Introduction to accounting Essay

INTRODUCTIONTO Accounting

DIPLOMA IN BUSINESS STUDIES ( BUSINESS ADMINISTRATION )

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Table of Content

Plagiarism Statement Declaration Form..………………………………………………..3

Safe Assign Report……………………………………………………………………….4

Taging Scheme…………………………………………………………………………..5

1. Introduction…………………………………………………………………………..7

2. Content………………………………………………………………………………..7

2.1 Accounting Equation…………………………………………………………….7

2.2 Net income Determination……………………………………………………………..8

2.3 Accounting Cycle……………………………………………………………… … 9

2.4 Users of Accounting Information…………………………………………… … … 9

2.5 Type of Business in Malaysia………………………………………………… … 10

2.6 Financial Statements……………………………………………………………..10

3. Conclusion……………………………………………………………………………11

Reference…………………………………………………………………………………..18

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1.Introduction of Accounting

Accounting as an information system is the procedure of roll uping, entering, sum uping, and pass oning the economic information of an organisation. Accounting besides provides users with fiscal information to steer them in doing determinations refering how to apportion money among different and viing undertaking. Users of accounting information need the information to do determination. It identifies dealing and events of a specific entity. Accounting is non same as clerking. Bookkeeping is merely a portion of accounting but accounting goes much further than merely maintaining records.

2.CONTENT2.1 Accounting EquationAssetss = Liabilities +Equity Equity = Assets – Liabilities Profit = Revenue – Expenses

Equity addition by proprietor invest into concern and Business Profit. On the other manus, Equity lessening by backdown from proprietors and Business Losses.

Assetss – The resources inside the concern for running the concern.The more the assets a concern has, the bigger the concern. There are two types of assets: –

  • Non current assets – Non current assets for go oning usage over a solitary period clip such as edifice, office equipment, motor vehicles, etc.
  • Current plus – Current assets are likely to alter in short term and that are within one twelvemonth For illustration, receivables, sedimentations, bank and hard currency balances, etc.

Equity – Equity are the resources that provided by the proprietor for usage in their concern. The equity will cut down because backdowns by the proprietor for personal usage and that are called Drawings. Company’s resources that can be in the signifier of hard currency or non hard currency points it is refers by Capital

Liabilitiess – Liabilitiess are the sum having to foreigners. The given by Bank it is amount having to the Bank and the purchases goods with recognition to the providers it is amount having to the providers. And it is called payables. Furthermore, there are two types of liabilities.

  • Current liabilities -The current liabilities are having within one twelvemonth such as payables, bank overdraft, etc.
  • Non current liabilities -The Non Current Liabilities are having over one old ages. Such as Bank Loan, Mortgage Loan. When the concern repays the loan or repays sum owing to providers so the liabilities will cut down.

2.2 Net income Determination

Net income is the money addition by a concern when the monetary value of merchandise sold is higher than the cost to bring forth. The greater the net income makes, the profitable the concern is. All the net income that is gained is belong to the business’s proprietor.

Net income is calculated by utilizing the net income finding equation:

Net income is derived when the gross is higher than disbursals. Howerer, if disbursals is higher than gross, the concern will makes a loss.

For illustration, if the concern earned RM120000 and spent RM80000 on stock lists and revenue enhancements, RM80000 is deduced from RM120000, RM40000 is go forthing as the net income.

2.3Accounting Cycle

Accounting rhythm besides refer to accounting procedure which are roll uping procedure, entering procedure, summarizing procedure and pass oning procedure. It starts with beginning paperss which used to entering a dealing. The 7 Books of Prime Entry is record day-to-day concern dealing based on the first measure. This includes Cash Book, Petty Cash Book and 6 specialised diary. The following measure is posted to the leger by utilizing dual entry system. The 3 legers are General Ledger, Gross saless Ledger and Purchased Ledger. Entries are checked by a bill of exchange test balance to see the entire sum debit and recognition points. It is besides used to finish dual entry system. At the terminal of the accounting period, seting entries have been summarized in the fiscal statements. There have two types of fiscal statements, the Statement of Profit or Loss and besides the Statement of Financial Position. Shutting entries are made at the terminal of an accounting rhythm.

2.4Users of accounting information

Accounting information helps users to do better fiscal determinations. Users of fiscal information may be both internal and external to the organisation.

  • Internal users

Management:determination devising, planning, control and coordination of concern activities.

Employees:payment of wage, other benefits, calling growing, secured employment.

Accounting information is presented to internal users normally in the signifier of direction histories, budgets, prognosiss and fiscal statements.

  • External users

Shareholders/Investors:company’s hereafter programs and dividends.

Customers:long-run supply of goods to guarantee supply is secured

Suppliers:ability of company to pay its debts within the recognition period given

Finance suppliers:guarantee its fiscal stableness and ability to refund the sum borrowed and pay involvements.

Government:assess revenue enhancement collectible, compile statistical informations for economic analysis

Public:protection of environment, just trade, responsible concern, community service, proviso of occupation chances, research workers.

2.5 Type of Business in Malaysia

There are three types of concern engage for net income such as fabrication that is use natural stuffs to merchandise into finished goods. Eg. Lam Eng Rubber mill, Produa auto Traders, Bursa Malaysia, trading is purchase or sell goods at a higher monetary value to clients. Eg. Panasonic, is to supply a good survices to our clients. Eg. AirAsia Airline, Maybank, Zurich Insurances.

3.6 Fiscal Statement

Statement of Comprehensive Income of EE Trading for the twelvemonth ended 31 December 2011

RM

RM

RM

Gross saless

112,080

Less:

Tax return Inwards

1,680

Discount Received

4,813

( 6,493 )

Net Gross saless

105,587

Less:

Cost of goods sold

Opening Inventories

70,000

Purchases

51,350

Less: Tax return Outwards

1,200

Discount Allowed

2,920

( 4,120 )

47,230

117,230

Less: Shutting Inventories

( 60,000 )

( 57,230 )

Gross Net income

48,357

Attention deficit disorder:

Income

Commission received

600

48,957

Less:

Outgo

Contribution

3,850

Insurance

3,200

Stationery

1,300

Salary

6,000

Motor Expenses

3,420

Depn: Motor Vehicle

1,600

Depn: Furniture

1,125

Depn: Office Equipment

500

Promotion

500

Bad debts

1,807

Rent

4,700

Utility

2,300

( 30,302 )

Net Net income

18,655

RM

RM

RM

Non Current Assetss

Premisess

350,000

Motor Vehicles

150,000

Less:

Acc Depn

( 55,600 )

94,400

Furniture

90,000

Less:

Acc Depn

( 28,125 )

61,875

Office Equipment

60,000

Less:

Acc Depn

( 12,500 )

47,500

553,775

Current Assetss

Inventories

60,000

Trade Receivable

36,140

Less:

Allowance for doubful debts

( 1,807 )

34,333

Bank

100,781

Cash

6,380

Stationery stock

2,000

203,494

Less:

Current Liabilitiess

Trade Payable

50,000

Other Collectible

32,000

Bank Overdraft

24,614

( 106,614 )

Net current assets

96,880

650,655

Financed by:

Capital as at 1 January

400,000

Attention deficit disorder: Extra Capital

34,000

434,000

Attention deficit disorders: Net Net income

18,655

452,655

Less: Drawing

( 2,000 )

Capital as at 31 December

450,655

Non-Current Liabilitiess

Bank Loan

150,000

Mortage Loan

50,000

200,000

650,655

4. Decision

Accountant is really of import tools in a company. All gross revenues, purchases, disbursals, fiscal status and operating consequences must be recorded. So that we can clearly understand all the disbursals that we use or the net income we earn. So, accounting can assist a company to do more net income if we make true determination. This is assured a necessary topic to give us became a successful concern individual.

Mention

1. Wood, F. and Sangster, A.2012. Business Accounting Volume 1. 12th Edition. Financial Times, Prentice Hall.

2. Leong, A and Wong, S.V.2010. Business Accounting. 3rd Edition. Pearson

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