GROUP NO: 5

CLASS: L3

SUBJECT: HFT10203 BASIC ACCOUNTING

TITLE: CASE STUDY 2

NAME OF LECTURER: DR AMIRA BINTI JAMIL

SUBMISSION DATE: 15/06/2023

NO. NAME MATRICS NO

1 NURUL SYUHADA BINTI SHAHIDAN H22A0327

2 SITI NUR SYAHIRAH BINTI ABU BAKAR H22A0103

3 CHE SYAHIRAH BINTI DAUD H22A0523

4 NUR AIN BINTI ANG TUNG HOH H22A0665

5 MUHAMMAD NUR AIMAN BIN MAHIDI H22A0829

6 MUHAMMAD DANIAL BIN NOR AZALI SHUKRI H22A0747

 TABLE OF CONTENT

NO CONTENT PAGES
1 ABSTRACT

2 1.0 INTRODUCTION

3 2.1 JOURNAL ENTRY

4 2.2 ACCOUNT/LEDGERS

5 2.3 TRIAL BALANCE

6 2.4 STATEMENT OF THE PROFT AND LOSS

7 2.5 BALANCE SHEET STATEMENT

8 2.6 THE USEFULNESS OF THE STATEMENT OF

PROFIT AND LOSS
9 2.7 THE USEFULNESS OF BALANCE SHEET
STATEMENT
10 3.0 CONCLUSION

11 4.0 REFERENCES
 ABSTRACT

The main purpose our group doing this assignment to apply the basic accounting subject
(HFT10203) through Case Study 2 prepared by our lecturer. Our lecturer name of this subject is Dr.
Amira Binti Jamil. Our group members consist of six students who have different background and
course. Although it is possible to discuss by face to face, but we still strive to complete this
assignment successfully. By that, our group leader has discussed to divide their respective tasks to
simplify the way to complete. Furthermore, what we get from this assignment is about the basic of
accounting that needed in company or business. In this situation, a group leader has an important role
to make an instruction and ensure that each group members complete their task according to their own
respectively. There are three objectives obtained in this assignment report. Firstly, to analyze data in
case study. The second objective is to identify and understand the transaction happened in Noah’s
business. Finally, the last objectives is to guide and help the business to improve their skills and have
a systematic plan according to the business transactions.
1.0 INTRODUCTION

Accounting is considering as a language business. The main role of accounting is to provide

information about business wealth, financial positions and results of operations. The business
need accounting because it provides information on business operation. In this case, accounting is
important thing in the company to manage finance.

Accounting also plays a vital role in running a business because it helps you track income and
expenditures, ensure statutory compliance and provide investors, management and government
with quantitative financial information which can be used in making business decisions. There are
three key financial statements generated by your record which is the income statement provides
you with information about profit and loss, the balance sheet gives you a clear picture on the
financial positions of tour business on a particular date, the cash flow statement is a bridge
between the income statement and balance sheets and reports the cash generated and spend during
a specific period of time.

The accounting equation is considered to be the foundation of the double entry accounting
system. On a company's balance sheet, it shows that a company's total assets are equal to the sum
of the company's liabilities and shareholders' equity. Based on this double-entry system, the
accounting equation ensures that the balance sheet remains "balanced," and each entry made on
the debit side should have a corresponding entry (or coverage) on the credit side. The financial
position of any business, large or small, is assessed based on two key components of the balance
sheet: assets and liabilities. Owners' equity, or shareholders' equity, is the third section of the
balance sheet. The accounting equation is a representation of how these three important
components are associated with each other. The accounting equation is also called the basic
accounting equation or the balance sheet equation. While assets represent the valuable resources
controlled by the company, the liabilities represent its obligations. Both liabilities and
shareholders' equity represent how the assets of a company are financed. If it's financed through
debt, it'll show as a liability, and if it's financed through issuing equity shares to investors, it'll
show in shareholders' equity. The accounting equation helps to assess whether the business
transactions carried out by the company are being accurately reflected in its book and accounts.

This accounting also have an element in the financial statements which is assets, liabilities,
equities, revenue and expenses. Assets include cash and cash equivalents or liquid assets, which
may include Treasury bills and certificates of deposit. Accounts receivables are the amount of
money owed to the company by its customers for the sale of its product and service. Inventory is
also considered an asset. Assets is the economic resources that are under the control of the
business. Assets is also what we have to generate benefit and income from operations in future.
The long-term assets can be expected to last longer than one year while the short term is other
assets can be convert to cash and normally within one year only. Regarding liabilities matter,
liabilities are what a company typically owes or needs to pay to keep the company running. Debt,
including long-term debt, is a liability, as are rent, taxes, utilities, salaries, wages, and dividends
payable. it is an amount due or the business entity's obligations to other parties. Liabilities consist
of notes payable, accounts payable and other liabilities that not fall under accrued salaries which
is salaries payable to employees and accrued taxation to payable to inland revenue board
(LHDN). However, liabilities are enforceable by laws. So, if necessary, a business could be
forced to sells all the assets to pay or settle any debts that the company have.

Furthermore, about the equities, the owners cannot to be claim all of the assets of the business
entity because it is limited to the contribution to a business together with the profit and loss. Share
holders' equity is a company's total assets minus its total liabilities. Shareholders' equity
represents the amount of money that would be returned to shareholders if all of the assets were
liquidated and all of the company's debt was paid off. Retained earnings are part of shareholders'
equity and are equal to the sum of total earnings that were not paid to shareholders as dividends.
Think of retained earnings as savings since it represents a cumulative total of profits that have
been saved and put aside or retained for future use. Therefore, income is also the elements in
financial statements because it generated from a successful business operation and from the cash
sales. Last but not least, expenses are about outflows of cash or others assets in the process of the
process to earning revenue. For example, in wages, salaries, rent and insurance.
2.0 BUSINESS TRANSACTION

Details of the business transaction:

October 1st :Noah started business with a capital of RM 80,000

3rd :Bought goods from Karl on credit RM20,000

4th :Sold goods to Darrsh RM25,000

5th :Cash purchases RM25,000

7th : Cash sales RM15,000

9th :Goods returned to Karl RM2,000

10th : Bought furniture for RM15,000

11th : Cash paid to Karl RM12,000

12th :Goods returned by Darrsh RM3,000

14th :Goods taken by Noah for personal use RM3,000

15th :Cash received from Darrsh RM12,000

16th :Took loan from Mike RM30,000

17th :Salary paid RM5,000

18th :Bought stationery for RM1,000

19th :Amount paid to Mike on loan account RM18,000

20th :Interest received RM4,000

2.1 JOURNAL ENTRY

A journal entry is used to record a business transaction in the accounting record of a business. A
journal entry is usually recorded in the general ledger; alternatively, it may be recorded in a subsidiary
ledger that is then summarized and rolled forward into the general ledger. The general ledger is then
used to create financial statements for the business. The logic behind a journal entry is to record
every business transaction in at least two places( known a double entry accounting)

DATE TRANSACTION ACCOUNTS DEBIT(RM) CREDIT(RM)

Oct 1 Noah started business Cash 80,000 -

with capital RM80,000
Capital - 80,000

Oct 3 Bought goods from Goods 20,000 -

Karl on credit
RM20,000 Karl - 20,000

Oct 4 Sold goods to Darrsh Darrsh 25,000 -

RM25,000
Goods - 25,000

Oct 5 Cash purchases Goods 25,000 -

RM25,000
Cash - 25,000

Oct 7 Cash sales RM15,000 Cash 15,000 -

Goods - 15,000

Oct 9 Goods returned to Karl Karl 2,000 -

RM2,000
Goods - 2,000

Oct 10 Bought furniture Furniture 15,000 -

RM15,000
Cash - 15,000
Oct 11 Cash paid to Karl Karl 12,000 -
RM12,000
Cash - 12,000

Oct 12 Goods returned by Goods 3,000 -

Darrsh RM3,000
Darrsh - 3,000

Oct 14 Goods taken by Noah Drawings 3,000 -

for personal use
RM3,000 Goods - 3,000

Oct 15 Cash received from Cash 12,000 -

Darrsh RM12,000
Darrsh - 12,000

Oct 16 Took loan from Mike Cash 30,000 -

RM30,000
Loan from Mike - 30,000

Oct 17 Salary paid RM5,000 Salary 5,000 -

Cash - 5,000

Oct 18 Bought stationery for Stationery 1,000 -

RM1,000
Cash - 1,000

Oct 19 Amount paid to Mike Loan from Mike 18,000 -

on loan account
RM18,000 Cash
- 18,000
Oct 20 Interest received Cash 4,000 -
RM4,000
Interest - 4,000
2.2 POSTING TO LEDGER ACCOUNTS

Ledger account an account contains a record of business transactions. It is separate record within the
general ledger that is assigned to a specific asset, liability, equity item, revenue type, or expense type.

There are some rules of double entry state:

1.Asset: when assets increases, debit the asset a/c, when assets decreases, credit the asset a/c.

2.Capital: when capital increase, credit the capital a/c, when capital decreases, debit the capital a/c.

3.Liability: when liability increases, credit the liability a/c, when liability decreases, debit the liability
a/c.

4.Revenue: when revenue increases, credit the revenue a/c, when revenue decreases, debit the revenue
a/c.

5.Expenses: when expenses increases, debit the expenses a/c, when expenses decreases, credit the
expenses a/c.

The Rules of Double Entry:

Step 1: Analyzing the nature of the transaction

Step 2: Deciding the accounts to be used

Step 3: Recording the debit and credit entries

Noah’s Business Transaction:

Cash Account

RM RM

Oct 1 capital 80,000 Oct 5 Goods 25,000

7 Goods 15,000 10 Furniture 15,000

15 Darrsh 12,000 11 Karl 12,000

16 Loan from Mike 30,000 17 Salary 5,000

18 Stationery 1,000

20 Interest 4,000 19 Loan from Mike 18,000

31 Balance c/d 65,000

141,000 141,000

Nov 1 Balance b/d 65,000

Capital Account

RM RM

Oct 31 Balance c/d 80,000 Oct 1 cash 80,000

80,000 80,000

Nov 1 Balance b/d 80,000

 Goods Account
RM RM
Oct 3 Karl 20,000 Oct 4 Darrsh 25,000
5 Cash 25,000 7 Cash 15,000
12 Darrsh 3,000 9 Karl 2,000
14 Drawings 3,000

31 Balance c/d 3,000

48,000 48,000
Nov I Balance b/d 3,000

Darrsh Account
RM RM
Oct 4 25,000 Oct 12 Goods 3,000
15 Cash 12,000

31 Balance c/d 10,000

25,000 25,000
Nov 1 Balance b/d 10,000
 Karl Account

RM RM
Oct 9 Goods 2,000 Oct 3 Goods 20,000
11 Cash 12,000

31 Balance c/d 6,000

20,000 20,000
Nov 1 Balance b/d 6,000

Loan from Mike Account

RM RM
Oct 19 Cash 18,000 Oct 16 Cash 30,000

31 Balance c/d 12,000

30,000 30,000
Nov 1 Balance b/d 12,000

Furniture Acoount
RM RM
Oct 10 Cash 15,000 Oct 31 Balance c/d 15,000
15,000 15,000

Nov 1 Balance b/d 15,000

Drawings Account
RM RM
Oct 14 Goods 3,000 Oct 31 Balance c/d 3,000
3,000 3,000
Nov 1 Balance b/d 3.000
 Salary Account
RM RM
Oct 17 Cash 5,000 Oct 31 Balance c/d 5,000
5,000 5,000

Nov 1 Balance b/d 5,000

Stationery Account

RM RM
Oct 18 Cash 1,000 Oct 31 Balance c/d 1,000
1,000 1,000

Nov 1 Balance b/d 1,000

Interest Account

RM RM
Oct 31 Balance c/d 4,000 Oct 20 Cash 4,000
4,000 4,000
Nov 1 Balance b/d 4,000
2.3 TRIAL BALLANCE

Particulars Amount Amount

(Debit) (cash)

Capital - 80,000
Karl - 6,000
Interest - 4,000
Loan - 12,000
Sales - 40,000
Return Purchase - 2,000
Purchase 42,000 -
Cash 65,000 -
Barsh 10,000 -
Furniture 15,000 -
Drawings 3,000 -
Salaries 5,000 -
Stationery 1,000 -
Return Sales 3,000 -

Total 144,000 144,000

Trial Balance of Mr. Noah on Oct

2.4 STATEMENT OF THE PROFIT AND LOSS
A company’s sales and expenses for a given time period, usually a month or a year, are
summarised in a profit and loss (P&L) account, also known as an income statement. The profit and
loss account’s main function to display the company’s net income or net loss, which is computed by
deducting all costs account can evaluate a company’s financial performance. Profit and loss accounts
include important detail about a company’s financial performance, such as whether it is earning a
profit or not by generating more revenue than it is spending on expenses. This data can be helpful in
determining trends in the company’s financial performance over time and gauging its overall
profitability. To analyze a company’s financial performance. A profit and loss account can give us
insight into how well a company is faring financially. A business is earning a profit if it is bringing in
more money than it is paying out in expenses. From the other hand, it is operating at a loss if it incurs
more expenses than it does revenue.

It is also helpful to compare financial performance to industry benchmarks using a profit and
loss account. A profit and loss account can be used to contrast a company’s financial performance
with industry averages or with its historical performance. This might assist the business in
determining the arcas in which it is performing better or worse then its competitors or previous
results. The corporation can find possibilities to increase its financial performance by examining this
data and making the required adjustments to its business decisions. Business can make wise business
decisions by evaluating competing companies. In order to make wise business decision, profit and
loss statements can offer useful information. For instance, if a business is continuously profitable, it
can be a good idea to think about growing the company or investing in new machinery. However, if a
corporation is regularry losing money, it may need to alter its operations or business strategy in order
to boost its financial performance.

The profit and loss statement is really helpful for guiding predections and budgets. Profit and
loss accounting can provide useful information for predicting and budgeting. A corporation can make
a budget that reflects anticipated revenues and expenses for the upcoming year by reviewing historical
financial performance. This can aid businesses in more efficient resource management and operational
decision-making. For instance, if a business routinely charges high operational costs in areas like
marketing and advertising, salaries, rent, and utilities, it is likely that these costs will account for a
sizable portion of the budget for the business in the future. This indicates that in order to continue
operating, the company may need to devote a large amount of its resources to these costs. On the
other hand, a business may have more room in its budget to spend funds to other areas, like research
and development or expansion, id its operational costs are consistently low. You may determine a
company’s normal expenses and make educated predictions about its future financial performance and
expenses by continuously reviewing its profit and loss account. This can be helpful for those with an
interest in the financial statement and future prospects, such as creditors and investors.
2.5 BALANCE SHEET STATEMENT

Financial statements or financial reports are formal records of the financial activities of a
business, individual or other business balance sheet statement are shown in the table below:

RM RM RM
Fixed Assets:
15,000
Furniture

Current Assets:
Goods
3,000
Debtors
10,000
Cash
65,000
Salary
5,000
83,000
Less: Current liabilities 6,000
Creditors

Working Capital 77,000

62,000

Financed by
Capital:
80,000
Balanced:
20,000
LESS: Net Loss Drawings 3,000

(23,000)
Purchase Return 57,000
Sales Return 2,000
3,000
62,000
2.6 THE USEFULNESS OF THE STATEMENT OF PROFIT AND LOSS
2.7 THE USEFULNESS OF BALANCE SHEET STATEMENT
A balance sheet is a financial statement that shows the relationship between assets, liabilities
and shareholders equity of the company at the specific point in time. There is on of the three core
financial statement it is income statement and cash flow statement that used for evaluating the
performance of a business. Balance sheet serves as reference document for investors and others
shareholders to know the financial health of an organization. It enables them to compare current assets
and liabilities to determine the business’s movement and can calculate the rate at which the company
generates returns. Balance sheet also can use for measuring a company net worth and show what that
company owns and how these assets are financed, either through debt or equity. In balance sheet there
have three component that are mentioned this formula is intuitive its assets, liabilities and
shareholders equity and among of usefulness of balance sheet it is to determine if working capital is
enough if the result of computation is positive, means the company is still doing okey.

The balance sheet provides an overview of the state of company finances at a moment in time
and it cannot give a sense of the trends playing out over a longer period on its own. For this reason,
balance sheet should be compared with those of previous period and investors can get a sense of a
company financial wellbeing by using a number of rations that can be derived from balance sheet. The
asset should always equal the liabilities and share holders equity means the balance sheet should
always balance and if it don’t balance may be there have some problem including incorrect data or
exchange rate error and miscalculation.

Assets is one of the component in balance sheet, accounts within this segment are listed from
top to bottom in order of their equity. This is the ease with which they can be converted into cash.
They are divided into current assets, which can be converted to cash in one year or less; and non-
current or long-term assets, which cannot. The general order of account within current asset is cash
such fixes assets it is land, machinery, equipment buildings and others and intangible asset is no-
physical but still valuable assets such as intellectual property and goodwill. This financial statement
list down everything that the company owns and all if its debts and the general order of account
within current asset is cash and cash equivalent, marketable securities and account receivable.

Balance sheet is very important because it is an essential tool used executives, investors,
analysts, and regulators to understand the current financial health of business. The balance sheet can
help users answer questions such as whether the company has a positive net worth, whether it has
enough cash and short-term assets to cover its obligations. The balance sheet includes information
about company’s assets and liabilities. Depending on the company, this might include short-term
assets, such as cash and accounts receivable, or long-term assets such as property, plant and
equipment likes liabilities may include short-term obligations such as accounts payable and wages
payable, or long-term liabilities such as bank loans and other debt obligations.
 The balance sheet is prepared from an organization’s general ledger and is automatically
generated by its accounting software. It is reviewed and adjusted by the firm’s general ledger
accountant. In a smaller firm, this task is taken on by the bookkeeper, worth the completed balance
sheet being reviewed by an outside accountant. If a company is public-held, then the contents of its
balance sheet is reviewed by outside auditors for the first, second, and third quarters if its fiscal year.
The auditors must conduct a full audit of the balance sheet at year-end, before the year-end balance
sheet can be released.
3.0 CONCLUSION
To sum up everything, accounting is the integral process of smooth functioning. Basically accounting
is recording the financial transactions in the books of accounts classifying the transactions into
different heads and sub-heads, summarising the accounting data into reports and financial statements
and interpreting the financial data to assist decision making.

Accounting helps organizations to determine their financial right and obligations, without proper
accounting, it would be very difficult for a business to calculate. For example, the exact amount a
supplier needs to be paid taking into account cost of purchase discounts, sales, tax with holding
tax,duties,refunds,etc.Accounting is therefore necessary for a business to fulfill its legal obligations
and asserting its own legal right.

Recording process in accounting is also the important thing,it is maintaining proper and fine accounts
has become very essential today,as a result ,of increasing complementation in the business
world.Every business organizations is,therefore,supposed to maintain fine accounts comprising of all
the financial transactions,financial as well as nonfinancial informational it keeps systematic of the
organizations financial information.Up to date records help users compare current financial
information to historical data.With full,consistent,and accurate records ,it enables users to assess the
performance of a company over a period of time.

Accounting is especially important for internal users of the organizations.Internal users may include
the people that plan,organize, and run companies.The management team needs accounting in making
important decisions. Business decisions may range from deciding to pursue geographical expansion to
instead,improving operational efficiency.

Accounting helps to communicate company results to various users.Investors,leaders,and other

creditors are the primary external users of accounting information. Investors may be deciding to buy
shares in the company ,while leaders need to analyze their risk in deciding to lead.It is important for
companies to establish credibility with these external users through,relevant and reliable accounting
information.

Proper accounting helps organizations ensure accurate reporting of financial assets and liabilities.Tax
authorities ,such as the u.s.Internal Revenue Service(IRS) and the Canada Renevue Agency(CRA),use
standardized accounting financial statement to access a company’s declated gress revenue and need
income.The system of accounting helps to ensure that a company’s financial statements are legally
and accurately reported.
What we can conclude based upon the data in our case study group is our group have learned what is
about business and there a lot of information and the purpose of setting up this business and so
on.While doing this case study we learned how to apply basic account to complete this assignment.
Not all of our groups members have off account base but we managed to complete this task
successfully and also gained new knowledge and interesting experience while making the assignment.
4.0 REFRENCES

1. Bhandari, SB, & Adams, M.T. (2017). On the definition, measurement and use of the free
cash flow concept in financial reporting and analysis: a review and recommendation. Journal
of Accounting and Finance, 17 (1), 11-19.
2. Ahmad, K, (2014). The adoption of management accounting practice in Malaysia small and
medium-sized enterprises. Asian Social Science, 10 (2), 236.
3. White, G.I, Sondhi, A.C & Fried, D, 9 (2002). The analysis and use of financial statement.
John Wiley & Sons.
4. Riggs, H.E. (2007). The Balance Sheet. In understanding the financial score (pp.1.16).
Springer Cham.
5. Marriott, P. Edwards. J.R, & Mellett, H.J. (2001). Introduction to Accounting. Sage.
6. Ainon, Maslina. (2016). Basic Accounting.