Contract Ref: ##########Course No: CIS3303Author: KannaSubject ContentMy Learning Plan 2: Basic principles in recording business transactions1.0IntroductionForall businesses, recordinaccountintransactionsisi!"ortantinorderto#ee" trac# of and understand the $nancial health of the co!"an%. An accountintransactionisde$nedasa"art of anaccountins%ste!thatisarecordof!one% either s"ent to "a% bills, bu% in&entor%, and so forth, or !one% recei&edfro! custo!ers, loans, debt collection, and so forth. 'ransactions are recordedt(ice, as a debit in one account and a credit to a corres"ondin account. 'his"rocess is #no(n as )double entr%* and is the acce"ted "ractice to account forall $nancial transactions. 1.1Learning Outcomes+"on co!"letin this cha"ter, %ou (ill be able to: Classi$cation of accounts in ter!s of nature. Anal%se the relationshi" bet(een the accountin e,uation and double-entr% boo##ee"in Record transactions in the a""ro"riate leder accounts usin the double-entr% boo##ee"in s%ste! and balance o. leder accounts at the end of an accountin "eriod2.0 Classication o! accounts2." Assets #n asset is a resource controlled by an entity as a result o! paste$ents and !rom %&ic& !uture economic benet are e'pected to(o% to t&e entity. )&e economic benet embodied in an asset &ast&epotential tocontributedirectlyorindirectlytot&e(o%o!cas& and cas& e*ui$alents to t&e entity.)&e !uture benets may (o% into t&e entity in $arious %ays suc&asa+ ,sed in t&e production o! goods and ser$iceb+ -'c&anged !or ot&ers assetsc+ ,sed to settle liabilitiesd+ .istributed to o%ners o! t&e entity2.2 /iabilities# liability is t&e present obligation o! an entity arising !rom paste$ents/ t&esettlement o! %&ic&is e'pectedtoresults inanout(o% !rom t&e entity o! resources embodying economicbenets. #n essential elements is t&at t&ere is a present obligation. )&e obligation may be settled by:0ersion: 1.0 1ae 1 of 12 3ate :45652017 3:20:00 A8Contract Ref: ##########Course No: CIS3303Author: Kannaa+ Payment o! cas& 0b+ )rans!er o! ot&ers assets0c+ Pro$isions o! ser$ices0d+ 1eplacements o! an obligations %it& ot&er obligations 0or e+ Con$ersion o! t&e obligations to entity 2.2 9,uit%-*uity is t&e residual interest in t&e assets o! an entity a!ter deducting all its liabilities. 3or disclosure purpose/ e*uity may be sub4classied to s&o% !unds contributed by s&are&olders/ retained prots and ot&er reser$es.2.5 Inco!eIncome includes bot& re$enue and gains. 1e$enue arises in t&e course o! t&e ordinary acti$ities o! an entity. -'amples o! re$enueare sales/ !ees/ interest income and rental income.Income and gains gi$e rise to an increase in economic benet during t&e accounting period. )&ese may be in t&e !orm o! in(o%sor en&ancements o! assets or decreases o! liabilities t&at results in increases in e*uity/ ot&er t&an t&ose relating to contributions !rom e*uity participants.2.6 9:"enses -'penses include bot& losses as %ell as e'penses t&at arise in t&eordinary course o! business. -'penses include cost o! sales/ %ages and depreciation. -'penses decrease t&e economic benet during t&e accounting period in t&e !orm o! out(o% or depletions o! assets or t&e incurrence o! liabilities t&at results in decreases in e*uity/ ot&er t&an t&ose relating to contributions or payments !rom or to e*uity participants.0ersion: 1.0 1ae 2 of 12 3ate :45652017 3:20:00 A8Contract Ref: ##########Course No: CIS3303Author: Kanna2.7 1ractice ,uestions: 2.7." MC82: #ssets #. are !uture economic benets.B. are e'isting debts and obligations.C. possess ser$ice potential. .. are t&ings o! $alue used by t&e business in its operation #ns%er9-'planation: # : #n asset is a resource controlledby an entity as a result o! past e$ents and !rom %&ic& !uture economic benet are e'pected to (o% to t&e entity. 2.7.2 MC82: ;&ic&o!t&e!ollo%ingisnott&e%aytosettleobligation >eeping or accounting ma>es it easier to accurately prepare nancial statements directly !rom t&e boo>s o! account and detect errors.-ac& account s&ould be s&o%n on a separate page. )&e double entry system di$ides eac& page into t%o &al$es. )&e le!t4&and side o! eac& page is called t&e debit side/ %&ile t&e rig&t4&and side is called t&e credit side. )&e title o! eac& account is %ritten across t&e top o! t&e accounts at t&e center..ouble entry rules !or accounts are:#ccounts )o record-ntry in t&e account#ssets / #n increase .ebit0ersion: 1.0 1ae 3 of 12 3ate :45652017 3:20:00 A8Contract Ref: ##########Course No: CIS3303Author: Kanna-'pense# decreaseCredit Liabilities/-*uity /1e$enue#n increase Credit# decrease.ebit 2.".2 1rocess $nancial transactions into the double entr% boo##ee"ins%ste!;or#ed e:a!"le 1. 'he "ro"rietor starts the $r! (ith R8 2,000 in cash on 1 s #ns%er9-'planation: C : .ouble entry system istransactions are recorded in terms o! debits and creditsso its t%o aspects. 2.2.2 MC82: ;&ic&o! t&e!ollo%ingjournal entriescorrectlyrecords t&e cas& purc&ase o! plant and e*uipment?-. .r Purc&ase ledger control accountCr Plant and -*uipment 3. .r Cas&Cr Plant and -*uipment@. .r Plant and -*uipmentCr Purc&ase account A. .r Plant and -*uipmentCr Casns%er9-'planation: . : Plant and e*uipment increases so.t. cas& decreases so Cr.5.0 Record transactions in the a""ro"riate leder accounts5."." 9nter transactions into the leders. 1. 'he "ro"rietor starts the $r! (ith R8 2,000 in cash on 1 balance o! 1M660 at t&e start o!t&e%ee>. .uringt&e%ee>t&e!ollo%ingtransactionsoccur: .ay " S&e sells goods on credit !or 1MFG7 .ay2S&erecei$esac&e*ue!or1M500!romacreditcustomer .ay 2 S&e purc&ases oHce e*uipment %it& a list price o!1M"/000 but recei$es a "0I discount !or payingimmediately by c&e*ue Ao% muc& does Eenny &a$e in t&e ban> at t&e end o! t&e%ee>?#. 1M2/F27B. 1M500C. 1M60 .. 1M"27 #ns%er9-'planation: c : balance %illdecreases t&e amount o! loan also decreases 6.".5 MC82: ;&en cas& is paid/ t&e possible e=ect isi+ #n increase in liabilitiesii+ #n increase in assetsiii+ #n increase in incomei$+ #n increase in e'penses#.i++ and ii+B.ii+ and iii+C.i+ and iii+..ii+ and i$+ #ns%er9-'planation: . : cas& paid could be buy ne% assets so ii+ is correct and it could be pay e'penses also so i$+ is correct. 0ersion: 1.0 1ae 11 of 12 3ate :45652017 3:20:00 A8Contract Ref: ##########Course No: CIS3303Author: Kanna6.".6 MC8": Capital injectionbyt&eo%ner %ill &a$e%&ic&e=ect ?#. Increase in protB. increase in e'penseC. increase in liabilities.. increase in amount belonging to t&e o%ner#ns%er9-'planation: . %&en capital increases it %ill increase t&e amount due to o%ners. 7.0 Supplementary Materials Malaysian Financial Reporting Standards (MFRS) Related Magazines, Internet Sites, Newspapers, Video, Movie, CD-Ro, !t"ersG.0 1e!erences #$N%&$'$Rand()angC"ingC"oo(*+,+)-Financial ReportingStandardsfor Malaysia-Mc.raw-(ill- /ood and Sangster (*++0), Business Accounting 1, ,,t" edition, F1 2rentice (allF.0 #ssignments1lease refer to Course (or# $le.0ersion: 1.0 1ae 12 of 12 3ate :45652017 3:20:00 A8