THE ACCOUNTING

CYCLE
SOURCE
DOCUMENT
JOURNAL
LEDGER/
ACCOUNTS
BALANCING
-OF
ACCOUNTS
TRIAL
BALANCE
YEAR END
ADJUSTMENT
TRIAL
BALANCE
FINANCIAL
STATEMENT
SOURCE DOCUMENT
JOURNAL
SPECIAL
JOURNAL
GENERAL
JOURNAL
CASHBOOK
SALES
JOURNAL
PURCHASE
JOURNAL
SALES
RETURN
PURCHASE
RETURN
LEDGER/ACCOUNTS
SUBSIDIARY
LEDGER
GENERAL LEDGER CASHBOOK
COMES
FROM
SPECIAL
JOURNAL
COMES
FROM
GENERAL
JOURNAL
YEAR END ADJUSTMENT
ACCRUALS AND PREPAYMENTS
BAD DEBTS AND ALLOWANCE FOR DOUBTFUL DEBTS
DEPRECIATION
STOCK VALUATION
TRIAL BALANCE(UNADJUSTED)
LISTING ALL ACCOUNTS BALANCES (BEFORE ADJUSTMENT)
BALANCING OF ACCOUNTS
ACCOUNTS NEED TO BE CLOSED AND BROUGHT FORWARD THE
BALANCE
TRIAL BALANCE(ADJUSTED)
LISTING OF ALL ACCOUNT BALANCES (AFTER
ADJUSTMENT)
FINANCIAL STATEMENT
INCOME STATEMENT
STATEMENT OF FINANCIAL POSITION

OBTAINING THE NET INCOME/LOSS FOR THE PERIOD
OBTAINING THE FINANCIAL POSITION OF THE COMPANY

SOURCE DOCUMENT TRANSACTION
INVOICE ISSUED CREDIT SALES
INVOICE RECIEVED CREDIT PURCHASES
DEBIT/CREDIT NOTES GOODS RETURNED
CASH RECIEPT/PAYMENT VOUCHER CASH RECEIVED AND PAYMENTS
CHEQUE BANK TRANSACTION
MEMO OTHER TRANSACTION eg.
PAYMENTS OF MONTHLY SALARIES
SOURCE DOCUMENT
A FORM WHICH PROVIDES DETAILS OF TRNSACTION AND THE EVIDENCE THAT
THE TRANSACTION HAS OCCURRED
IT ACTS AS A PROOF TO THE AUDITOR AS TO THE VALIDITY OF A
TRANSACTION
BECOME THE BASIS TO RECORD THE TRANSACTION
COLLECTS AND TRANSMITS INFORMATION ON TRANSACTION THAT
OCCURS AT A DIFFERENT LOCATION FROM WHERE THE ACCOUNTING
RECORDS ARE MADE
ACC NO ACCOUNT DEBIT CREDIT
BANK 106,900
CASH 8,810
BUILDING 300,000
MOTOR VEHICLES 90,000
INVENTORIES 12,000
A/C RECEIVEABLE CONTROL 24,120
A/C PAYABLE CONTROL 22,800
CAPITAL 497,900
DRAWING 200
UMW MOTOR 20,000
SALARIES EXPENSES 560
SALAES 1,600
SALES RETURN 6,300
PURCHASE 180
PURCHASE RETURN 2690
SALES DISCOUNT 90
PURCHASE DISCOUNT 200
MOTOR EXPENSES 300
130
547,390 547,390



TRIAL BALANCE

MEGAH TRADING SDN. BHD.
TRIAL BALANCE ON 31 JANUARY 20X5
JOURNALS
Called book of original entry because it is where the
information from source document is first record.
Referred to a day book.
The process of recording is called journalizing.
FUNCTIONS
Record similar transactions by classifying the same items.
Cuts unnecessary details in ledger .
TYPES
Cash book.
Special Journals.
General Journals.


The source document use to record the transactions
into the cash books are Cash Receipts and Cash
Payment Vouchers for cash transactions and cheques
for bank transactions.

Special Journals
Set up to provide for a common and specific purpose.
Used to record all credit transactions.
Types of special journals :
Sales Journal >>> record credit sales.
>>> source document used is sales document
/invoices that send to customers(ARC)
Purchase Journal <<< record credit purchase .(APC)
Sales Return Journal >>> or return inwards.
>>> record the goods return(credit) by
customers.(ARC)
>>> source documents is credit note
issued by customer / debit note
received from customers .
Purchase Return Journal <<< or return outwards

General Journals
Used to record other transactions which cannot be
recorded in special journal or cash book.
Examples :
a) Opening balance entries
b) Closing balances entries
c) Purchases and sales 0f noncurrent assets(credit)
d) Corrections of errors
e) Drawings excepts cash drawings
f) Year-end adjustments

DATE ACCOUNTS REF. DEBIT(RM) CERDIT(RM)
20X5 JAN 1 Building GL 300000
Motor Vehicle GL 60000
Inventories GL 12000
Accounts Receivable Control GL 22000
Bank CB 125400
Cash CB 4500
Accounts Payable Control GL 26000
Capital GL 497900

9 Drawings GL 200
Purchases GL 200

16 Motor Vehicle GL 30000
UMV Motors GL 30000




GENERAL JOURNAL


SALES JOURNAL
DATE ACCOUNTS DEBITED INVOICES REF. ARC Dr.

SALES Cr.(RM)
20X5 JAN 5 Haris 10 SL-AR 4000
12 Fahmy 11 SL-AR 2300
6300

PURCHASES JOURNAL
DATE ACCOUNTS CREDITED INVOICES REF. PURCHASES DR.
APC Cr.(RM)
20x5 JAN 3 Yasmin 22 SL-AP 2000
21 Sarah 198 SL-AP 890
2890



SALES RETURN AND ALLOWANCES JOURNAL
DATE ACCOUNTS CREDITED CREDIT REF. SRA Dr.

NOTE NO.

ARC Cr.(RM)
20X5 JAN 15 Haris 5 SL-AR 180
180

PURCHASES RETURNS AND ALLOWANCES
JOURNAL
DATE ACCOUNTS DEBITED CREDIT REF. APC Dr.
NOTE NO. PRA Cr.(RM)
20X5 JAN 20 Yasmin 51 SL-AP 90
90

CASH BOOK
DATE
ACCOUN
TS F Doc Sales ARC Sales Other Bank Cash Date Accounts F Doc. Purch. APC Purch. Other Bank Cash
Disc. Receipt Disc
Payme
nts
20x5
JAN 1 Capital GL 129900 125400 4500
20x5
JAN 1 Cash 5000
Bank 5000 8
Motor
Expenses GL PV.053 130 130
18 Isaac
AR-
SL C3003 4000 200 3800 24 Zainab
AP-
SL 2121 6000 300 5700
29 Salaries Gl PV 056 560 560
Rent GL 2123 1600 1600
30
UMV
Motors GL 2124 10000 10000

31 Bal c/d 106900 8810
4000 200 5000 129200 9500 6000 300 17290 129200 9500
20X5
FEB 1 Bal b/d 106900 8810

Control Accounts
Control Accounts can be divided into two types:

Account Receivable / Sales Ledger Control Account
Contains all details of the account receivable accounts
in sales ledger.
The details are presented in total.

Account Payable / Purchases Ledger Control Account
Contains all details of the account payable accounts in
purchases ledger.
The details are presented in total.


Format of the Control Account:

Account Receivable Control





Balance b/d Cash
Total Credit Sales Bank
Cash refunded Bad Debts
Dishonoured cheque Discount Allowed/Sales
Discount
Interest charges/other charges Return Inwards/Sales Return
Bad Debt Recovered Contra with APC
Balance c/d
Note: Cash and Bank Amount received from A/R
Format of the Control Account:

Account Payable Control





Cash Balance b/d
Bank Total Credit purchases
Discount Received/Purchases
Discount
Return Outwards/Purchases
Return
Contra with ARC
Balance c/d
Note: Cash and Bank Amount payable from A/P
Cash Discount and Trade Discount
Cash discount can be classified into two:
Discount allowed/Sales discount
EXPENSES to the business.

Discount received/Purchases discount
REVENUE to the business.


Trade discount:
Discount given for BULK PURCHASES


Trial Balance
What is Trial Balance?
A list of balances of all accounts or a statement
which shows accounts title with the debit balances
and credit balances.
Total of both balances must be BALANCE

What is the purpose of the Trial Balance?
To check the accuracy of the double entry system.

Format of the trial balance:

Business Name
Trial Balance as at dd/mm/year





A/C NO ACCOUNTS NAME DEBIT (RM) CREDIT (RM)
Account name xxx
Account name xxx
Account name xxx
Account name xxx
Total xxx xxx
EXERCISE
Date Particulars Amount Date Particulars Amount
20X5
Jan 1
Capital RM300,000
20X5
Jan 31
Balance c/d RM300,000
RM300,000 RM300,000
Feb 1 Bal b/d RM300,000
Building
General Ledger
Motor Vehicles
Date Particulars Amout Date Particulars Amount
20X5
Jan 1
Capital RM60,000
UMW Motor RM30,000
20X5
Jan 31
Bal c/d RM90,000
RM90,000 RM90,000
Feb 1 Bal b/d RM90,000
Date Particulars Amount Date Particulars Amount
20X5
Jan 1
Capital RM12,000
20X5
Jan 31
Balance c/d RM12,000
RM12,000 RM12,000
Feb 1 Bal b/d RM12,000
Inventories
General Ledger
Account Receivable Control
Date Particulars Amout Date Particulars Amount
20X5
Jan 1
Capital RM22,000 20X5
Jan 31
Bank RM3,800
Jan 31 Sales RM6,300 Jan 31 Sales Discount RM206
Jan 31 Sales Return RM180
Jan 31 Bal c/d RM24120
RM28,300 RM28,300
Feb 1 Bal b/d RM,24120
Date Particulars Amount Date Particulars Amount
20X5
Jan 1
Account Payable RM26,000 20X5
Jan 1
Summary RM523,900
20X5
Jan 31
Balance c/d RM497,900
RM523,900 RM523,900
Feb 1 Bal b/d RM497,900
Capital
General Ledger
Account Payable Control
Date Particulars Amout Date Particulars Amount
20X5
Jan 31
Purchase Return RM90 20X5
Jan 1
Capital RM26,000
Jan 31 Bank RM5700 Jan 31 Purchases RM2890
Jan 31 Purchase Discount RM300
Jan 31 Bal c/d RM22,800
RM28,890 RM28,890
Feb 1 Bal b/d RM22,800
Date Particulars Amount Date Particulars Amount
20X5
Jan 9
Purchases RM200
20X5
Jan 31
Bal c/d RM200
RM200 RM200
Feb 1 Bal b/d RM200
Drawing
General Ledger
Salaries
Date Particulars Amout Date Particulars Amount
20X5
Jan 29
Cash RM560
20X5
Jan 31
Bal c/d RM560
RM560 RM560
Feb 1 Bal b/d RM560
Date Particulars Amount Date Particulars Amount
UMW Motors
General Ledger
Date Particulars Amout Date Particulars Amount
Rent Expenses
Date Particulars Amount Date Particulars Amount
20X5
Jan 31
Bal c/d RM6,300 20X5
Jan 31
Account
Receivable
Control
RM6,300
RM6,300 RM6,300
Feb 1 Bal b/d RM6,300
Sales
General Ledger
Sales Return
Date Particulars Amout Date Particulars Amount
20X5
Jan 31
Account
Receivable Control
RM180 20X5
Jan 31
Bal c/d RM180
RM180 RM180
Feb 1 Bal b/d RM180
Date Particulars Amount Date Particulars Amount
Purchases
General Ledger
Purchase Return
Date Particulars Amout Date Particulars Amount
20X5
Jan 31
Bal c/d RM90 20X5
Jan 31
Account Payable
Control
RM90
RM90 RM90
Feb 1 Bal b/d RM90
Date Particulars Amount Date Particulars Amount
20X5
Jan 31
Account
Receivable Control
RM200 20X5
Jan 31
Bal c/d RM200
RM200 RM200
Feb 1 Bal b/d RM200
Sales Discount
General Ledger
Purchase Discount
Date Particulars Amout Date Particulars Amount
20X5
Jan 31
Bal c/d RM300 20X5
Jan 31
Account Payable
Control
RM300
RM300 RM300
Feb 1 Bal b/d RM300
Date Particulars Amount Date Particulars Amount
20X5
Jan 5
Cash RM130
20X5
Jan 31
Bal c/d RM130
RM130 RM130
Feb 1 Bal b/d RM130
Motor Expenses
General Ledger
Date Particulars Amount Date Particulars Amount
20X5
Jan 1
Capital RM18,000 20X5
Jan 31
Sales Return RM180
Jan 1 Sales RM4,000 Jan 31 Bal c/d RM21820
RM22,000 RM22,000
Feb 1 Bal b/d RM21,820
Haris
Account Receivables Subsidiary Ledger
Fahmy
Date Particulars Amout Date Particulars Amount
20X5
Jan 1
Sales RM2,300 20X5
Jan 31
Bal c/d RM2,300
RM2,300 RM2,300
Feb 1 Bal b/d RM2,300
Date Particulars Amount Date Particulars Amount
20X5
Jan 1
Capital RM4,000 20X5
Jan 31
Bank RM3,800
Jan 31 Sales Discount RM200
RM4,000 RM4,000
Isaac
Account Receivables Subsidiary Ledger
Date Particulars Amount Date Particulars Amount
20X5
Jan 31
Purchase Return RM90 20X5
Jan 1
Capital RM20,000
Jan 1 Purchase RM2,000
Jan 31 Bal c/d RM21,910
RM23,000 RM23,000
Feb 1 Bal b/d RM21,910
Yasmin
Account Payable Subsidiary Ledger
Date Particulars Amount Date Particulars Amount
20X5
Jan 31
Bank RM5,700 20X5
Jan 1
Capital RM6,000
Jan 31 Purchase Discount RM300
RM6,000 RM6,000
Zainab
Date Particulars Amount Date Particulars Amount
20X5
Jan 31
Bal c/d RM890 20X5
Jan 1
Purchase RM890
RM890 RM890
Feb 1 Bal b/d RM890
Sarah
Account Payable Subsidiary Ledger