
  • 30. Transaction Analysis KAL1013 BBA EXEC.(T.HAJI) Owner took out RM 10,000 for his own use. Assets = Liabilities + Owners Equity = RM155,500 RM42,000 + RM113,500 RM145,500 RM145,500 (-) RM 10,000 (-) RM 10,000