BBAW2103 FINANCIAL ACCOUNTING

BACHELOR OF HUMAN RESOURCE MANAGEMENTS

MAY 2017

BBAW2103

FINANCIAL ACCOUNTING

MATRICULATION NO: 931118055046001

IDENTITY CARD NO. : 931118-05-5046
TELEPHONE NO. : 013-6167517
E-MAIL : jamunaranisathasivam@gmail.com
LEARNING CENTRE : OPEN UNIVERSITY MALAYSIA
SEREMBAN

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QUESTION 1
a)
i) How does the balance sheet of an entity provide useful source of information?
A balance sheet is used to report the Ringgit amount of a company’s assets, liabilities and
owners’ equity for a required period of the year. It is the statement to tell a company about
their financial position. A balance sheet consists of Assets, Liabilities and Equities. The
accounting equation law states that Asset = Liability + Owners Equity. Thus, the balance
sheet provides a useful source of information by calculation the total asset which should be
tally with the company’s total liability and equity. It presents the company’s resources and
origin of sources.
Assets include cash, accounts receivable, inventory, investments, land, buildings, equipment,
some intangible assets, and others. Generally assets are reported at their cost or a lower
amount due to depreciation, the cost principle, and conservatism. The cost principle also
means that some very valuable aspects of the company are not listed as assets. For example, a
company's outstanding reputation, its effective management team, and its amazing brand
recognition are not reported as assets if they were not acquired in a transaction involving
another party or entity.
Liabilities are obligations of a company as of the balance sheet date. These include loans
payable, accounts payable, warranty obligations, taxes payable, and more.
The stockholders' equity or owner's equity reports the amount of the assets that came from the
owners and not from its creditors.
The balance sheet allows you to easily determine the amount of a company's working capital
and whether the company is highly leveraged.
With every balance sheet distributed by a company there should be notes or footnotes. These
notes provide important additional information about the company's financial position
including potential liabilities not yet appearing as amounts on the balance sheet.

ii) Why do you think the RM7000 value for accounts payable is shown in brackets?

The value for creditors shown in bracket is because it is a cash outflow from the business as
the accounting equation states that Asset = Liability + Equity. Creditors fall under liabilities.
The cost of capital figure is obtained by adding opening stock and purchases together and
then deducting closing stock to creditors. In this case, the RM7000 value for accounts
payable is shown in brackets because the amount should be reduced against the asset.
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QUESTION 1
B) HAIRI
BALANCE SHEET AS AT 30 NOVEMBER 2016

ASSETS RM LIABILITIES AND OWNER’S EQUITY RM

Current assets: Current Liabilities:
Inventories 8,100 Accounts receivable 4,050
Accounts payable 2,800
Cash at bank 9,100
Cash in hand 195
TOTAL: 21,445
Non-current Assets: Owner Equity:
Assets: Capital 0
Equipment 6,200 TOTAL LIABILITIES AND OWNER’S
EQUITY 4,050
Car 7,300
TOTAL: 13,500

TOTAL ASSETS: 34,945

Profit and loss is 30895

ASSET- (LIABILITIY+OWNER’S EQUITY) = (34945-4050=30895)

ASSET=LIABILITY +OWNER’S EQUITY

34945 =4050
34945 =4050+30895
34945=34945

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Table: summary of transaction analysis of Hairi’s assets and liabilities, 30 December

2016

Transaction Assets = Liability + Owner

equity

Accounts Cash at Cash in

Receivable Bank Hand
Inventories equipment car Accounts Capital

Payable
Balance brought forward 8,100 + 4,050 + 9,100 + 195 + 6,200 + 7,300 = 2,800 + 0

(a) +110 = +110

Balance 8,100 + 4,050 + 9,100 + 195 + 6,310 + 7,300 = 2,910 0

(b) +380 -380

Balance 8,480 + 4,050 + 8,720 + 195 + 6,310 + 7,300 = 2,910 + 0

(C) -1,150 -1,150

Balance 8,480 + 4,050 + 7,570 + 195 + 6,310 + 7,300 = 1,760 + 0

(d) -730 +640 +90

Balance 8,480 + 3,320 + 8,210 + 285 + 6,310 + 7,300 = 1,760 + 0

(e) +1,300 +200 +1,500

Balance 8,480 + 3,320 + 9,510 + 485 + 6,310 + 7,300 = 1,760 + 1,500

Profit and loss is 32145

ASSET- (LIABILITIY+OWNER’S EQUITY) = (35405-3260=32145)

ASSET=LIABILITY +OWNER’S EQUITY

35405 =1760 +1500

35405 =3260+32145

35405=35405

HAIRI
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BALANCE SHEET AS AT 31 DECEMBER 2016

ASSETS RM LIABILITIES AND OWNER’S EQUITY RM

Current assets: Liabilities:

Inventories 8480 Current Liabilities:

Accounts receivable 3320 Accounts payable 1760

Cash at bank 9510

Cash in hand 485

TOTAL: 21,795

Non-current Assets: Owner Equity:

Capital 1500

Equipment 6310 Profit and loss 32145

Car 7300

TOTAL: 13,620 TOTAL LIABILITIES AND 3260+32145

TOTAL ASSETS: 35405 OWNER’S EQUITY =35405

PROFIT AND LOSS IS 32145

ASSET- (LIABILITIY+OWNER’S EQUITY) = (35405-3260=32145)

ASSET=LIABILITY +OWNER’S EQUITY

35405 =1760 +1500

35405 =3260+32145

35405=35405

QUESTION 2
a)

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DEBTORS = JOHNNY, THOMAS, SEAN

POST TO LEDGER

JOHNNY ACCOUNT
2016 RM 2016 RM
SEPT 1 ACCOUNTS RECEIVABLE 520 SEPT 24 BANK 400
28 CASH 80
30 BALANCE CARRIED 40
FORWARD
520 520
POST TO LEDGER
THOMAS ACCOUNT
2016 RM 2016 RM
SEPT 1 ACCOUNTS RECEIVABLE 630 SEPT 12 RETURN INWARDS 190
8 ACCOUNTS RECEIVABLE 640 30 BALANCE CARRIED 1080
FORWARD
1270 1270
POST TO LEDGER
SEAN ACCOUNT
2016 RM 2016 RM
SEPT 1 ACCOUNTS RECEIVABLE 240 SEPT 12 RETURN INWARDS 25
30 BALANCE CARRIED 215
FORWARD
240 240
POST TO LEDGER
LANCE ACCOUNT
2016 RM 2016 RM
SEPT 8 ACCOUNTS RECEIVABLE 418 SEPT 30 BANK 418
418 418
GENERAL JOURNAL ENTRIES (SALES ACCOUNT)
ACCOUNTS RECEIVABLE

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2016 RM 2016 RM
SEPT 30 BALANCE CARRIED FORWARD 2448 SEPT JOHNNY 520
1
THOMAS 630
SEAN 240
8 THOMAS 640
LANCE 418
2448 2448

RETURN INWARDS ACCOUNT

2016 RM 2016 RM
SEPT 30 BALANCE CARRIED FORWARD 215 SEPT THOMAS 190
12
SEAN 25
215 215

BANK ACCOUNT
2016 RM 2016 RM
SEPT 30 BALANCE CARRIED FORWARD 818 SEPT JOHNNY 400
24
30 LANCE 418
818 818

CASH ACCOUNT
2016 RM 2016 RM
SEPT 30 BALANCE CARRIED FORWARD 80 SEPT 28 JOHNNY 80

80 80

CREDITOR = PATRICK, JAMES, RAYMOND

POST TO LEDGER
PATRICK ACCOUNT
2016 RM 2016 RM
SEPT 30 BALANCE CARRIED 280 SEPT 2 ACCOUNTS PAYABLE 280
FORWARD

280 280

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POST TO LEDGER
BEN ACCOUNT
2016 RM 2016 RM
SEPT 2 BANK 390 SEPT 20 ACCOUNTS PAYABLE 390

390 390
POST TO LEDGER
JAMES ACCOUNT
2016 RM 2016 RM
SEPT 17 RETURN OUTWARDS 84 SEPT 10 ACCOUNTS PAYABLE 870
26 BANK 766
30 BALANCE CARRIED 20
FORWARD
870 870

POST TO LEDGER
RAYMOND ACCOUNT
2016 RM 2016 RM
SEPT 17 RETURN OUTWARDS 12 SEPT 2 ACCOUNTS PAYABLE 510
30 BALANCE CARRIED 590 10 ACCOUNTS PAYABLE 92
FORWARD
602 602

GENERAL JOURNAL ENTRIES (PURCHASE ACCOUNT)

ACCOUNTS PAYABLE
2016 RM 2016 RM
SEPT 30 BALANCE CARRIED FOWARD SEPT PATRICK 280
2
RAYMOND 510
10 JAMES 870
RAYMOND 92
20 BEN 390

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2142 2142

RETURN OUTWARDS ACCOUNT

2016 RM 2016 RM
SEPT 30 BALANCE CARRIED 96 SEPT JAMES 84
FORWARD
17
RAYMOND 12
96 96

BANK ACCOUNT
2016 RM 2016 RM
SEPT 30 BALANCE CARRIED 1156 SEPT 2 BEN 390
FORWARD
SEPT 26 JAMES 766
1156 1156

B) COMPLETE THE EQUATION IN THE FOLLOWING TABLE:

Assets Liabilities Capital

12,500 1,800 10,700
28,000 4,900 23,100
16,800 4,300 12,500
19,600 3,150 16,450
25,500 6,300 19,200
51,400 11,650 39,750
4,200 2,100 2,100
3,750 2,000 1,750

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ASSETS=LIABILITIES + CAPITAL
12,500-1,800=10,700
28,000-4,900=23,100
16,800-12,500=4,300
19,600-16,450=3,150
19,200+6,300=25,500
39,750+11,650=51,400
4,200-2,100=2,100
3,750-2,000=1,750

REFERENCES
AAA (American Accounting Association) (1966). A Statement of Basic Accounting
Theory.

Evanston, Illinois: AAA.Director’s Report and Audited Financial Statements Ended on 31

January 2012.

Emerging Markets Information Services (EMIS). Accessed on May 30,

2013.http://www.securities.com/

FASB & IASB (International Accounting Standards Board) (2007).

Project Update: Conceptual Framework: Summary of Tentative Decisions

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(Updated through October 9, 2007). [Online]. Accessed on May 31, 2013.

Available: http://www.fasb.org/project/cf_summary-of-decisions.shtml.

FASB (Financial Accounting Standards Board) (1980). Statement of Financial

Accounting Concepts No. 2, Qualitative Characteristics of Accounting Information.

IASB (2007a). Phase A: Objective of Financial Reporting and Qualitative

Characteristics-Comment Letter Summary. Information to observers: Board meeting 20
February 2007. June1, 2013.
http://www.investopedia.com/ask/answers/121514/what-difference-between-pl-
statement-and-balance-sheet.asp

https://www.wrexham.gov.uk/assets/pdfs/business/se_manual/63_profit_loss.pdf
https://nerdenterprises.com/which-came-first-the-balance-sheet-profit-and-loss-or-
statement-of-cash-flows/

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