FACULTY OF BUSINESS AND MANAGEMENT

BACHELOR OF OFFICE SYSTEM MANAGEMENT (HONS)

INTERMEDIATE FINANCIAL ACCOUNTING AND REPORTING (ACC406)

GROUP PROJECT 1:
THE BOBA’S CAFE

PREPARED BY:
NUR AIN SHAHIMA BINTI SUBAIDI (2020827968)
YUZDIYATUL ATIQAH BINTI MOHD YUSOF (2020609056)
NUR ALIA NAJWA BINTI MOHD SAKRI (2020462342)
NUR SYAMIMI ATHIRAH BINTI ZULKIFLI (2020846746)

PREPARED FOR:
PN. NORLAILA BINTI MOHD DIN

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1.0 INTRODUCTION

The assignment assigned us to do a research about business and to test how far
students understanding about businesses through acquisition and organization of accounting
information in the preparation of financial statement of partnership. The partnership is a
business owned by more than one person. We aim to know how accounting principles used in
business and how the owner used the financial position statement in their business. We also
want to know about the background of the business such as who is the owner, location, what
kind of the business types they use, and how much capital used by the owner.

Therefore, we have decided to do the research on our own business that called The
Boba’s Cafe. This business provides light food and beverages that are currently attracting
people, especially teenagers and young people. Our business provided drinking water with
many flavors such as, cappuccino, latte, strawberry, Oreo, orange, avocado and another else. In
addition, we also have topping as an extra. The most famous that called “pearl” or “boba”. The
Boba’s Café located at Jalan Sultan Sulaiman Kuala Terengganu which is near with school and
the mall. Our group also aim to know more about how to start a business in partnership. The
owner of this cafe belongs to fours of member, Syamimi, Yuzdiyatul, Alia, and Shahima. The
owner decided to involve into this business and rent premise at strategic place because they
believe they can gain more profit.

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2.0 BACKGROUND OF THE ORGANIZATION

The Boba’s Café started its operation in January 2020. This business is owned by four
women which is Syamimi, Alia, Yuzdiyatul and Shahima and we are 20 years old. The idea to
open this business started when the four of us were given course work group assignments at our
university to open a business and we decided to sell various types of boba’s drink. Starting from
our assignment but this business received a very encouraging response so we decided to open a
small cafe as a first step to start our business. We decided to make a loan at the bank. We used
RM 50.000 as the beginning capital. The business located at No 15, Jalan Sultan Sulaiman,
21100 Kuala Terengganu, Terengganu.

We started the business by selling a few types of boba’s drink only. After we gains profit
from this business. We expand our business by selling more boba’s drinks. We work together to
find new ideas to create these different types of our boba’s drink and also the ideas from our
customers also and now we have 15 various type of boba’s drink at our café. Until this
November we already have four employees, two girl and two men.

The types of our business run by us is partnership. Our business operates every day from
10 am to 10 pm and will be closed on special events such as Hari Raya, Chinese New Year, Hari
Deepavali and other events. The cost is calculated by divided into three part which is capital,
wage and profit.

Our business gets our stock from our suppliers which is from Mydin Mall Sdn Bhd. The
business asset such as the machine for making drinks, furniture, refrigerator and cash register.
The estimated value of asset of The Boba’s Café is around RM 25,000. The profits earned by the
company in for one month is around RM 10,000 and the expense on worker’s wages is around
RM 1000 to each worker.

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3.0 CHARACTERISTIC OF BUSINESS

The characteristic of business is including liability, no of owner, books and accounts

keeping, business establishment and profit sharing. The BOBA’s Café is a business under
partnerships. A partnership business is formed by the agreement between two or more
individuals to carry on a business as co-owners.

The BOBA’s Café is a company which produces various type of boba’s drink and
flavors. The BOBA’s Café has a few liabilities in hand which are loans from Maybank, trade
creditors and hire purchase creditors. The BOBA’s Café also rents a shophouse in Terengganu
where it is the best industrial area with strategic place. The address is at No 22a, Jalan Dato’
Isaacs, Kampung Dalam Bata, 20000 Kuala Terengganu, Terengganu.

The BOBA’s Café is a partnership business where there are two or more people to run
this business. However, this business is set up by four young people which are Alia, Yuzdiyatul,
Shahima and Syamimi. A partnership business has limited liability if it is a limited liability
partnership liability. Each partner is not responsible or liable for another partner’s wrongdoing or
carelessness (Fatimah Abd Rauf, 2019). Further, if the business fails and the assets are
insufficient to cover the debt, the debt must have the right to take the partner’s personal property
as collateral.

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 The BOBA’s Café use bookkeeping method as their accounting method. Bookkeeping is
the recording of financial transactions, and is part of the process of accounting in business.
Transactions include purchases, sales, receipts and payments by an individual person or an
organization. Bookkeeping is the work of a bookkeeper who records the day-to-day financial
transactions of a business. They are usually writing the daybooks which contain records of sales,
purchases, receipts and payments and also document each financial transaction, whether cash or
credit, into the correct daybook.

(example of receipt)

The BOBA's cafe has a strategic location. It is located in the middle of Kuala Terengganu
which will definitely be an attraction for all groups, especially teenagers. in addition, in boba
cafe there are many facilities such as WIFI, Toilet, and places that are not crowded with people.
the cafe is also located on a flat and high ground position. will certainly not experience
landslides and will not be flooded. The BOBA’s Café was registered with the Companies
Commission of Malaysia under the Business Registration Act 1956 and 1957. The BOBA’s Café
was set up on January 2020. The reason why owners want to run up this business because they
wanted to create a new idea of drink and up to date at affordable price and come with various of
flavor. The owners also want to gain new knowledge in business, express themselves to be more
creative and earn unlimited income.

Profit sharing is one of the most efficient process that helps employees work beyond their
capabilities to perform for achieving greater results. It also increases the morale of the employee
and employee retention rate. The profit or loss will be shared by the partners according to their
profit-sharing ratio. The owners agreed to have a fair ratio which is 25 for each person due to
their work division.

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4.0 CLASIFICATION OF BUSINESS

ASSETS

Assets is the resources or things of value that are owned by a company as the result of company
transactions. There are two types of assets. It is current asset and non-current assets.

Current asset are the assets that were usually kept in the business for less than a year. It is
because the assets can convert into cash such as stock and account receivable.

Next, non-current assets are the assets in the company that were usually kept in the business
more than a year. Non-current assets can be categorized into tangible assets and intangible assets.
Example for tangible assets are cash and furniture, and for intangible assets are customer data
and trademark.

For the Boba’s Cafe have some assets. The café focused on non-current assets such as furniture,
blender machine, tables and chairs, refrigerator and cash register. According to the owner, the
value of non- current assets in The Boba’s Café is RM 40,000.

Current assets such as inventory, cash in bank and cash in hand. The value of current assets is
RM 10,000. Part of the loan the owner uses to buy stock and the other part for savings.

LIABILITIES

Liabilities is something a person or company owes, usually a sum of money. Liabilities are
settled over time through the transfer of economic benefits including money, goods, or services.
There two types of liabilities which are current liabilities and non-current liabilities.

Current liabilities which also known as short term liabilities are debt can be paid in a year. it
takes a short period to pay because of the huge value. For examples, account payable and bank
overdraft.

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In additional, non-current liabilities which also known as long term liabilities are debt cannot be
paid in year. It takes long period to pay because of the small value. For examples, long term loan
and mortgage. The Boba’s Café has non-current liability to operate the business. we decided to
owe the loan from bank. We agreed to owe Rm 50,000 with the 15% interest for 5 years. We
should to RM 1114 monthly. The loan used to start a business. Besides, a part loans are also used
to buy assets.

DRAWING

A drawing account is an accounting record kept to track money withdrawn from a business by its
owner. The money spent for the personal use.

For your information, this withdrawn money can not only be withdrawn by the owner, but the
partnership can also draw the money for their personal use.

In The Boba’s Café, one of our partnership Shahima, has used the money as much as rm 2,000
for his personal use.

In addition, the owner Athirah, draws the money from company account to pay monthly car
installment in March. The amount of money used is RM 500.00.

CAPITAL

Capital is a term for financial assets, such as funds held in deposit accounts and/or funds
obtained from special financing sources. Capital can also be associated with capital assets of a
company that requires significant amounts of capital to finance or expand. Capital is also
available from owners as well as partnerships. This can increase the company's capital to open a
business.

In The Boba's Cafe business, there are 3 partnerships. Consist of Alia, Shahima and Yuzdiyatul.
Each has invested 5 thousand per person to start this business. From that, because they are
partners in this business, they also have rights over this company.

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REVENUE

Revenue is the income generated from normal business operations and includes discounts and
deductions for returned merchandise. It is the top line or gross income figure from which costs
are subtracted to determine net income.

In The Boba’s Café, we do not rent anything or provide other services other than selling drinks
only.

EXPENSES

Expenses is the cost accrued in or required for in return and use to generate the revenue.
Expenses can be classified into operating expenses and non-operating expenses.

Operating expenses are expenses which are directly involved operating every day in a business.
For example, is selling and distribution expenses, general and administrative expenses and
financial expenses.

For the year ended 31 Dec 2020 in The Boba’s Café, rm12000 has been used to pay salaries
expenses, rm4500 for utility, rm2000 for insurance and rm1500 for rent n rates.

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5.0 THE RECORDING PROCESS OF THE BUSINESS

Every business should start with an accounting process. The accounting process begins with the
recording of business transactions and ends with the preparation of final accounts. The
accounting process included source document, journals, ledgers, trial balance, the adjustments
and financial statements.

Source Documents

During an accounting or tax audit, source documents back up the accounting journals and
general ledger as an indisputable transaction trail. Source documents are invoices, bills, receipts,
debit notes, credit notes and vouchers. The owner of business must keep the source documents
for their expenses in their business. It is because source document provides any proof of
purchase and payment which has occurred throughout the course of the business. Source
documents can also describe all the items of the transactions. For example, the amount of the
transactions, to whom, the purpose and the date of transactions was made. The source documents
must be record in accounting journal after doing the transaction because this document is
important to owner of the business to make a double check in their transactions.

(example of invoice) (example of receipt)

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Journals

Usually, the businesses will have a journal for accounting purposes. The process of recording
transactions in the journals is known as journalizing. Journals can be classified into the general
journal, purchases journal, sales journal, return inwards journal, cash payments and receipts
journal. The journals provided how much total sales for Sunday until Thursday if the owner of
business want to compare Sunday sales with Thursday sales. If the owner wants to know how
much of their monthly income was derived, they would have to total every sale of that item in
their journal. The Boba’s Cafe was practice in appropriate journals because our business
provided the accountant. One of the members in our business offered to be an accountant to
manage our business which is she must be in a cafe every working day.

(Example of general journal)

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Ledgers

Ledgers is a compilation of accounts maintained by a business. After transactions was recorded

in journals, the total will be posted to ledgers. This process is known as posting. Ledgers can be
classified into the general ledgers, sales or debtors’ ledgers and purchases or we called creditors
ledgers. General ledgers show the nominal account where revenues and expenses are recorded.
Sales account are cash and credit sales and sales returns. The ledgers can show the total of sales
to owner, but ledgers did not show the specific of customers who made paid and cash. If the
journals were not complete, it automatically affected to ledgers. It is because all the data referred
into the journals.

(example of general ledger)

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Trial Balance and Adjustment

Trial balance summarizes information from the ledgers. Trial balance was prepared at the end of
the month or when the end of accounting period. The trial balance listed the ending balance in
each general ledger account by the owner of business. The total of amount debits and credits in
each accounting are supposed to match because it will be recorded correctly in the books of
accounts. If the debits and credits column of the trial balance are the same, it proves that the
debit entries and credit entries were matched. The adjustment was made if there any errors
transaction in business. Some of these accounting adjustments are intended to be reversing
entries and they are to be reversed as of the beginning of the next accounting periods.
Accounting adjustments can also apply to prior periods when the company has adopted a change
in accounting principle.

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 (example of trial balance)

Financial Statements

Finally, financial statements were prepared by obtaining information from the list of balances in
the trial balance. Financial statements are to provide information about the results of operations,
financial position, and cash flows of an organization. In short, financial statements can be
presented for individual subsidiaries or business segments, to determine their results at a more
refined level of detail and the financial statements have a number of purposes, depending upon
who is reading the information and which financial statements are being perused.

(example of financial balance)

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6.0 ADVANTAGES OF ACCOUNTING RECORDING PROCESS

a) Help in taxation matters

 In Malaysia, if your company make a lot of profit, your company need to paid a various
tax like income tax. Total of the tax depends on the account maintained by your
management for settlements of taxation matters. For example, The Boba’s Café need to
pay for the taxes if our business gains more profit than amount assigned to pay taxes. So,
we can know the right amount of the taxes based on our accounting recording process.

b) Decision making

 When there is a proper recording process, it is easier for us to making a decision after
knowing about accounting information of our business. We can plan for the future
activities such as to open more branches to grow our business.

c) Replacement of memory

 Recording proses help us to remember about our business financial details on our
financial statement. It is difficult for us to remember everything about our business
financial such as asset, expenses for the café, profit and losses if there is no financial
process recorded.

d) Preparation of financial statement

 Recording process allow us to do a comparison the financial result of one year with
another year easily. We can know the current year’s profit of our business and comparing
with the previous year. Also, we can analyze the systematic recording of all transactions
according to the policies of the entity.

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e) Preparation of financial statement

 Recording process make it easier to prepare a financial statement for our business. From
the financial statement, we know the total of business modal, expenses such as utilities,
rant, and maintenance and also our profit or loss statement.

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DISADVANTAGES OF ACCOUNTING RECORDING PROCESS

a) Manipulation of Account

 Manipulation will be happening if the person who manage the account is untrustworthy
and not responsible for their work. They might manipulation the account by cheating
about the financial information. For example, in the transactions may show the money is
spend for the business purpose, but actually the money is for personal use.

b) Express accounting information in term of money

 In book of account, non-financial transaction cannot be given effect to the books. The
accountant only measurable the transactions of financial nature. For example, if we want
to buy a café thing like flavour of drinks, plastic glass and sugar, we cannot put the list in
the book of accounting. We only can put amount and the price list.

c) Provide insufficient information

 By making a recording process, information may be not accurate, this is because there
will be information that is overlook by the accountant and this will be causing the entire
of recording process be affected. As example, there are excess spending in the expenses
and the excess is actually a purchase on milk that are recorded. It may lead to a
insufficient information on financial statement.

d) Maybe Manipulated

 Information presented by accounting recording may be manipulated as per the desire of

management. They may change the figures and present misappropriated data for their

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 interest. Profit may be shown high by them to attract equity shareholders or they may
reduce it to evade tax.

e) Accounting recording deals with overall profitability

 Accounts of business are made by a way which shows only overall profitability. It does
not show net profit per product, or per department or according to job. Thus, to find it
difficult to all activities which do not give profit. So, it creates inefficiency in business
activities.

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7.0 CONCLUSION

The accounting cycle provides a series of processes concerning the gathering,

communication and the processing of the financial information. The accounting process is
divided into several parts that affect the maintenance the account of the organization. Financial
information of an organization is presented properly in reports, known as financial statements.

Before preparing a financial statement, various details and information about the business
transactions of the organization must be collected. After that, the obtained information will be
recorded and then organize to come up with a proper report. The business transaction forms a
complete cycle and several steps are taken to complete a financial statement. This complete
chain of forming a proper business transaction and financial statement in called as a recording
process.

Every recording process in accounting are starting with identifying and analyzing
business transactions, then maintaining the records of transactions in a journal, then posting a
transaction to a ledger, continue with unadjusted trial balance, then adjusting entries, and
followed by adjusted trial balance, do financial statements, and then closing entries and finally
post-closing trial balance. Once the transaction goes through all the steps, it becomes free of all
the flaws and the discrepancies. Hence, anyone could take a look into it and eventually a proper
ad a perfect account is maintained.

Finally, we all hope to further develop this store business towards a higher level. We will
also add more such as cakes and pastries so that customers can enjoy it.

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8.0 REFERENCES

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https://www.coursehero.com/file/41290391/ACC406-GROUP-ASSIGNMENTdocx/.
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COUNSTABLEMOLEPERSON2631'S. (n.d.). COURSE HERO. Retrieved from
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%20are%20assets%20of,portion%20of%20the%20balance%20sheet.
HAYES, A. (2020, oct 21). investopedia. Retrieved from
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%20something%20a,usually%20a%20sum%20of%20money.&text=Recorded%20on
%20the%20right%20side,%2C%20warranties%2C%20and%20accrued%20expenses.
KEEPING, B. (2019, MAY 25). EasyBooks. Retrieved from
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RAUF, A. (2015). FINANCIAL ACCOUNTING FOR NON-ACCOUNTING STUDENT.
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