1. Dpa1013-Fundamentals of accounting
COMMERCE DEPARTMENT
Dpa1013-Fundamentals of accounting
Lecturer name: En.Wan Mustaffa bin Wan Yusoff

2. CHAPTER 3
DOUBLE-ENTRY CONCEPT

3. LEARNING OUTCOMES AT THE END OF THIS CHAPTER, STUDENTS BE ABLE TO :
EXPLAIN THE CONCEPT OF DOUBLE-ENTRY ACCOUNTING AS A COMPLETE ACCOUNTING RECORD AND AS A METHOD OF RECORD-KEEPING
EXPLAIN THE TYPES AND FUNCTIONS OF REVENEUS , EXPENSES, ASSETS, LIABILITIES, AND CAPITAL ( OWNER’S EQUITY)
PREPARE DOUBLE ENTRIES FOR ASSETS, LIABILITIES AND CAPITAL (OWNER’S EQUITY)
DIFFERENTIATE BETWEEN SUBSIDIARY ACCOUNT’S AND NON-SUBSIDIARY ACCOUNT’S.
UNDERSTAND THE FEATURES AND ENTRIES OF A CASH BOOK (TWO COLUMN AND THREE COLUMN)
SHOW THE STEPS NEEDED TO POST ENTRIES FROM A DAY BOOK INTO LEDGER.

4. DOUBLE-ENTRY CONCEPTS
Understand the double-entry
concepts
3.2 - know the accounting
equation

5. INTRODUCTION introduction
The double-entry system is the basic of the an accounting recording system.
INTRODUCTION

6. ACCOUNTING EQUATION AND THE DOUBLE-ENTRY SYSTEM
An accounting equation shows the relationship between three important elements asset,liability,owner’s equity.
Asset = Liability + Owner’s Equity

7. Relationship between assets and the financial resources
INVESTMENTS
(Financial sources)
3.ASSETS OWNED BY THE BUSINESS
2.EXTERNAL SOURCES
-Bank loan
-Accounts payable
(liabilities)
1. CONTRIBUTION FROM OWNERS
(Owner’s equity)

8. The relationship between an accounting equation and the double-entry=
ACCOUNTING EQUATION
ASSETS
LIABILITIES + OWNER’S EQUITY
DEBIT for increases
CREDIT for decreases
DEBIT for decreases
CREDIT for increases
DOUBLE-ENTRY SYSTEM

9. 3.2 type and function of accounts
Ledger accounts can be divided into five main categories: a) revenues b) expenses c) assets d) liability e) owner’s equity

10. REVENUES
Example of revenues are sales revenues from the sale of goods,service revenues for services
provided,commision received,interest received or rent received,discount received,bonus
Revenues may also be received from extraordinary business activities such as:
a) profit from the sale of used assets
b) dividends from investments
Revenues accounts have a credit balance.

11. EXPENSES
Examples of expenses incurred are purchases of goods,employee’s salaries and wages,assessment rates and freight charges.
Examples of non-ordinary business activity expenses are:
a) losses on sale of used assets
b) donations
Expenses accounts have a debit balance.
Assets are divided into two main categories :
a) non-current assets
b) current assets
Assets accounts have a debit balance.
ASSETS

12. LIABILITIES/OBLIGATIONS
Liabilities are debts owed by a business entity to external parties.
Liabilities can be divided into two main categories:
a) non-current liabilities
b) current liabilities
Liabilities accounts have a credit balance
Owner’s equity is the business’ debts to the business owner based on the amount invested by the business owner.
The total amount of owner’s equity will be determined by the capital,drawings and business performance(the profit and loss obtained)
Capital accounts have a credit balance.
OWNER’S EQUITY (CAPITAL ACCOUNT)

14. Characteristics of non-current assets and current assets
example
Account balance
Non-current assets
a)Assets life is longer than one accounting period
b)Can be used repeatedly
c)Fixed value
a)Land and premise
b)Vehicles
c)Machinery and plants
d)Office equipment
e)Fixture and fittings
f)Leased assets
Debit balance
Current assets
a)Assets that are easily converted into cash
b)Value is not fixed
a)Cash
b)Account receivable
c)Inventories
d)Prepaid expenses
e)A ccurent revenues

15. Characteristics of non-current liability and current liability
example
Account balance
Non-current liability
Debts that must be paid off after one accounting period
a)Bank loan
b)Debenture
c)mortgage
Credit balance
Current-liabilities
Debts that must be paid off within one accounting period
a)Accounts creditors
b)Bank overdraf

16. Characteristics of owner’s equity
Explanation
Accounts balance
capital
Cash or assets brought into the business by the owner
Credit balance
drawings
a)cash/goods/assets taken by the owner for personal use.
b) Reduction of owner’s equity
Debit balance
Business performance (profit and loss)
a)Calculated through the closing account.
b)owner’s equity increased if business generates as profit.However,if a loss is obtained,then owner’s equity will be decreased.
Debit or credit balance

17. Non-Subsidiary Accounts
Types of accounts
Subsidiary Accounts
Non-Subsidiary Accounts
Accounts receivable
Accounts payable
Real Accounts
Nominal Accounts
Liabilities and Owner’s Equity
Assets
Expenses
Revenues
Loan
Accrued expenses
Unearned revenues
Capital
Cash
Bank
Premise
Land
Plants and machineries
Office equipment
Motor vehicle
Fixtures and fittings
Furniture
Purchases
Discount allowed
Advertising
Rent
Salaries and wages
Stationeries
Assessment rate
Freight charges
Import duties
Commision received
Interest received
Rent received

18. LEDGER ENTRIES
Definition > the most important books of accounts used to record business transactions.
All ledger accounts must be balanced before a trial balance is prepared.
A ledger’s account is balanced by comparing the total debit amount with the total credit amount,and determining which amount is larger.

19. E
xample :
Debit
Acc
ount A
Credit
2005 RM J an
Balan
ced
b/d
200
Jan 4
Cash 50
Sales
273 31
Balanced
c/d 42 3
473
Feb
Balanced b/d
423
Account B
edit Cr
Jan
410
Jan Cash
723
Balanced c/d 13 1
Balanced b/d

20. Debit Cash Book Credit 2005 Particulars RM Date Item Fol. Dis. Allo.
Example :
Debit Cash Book Credit
2005
Particulars RM
Jan 2 3 8 14 18
Cash purchase of goods.
Cash sales.
Paid cheque to ABC Company.
Owner deposited his savings into the bank.
Ali paid his debt by cash.
800
1,000
1,200
5,000
150
Date
Item
Fol.
Dis.
Allo.
(RM)
Cash
Bank
Recd.
2005
Jan 3
Sales
1,000
Jan 2
Purchase 14
Capital
5,000 8
Account payable- ABC Company 18
Accaount receivable-Ali
150
1,150 31
Balance
c/d
Feb 1
b/d
Cash
(RM)
Bank
800
1,200
350
1,150
3,800
5,000

21. Zaharah is owner of Uniq Style Enterprise
Zaharah is owner of Uniq Style Enterprise.Below is the transaction for her business in April 2001.
April 1
Started business with RM 10,000 cash in hand RM 30,000 cash at bank. 3
Sold goods to Salmi RM 1,000 and received cash. 5
Sold goods to Fatin RM 3,000 by credit. 8
Purchases furniture RM 700 and paying by cheque. 10
Purchases a fax machine RM 500 by cheque. 13
Paid for stationery by cash RM 550. 15
Purchases goods from Mawar Indah Enterprise by credit RM 6,400. 16
Paid for aircond maintence by cash RM 1,200. 19
Fatin paid her debts RM 1,500 by cheque and given her 10% discount. 22
Paid Mawar Enterprise RM 2,000 by cheque and received RM 100 discount. 25
Paid for utility by cash RM 300. 28
Paid worker salary RM 1,800 by cheque.
You are required to prepared a ledger entry for the transaction.

22. GENERAL JOURNAL DATE PARTICULAR DEBIT (RM) CREDIT (RM) 2001 APRIL 1
Cash
Bank
Capital
(Started business)
10,000
30,000
40,000 3
Sales
(Sold goods to salmi by cash)
1000 5
Fatin
(Sold goods to Fatin by credit)
3000 8
Purchases
(Purchases furnite by cheque)
700

23. GENERAL JOURNAL DATE PARTICULAR DEBIT (RM) CREDIT 2001 APRIL 10
Purchases
Bank
(Purchases a fax machine by cheque)
500 13
Stationery
Cash
(Paid stationery by cash)
550 15
Mawar Indah Enterprise
(Purchases goods by credit)
6400 16
Maintence
(Paid aircond maintence by cash)
1200

24. GENERAL JOURNAL DATE PARTICULAR DEBIT (RM) CREDIT 2001 APRIL 19 Bank
Discount Allowed
Fatin
(Fatin paid her debts by cheque and got discount 10%)
1350
150
1500 22
Mawar Enterprise
Discount Received
(Paid Mawar Enterprise by cheque and received discount)
2000
100
1900 25
Utility
Cash
(Paid utility by cash)
300 28
Salary
(Paid worker salary by cheque)
1800

25. General Ledger Capital Account
RM RM April 30 Balance c/d ,000 April 1 Cash , Bank , , ,000
Mei Balance b/d ,000
Cash Account
RM RM April 1 Capital ,000 April 13 Stationery Sales , Maintenance expenses 1, Utility Balance c/d , , ,000
Mei Balance b/d ,050

26. Bank Account
RM RM April 1 Capital , April 8 Furniture Fatin , Office Equipment Mawar Enterprise , Salary , Balance c/d , , ,350
Mei 1 Balance b/d , Sales Account
RM RM April 30 Balance c/d , April 3 Cash , Fatin , , ,000
Mei Balance b/d ,000

27. Fatin Account
RM RM April 5 Sales , April 19 Bank , Discount Allowed Balance c/d , , ,000
Mei 1 Balance b/d , Furniture Account
RM RM April 8 Bank April 30 Balance c/d
Mei Balance b/d

28. Office Equipment Account
RM RM April 10 Bank April 19 Bank Balance c/d Mei Balance b/d
Stationary Account
RM RM April Bank April 30 Balance c/d
Mei Balance b/d
Purchases Account
RM RM April Mawar Indah , April 30 Balance c/d , Enterprise , ,000
Mei Balance b/d ,000

29. Mawar Indah Enterprise Account
RM RM April 22 Bank , April 15 Purchases , Discount received Balance c/d , , ,400
Mei 1 Balance b/d , Maintenance Expenses Account
RM RM April 16 Cash , April 30 Balance c/d , , ,200
Mei Balance b/d ,200
Discount Allowed Account
RM RM April 19 Fatin April 30 Balance c/d Mei Balance b/d

30. Discount Received Account
RM RM April 30 Balance c/d April 22 Mawar Enterprise
Mei Balance b/d
Utility Account
RM RM April 25 Cash April 30 Balance c/d
Mei Balance b/d
Salary Account
RM RM April 28 Bank , April 30 Balance c/d , , ,800
Mei Balance b/d ,800

31. Wood & Woods Enterprise started its furniture business on 1 July 2013
Wood & Woods Enterprise started its furniture business on 1 July Below is the transaction for the company.
You are required to record all the transaction into a ledger.
July
Started business with RM 35,000 in bank, RM 25,000 cash and RM 70,000 vehicles. 2
Bought stationery RM 800 by cash. 3
Bought furniture for office use RM 10,000 from Cengal Enterprise. 7
Bought furniture for sale RM 60,000 from Marco Enterprise. 11
Sold goods to Ganesh RM 9,000 by credit. 13
Sold goods to Ramli and received cheque RM 8,500. 16
Paid for advertising RM 4,000 by cash. 18
Bought an aircond and paid by cash RM 4,500. 19
Sold goods RM 5,000 and received cheque . 22
Paid RM 10,000 by cash to Marco Enterprise and received RM 250 discount. 24
Sold goods and received cash RM 1,000. 27
Received cheque from debtors RM 2,500. 28
Return defected furniture to Macro Enterprise RM 5,000. 30
Paid salary to worker RM 1,400 and shop rent RM 1,000 by cheque.

32. GENERAL JOURNAL DATE PARTICULAR DEBIT (RM) CREDIT 2013 July 1 Bank
Cash
Vehicle
Capital
(Started business)
35,000
25,000
70,000
130,000 2
Stationery
(Bought stationery by cash)
800 3
Office furniture
Cengal Enterprise
(Bought furniture by credit)
10,000 7
Purchases
Macro Enterprise
60,000

33. GENERAL JOURNAL DATE PARTICULAR DEBIT (RM) CREDIT July 11 Ganesh Sales
(Sold goods to Ganesh by credit)
9000 13
Bank
(Sold goods to Ramli and received cheque)
8500 16
Advertising
Cash
(Paid for advertising by cash)
4000 18
Office equipment
(Bought aircond by cash)
4500 19
(Sold goods and received cheque)
5000

34. GENERAL JOURNAL DATE PARTICULAR DEBIT (RM) CREDIT July 22
Macro Enterprise
Discount
Cash
(paid to Marco Enterprise by cash and received discount)
10,000
250
9750 24
Sales
(Sold goods and received cash)
1000 27
Bank
Debtors
(Received cheque from debtors)
2500 28
Return outwards
(Return defected furniture)
5000 30
Salary
Rent
(Paid salary and rent by cheque)
1400
2400

35. General Ledger
Capital Account
RM RM July Balance c/d ,000 July 1 Cash , Bank , Vehicle , , ,000
August 1 Balance b/d ,000
Cash Account
RM RM July 1 Capital , July 2 Stationery Sales , Advertising , Office Equipment , Marco Enterprise , Balance c/d , , ,000
August 1 Balance b/d ,700

36. Bank Account
RM RM July 1 Capital , July 30 Salary , Ramli , Rent , Sales , Balance c/d , Debtors , , ,000
August 1 Balance b/d , Vehicle Account
RM RM July 1 Capital , July 31 Balance c/d , , , August 1 Balance b/d ,000
Stationery Account
RM RM July 2 Cash July 31 Balance c/d
August 1 Balance b/d

37. Office Furniture Account
RM RM July 3 Cengal Enterprise , July 31 Balance c/d , , ,000
August 1 Balance b/d ,000
Cengal Enterprise Account
RM RM July 31 Balance c/d , July 3 Office furniture , , ,000
August 1 Balance b/d ,000
Purchases Account
RM RM July 7 Marco Enterprise , July 31 Balance c/d , , ,000
August 1 Balance b/d ,000

38. Marco Enterprise Account
RM RM July 22 Cash , July 7 Purchases , Discount received Return outwards , Balance c/d , , , August 1 Balance b/d ,750
Ganesh Account
RM RM July 11 Sales , July 31 Balance c/d , , ,000
August 1 Balance b/d ,000
Sales Account
RM RM July 31 Balance c/d , July 11 Ganesh , Bank , Cash , , , August 1 Balance b/d ,000

39. Ramli Account
RM RM July 31 Balance c/d , July 13 Bank , , ,500
August 1 Balance b/d ,500
Advertising Account
RM RM July 16 Cash , July 31 Balance c/d , , ,000
August 1 Balance b/d ,000
Office Equipment Account
RM RM July 18 Cash , July 31 Balance c/d , , ,500
August 1 Balance b/d ,500

40. Discount Received Account
RM RM July 31 Balance c/d July 22 Marco Enterprise
August 1 Balance b/d
Debtors Account
RM RM July 31 Balance c/d , July 27 Bank , , ,500
August 1 Balance b/d ,500
Return Outwards Account
RM RM July 31 Balance c/d , July 28 Marco Enterprise , , ,000
August 1 Balance b/d ,000

41. Salary Account
RM RM July 30 Bank , July 31 Balance c/d , , ,400
August 1 Balance b/d ,400
Rent Account
RM RM July 30 Bank , July 31 Balance c/d , , ,000
August 1 Balance b/d ,000

42. The following are the transactions of Usaha Maju Enterprises January 2012.
Encik Chan, the owner of Usaha Maju Enterprises invested cash RM20,000 into the business. 5
Furniture amounting to RM2,000 was purchased on credit from Aladin Furniture Bhd. 9
Mr.Chan the owner took cash RM100 for personel use. 10
The business paid a cheque for RM100 for other office supplies. 13
The business paid the full amount owing for the furniture purchased on the 5 of january 2012 by paying with a cheque. 25
The business paid cash RM80 for miscellaneous expenses. 31
The business paid salaries amounting to RM 2,000 with cheque.
You are required to prepared a ledger entry for the transaction.

43. GENERAL JOURNAL DATE PARTICULAR DEBIT (RM) CREDIT 2012 January 1
Capital
Cash
(Invested cash into the business)
20,000 3
Furniture
Aladin Furniture Bhd
(Purchased furniture on credit)
2000 9
Drawings
(Mr.Chan took cash for personal use)
100 10
Office supplies
Bank
(Paid other office supplies by cheque) 13
(Paid the full amount for the furniture)

44. GENERAL JOURNAL DATE PARTICULAR DEBIT (RM) CREDIT January 25
Miscellaneous expenses
Cash
(Paid miscellaneous expenses by cash) 80 30
Salaries
Bank
(Paid salaries by cheque)
2000

45. General Expenses
Cash Account
RM RM Jan 1 Capital , Jan 1 Drawing Miscellaneous Expenses Balance c/d , , ,000
Feb 1 Balance b/d ,000
Capital Account
RM RM Jan 31 Balance c/d , Jan 27 Bank , , ,000
Furniture Account
RM RM Jan 5 Aladin Furniture Bhd , Jan 31 Balance c/d , , ,000
Feb 1 Balance b/d ,000

46. Aladin Furniture Bhd Account
RM RM Jan 13 Bank , Jan 5 Furniture , , ,000
Drawing Account
RM RM Jan Cash Jan 31 Balance c/d
Feb 1 Balance b/d
Office Expenses Account
RM RM Jan 10 Balance c/d Jan 28 Marco Enterprise
Feb 1 Balance b/d

47. Bank Account
RM RM Jan 31 Balance c/d , Jan 10 Office expenses Aladin Furniture Bhd , Salary , , ,100
Feb 1 Balance b/d ,100
Miscellaneous Expenses Account
RM RM Jan 25 Cash Jan 31 Balance c/d
Feb 1 Balance b/d
Salary Account
RM RM Jan 31 Bank , Jan 31 Balance c/d , , ,000
Feb 1 Balance b/d ,000