Introduction To Accounting Concept (Pengenalan kepada Konsep Perakaunan / 会计基础的简介）

 INTRODUCTION TO ACCOUNTING CONCEPT

What is accounting?

1) Accounting can be defined as an information system that provides reports to users about the economic activities and condition of a business. 

Perakaunan adalah aktiviti penyampaian maklumat kewangan dan peristiwa ekonomi sesebuah entiti perniagaan kepada pengguna berkepentingan.

会计学是以研究人类的财务活动和成本资料的收集、分类、综合、分析和解释的基础上形成协助决策的资讯系统，以有效地管理经济的一门应用学科。

2) The process by which accounting provides information to users is as follows:

·         Identify users.

·         Assess users’ information needs.

·         Design the accounting information system to meet users’ needs.

·         Record economic data about business activities and events.

·         Prepare accounting reports for users.

Perakaunan merupakan satu proses:

·         Mengenal pasti pengguna luaran atau dalaman.

·         Merekod dan mengkelas maklumat penyata kewangan.

·         Meringkas maklumat kewangan kepada pengguna.

·         Melapor maklumat kewangan kepada pengguna

·         Mentafsir maklumat penyata kewangan kepada pengguna

·         Mengkomunikasi maklumat penyata kewangan kepada pengguna luaran dan dalaman.

3) The area of accounting that provides external users with information is called financial accounting. The objective of financial accounting is to provide relevant and timely information for the decision-making needs of users outside of the business.

Perakaunan kewangan ialah satu bidang perakaunan yang melibatkan penyediaan maklumat kewangan dan perakaunan kepada pihak luaran sesebuah entiti perniagaan dengan bertujuan untuk mengetahui prestasi dan kedudukan kewangan.

4) The area of accounting that provides internal users with information is called managerial accounting. Managerial accounting information is designed to meet the specific needs of a company’s management. 

Perakaunan pengurusan ialah satu bidang perakaunan yang melibatkan penyediaan maklumat kepada pengguna dalaman entity perniagaan dengan bertujuan untuk merancang, mengawal, mengkoodinasi, mengukur prestasi dan membuat keputusan.

Accounting Principles dan Assumptions

1) Historical cost principle

·         this principle requires companies to account and report based on acquisition costs rather than fair market value for most assets and liabilities.

·         this concept also involves the objectivity and unit of measure concepts.

Kos Sejarah

·         Urus niaga direkodkan pada nilai kos asal pada masa dibeli atau selepas perkhidmatan diperoleh

2) Objectivity principle

•      financial and accounting information needs to be independent and free from bias.

•      this means that financial reporting like a company's financial statements need to be based on evidence and not opinions.

Keobjektifan

·         Urus niaga yang direkodkan perlu disokong oleh bukti-bukti dokumen yang nyata

3) Matching

·         Expenses have to be matched with revenues as long as it is reasonable to do so.

·         Expenses are recognized not when the work is performed, or when a product is produced, but when the work or the product is actually makes its contribution to revenue.

Pemadanan

·         Hasil yang diperoleh dipadankan dengan belanja yang dilibatkan dalam tempoh perakaunan yang sama.

4) Revenue recognition

•      companies may not record revenue until it is realized or realizable and when it is earned.

•      The flow of cash does not have any bearing on the recognition of revenue.

•      This is the essence of accrual basis accounting.

Pengiktirafan hasil

·         Perniagaan akan mengiktiraf hasilnya apabila barang niaga telah diserahkan atau servis telah dijalankan untuk pelanggan.

5) Full-disclosure

•      It requires that all material information has to be disclosed in the financial statements either on the face of the financial statements or in the notes to the financial statements.

Pendedahan penuh

·         Semua maklumat yang boleh mempengaruhi pengguna penyata kewangan perlu dilaporkan

6) Economic entity

•      a business or an organization and its owners are treated as two separately identifiable parties

•      It is necessary to record the business's transactions separately, to distinguish them from the owners' personal transactions

Entiti berasingan

·         Semua aktiviti perniagaan mestilah diasingkan daripada aktiviti ekonomi pemiliknya

7) Going concern

•      a business that functions without the threat of liquidation for the foreseeable future.

•      the entity has neither the intention nor the need to stop its operations.

Usaha berterusan

·         Perniagaan diandaikan mempunyai hayat yang berterusan bagi suatu jangka masa yang tidak terbatas

8) Time period

·         a firm's operating cycle is divided into separate accounting periods that can be reported on in a manner that is timely

·         the time period principle is the concept that a business should report the financial results of its activities over a standard time period, which is usually monthly, quarterly, or annually

Tempoh perakaunan

·         Hayat perniagaan perlulah dibahagikan kepada tempoh-tempoh tertentu bagi tujuan mengukur prestasi perniagaan

9) Conservatism

·         when in doubt on how to record or report or when two different acceptable methods could be used, choose the one that won’t overstate assets or profits

Konservatisme

·         Semua belanja yang mungkin berlaku perlu diambil kira tetapi hasil hanya direkod apabila ia direalis

10) Materiality

·         Report only those that are considered significant. Insignificant amounts need not be recorded and reported

Kematerialan

·         Hanya butir-butir yang berkepentingan relatif kepada keseluruhan perniagaan itu sahaja yang perlu direkodkan

What are Financial Statements?

•      A set of statements that explained about the profitability, equity or ownership, financial position or status, and cash operations of an entity.

•      These statements are prepared based on the recorded transaction, which are intended for users of financial information.

Example of financial statement:

1) Statement of Profit or Loss

JLCY Company Statement of Profit or Loss For the Year Ended December 31, 2020
	RM	RM	RM
Sales			XXXXX
(-) Sales return and allowance			XXXXX
Net Sales			XXXXX
Less: Cost of Merchandise Sold
Beginning inventory		XXXXX
(+) Net purchases cost		XXXXX
		XXXXX
(-) Ending inventory		XXXXX
Total cost of merchandise sold			XXXXX
Gross Profit			XXXXX
Deduce: Operating Expenses
Selling Expenses
Sales salaries expense	XXXXX
Advertising expense	XXXXX
Depreciation expense (Store equipment)	XXXXX
Delivery expense	XXXXX
Miscellaneous selling expense	XXXXX
Total selling expenses		XXXXX
Administrative expenses
Office salaries expense	XXXXX
Rent expense	XXXXX
Depreciation expense (Office equipment)	XXXXX
Insurance expense	XXXXX
Office supplies expense	XXXXX
Miscellaneous administrative expense	XXXXX
Total administrative expenses		XXXXX
Total Operating Expenses			XXXXX
Income from Operations			XXXXX
(+) Other Income:
Rent revenue		XXXXX
Interest revenue		XXXXX	XXXXX
			XXXXX
(-) Other Expense:
Interest expense			XXXXX
Net Income			XXXXX

 

2) Statement of Owner’s Equity

JLCY Company Statement of Owner’s Equity For the Year Ended December 31, 2020
	RM	RM
Capital, 1 Jan 2020		XXXXX
(+) Additional investment	XXXXX
Net income	XXXXX
	XXXXX
(-) Withdrawals	XXXXX
Increase in owner’s equity		XXXXX
Capital, 31 Dec 2020		XXXXX

 

3) Statement of Financial Position

JLCY Company Statement of Financial Position For the year ended December 31, 2020
	RM	RM	RM
Assets
Current Assets
Cash		XXXXX
Bank		XXXXX
Account receivable		XXXXX
Accrued revenues		XXXXX
Merchandise inventory		XXXXX
Office supplies		XXXXX
Prepaid expenses		XXXXX
Total current assets			XXXXX
Property, Plant, and Equipment
Land		XXXXX
Building		XXXXX
Truck	XXXXX
(-) Accumulated depreciation – Truck	XXXXX	XXXXX
Store equipment	XXXXX
(-) Accumulated depreciation – Store equipment	XXXXX	XXXXX
Office equipment	XXXXX
(-) Accumulated depreciation – Office equipment	XXXXX	XXXXX
Vehicle	XXXXX
(-) Accumulated depreciation – Vehicles	XXXXX	XXXXX
Total property, plant, and equipment			XXXXX
Total Assets			XXXXX
Liabilities
Current Liabilities
Accounts payable		XXXXX
Note payable (current portion)		XXXXX
Overdraft Bank		XXXXX
Unearned revenue		XXXXX
Expenses payable		XXXXX
Total current liabilities			XXXXX
Long-term Liabilities
Bank Loan		XXXXX
Note payable (final payment due in 5 years)		XXXXX
Bonds		XXXXX
Debenture		XXXXX
Total long-term liabilities			XXXXX
Total Liabilities			XXXXX
Owner’s Equity
Owner, capital, January 1, 2020		XXXXX
(+) Additional investment		XXXXX
Net income of the year		XXXXX
		XXXXX
(-) Owner, drawing		XXXXX
Owner, capital, December 31, 2020			XXXXX
Total Liabilities and Owner’s Equity			XXXXX

 

4) Statement of Cash Flows

JLCY Company Statement of Cash Flows For the year ended 31 December 2020
		RM	RM
Cash flows from operating activities:
	Cash receipts from customers	XXX
	Cash paid to suppliers, employees and expenses	(XXX)
	Cash generated from operations	XXX
	Interest paid	(XXX)
	Income taxes paid	(XXX)
	Net Cash flows from/used in operating activities		XXX
Cash flows from investing activities:
	Purchases of property, plant and equipment (PPE)	(XXX)
	Proceeds from the disposal of PPE	XXX
	Purchases of investment	(XXX)
	Interest received	XXX
	Dividend received	XXX
	Net cash flows from/used  in investing activities		XXX
Cash flows from Financing activities:
	Proceeds from the issue of share capital	XXX
	Proceeds from long-term borrowings	XXX
	Redemption of preference shares	(XXX)
	Repayment of long-term borrowings	(XXX)
	Dividend paid	(XXX)
	Net cash flows from/used in financing activities		XXX
	Net increase/decrease in cash and cash equivalents		XXX
	Cash and cash equivalent at the beginning of period		XXX
	Cash and cash equivalent at the end of period		XXX

 

Accounting Cycle

What are assets, liability and owner’s equity?

1) Assets are recourses owned by the business entity.

Aset dapat didefinisikan sebagai harta yang dimiliki oleh sesebuah organisasi perniagaan dan dimanfaatkan dalam menjalankan operasi perniagaan.

资产指一个商家或企业透过交易或非交易事项所获得的经济资源，同时也能够为个人或企业带来收益的东西。

2) There have two types of asset, which is property, plant, and equipment / non-current assets / long-term assets / fixed assets / plant assets (useful life more than one year) and current assets (useful life less than one year).

3) Examples of fixed assets (长期资产) :

4) Example of current assets （短期资产）:

5) Liability are debts owed to outsiders (creditors).

Liabiliti ialah obligasi atau tututan ekonomi hasil daripada urus niaga yang telah berlaku yang memerlukan pembayaran atau penyelesaiannya dalam bentuk tunai atau barangan / perkhidmatan.

负债是指因为过去的一些交易或事件，使得未来必须要牺牲的经济利益。这些负债可能来自于向银行或其他公司取得某些资产，这些现在获得的资产，有在未来偿还的义务；偿付负债，将会造成未来的资产减少。

6) There have two types of liability, which is non-current liability / long-term liability (debts payable over a longer period) and current liability (debts payable within one year).

7) Example of long-term liability (长期负债):

8) Example of current liability （短期负债）:

 9) Owner's equity is the owner's right to the assets of the business after all liabilities have been paid.

Ekuiti ialah bahagian tuntutan pemilik perniagaan ke atas baki aset selepas tuntutan yang dibuat oleh liabiliti.

股东权益指该企业或股东对资产清偿所有负债后剩余价值的所有权。

Components of Equity

1) Components of equity are opening capital (modal awal / 刚开始做生意时或是年头时的资本数目), revenue (hasil / 公司收入), expenses (belanja / 公司开销) and drawings (ambilan / 公司的老板拿公司的资产for私人用途).

2) For a proprietorship, the owner’s equity is represented by the balance of the owner’s capital account.

3) Revenues are increases in assets and owner’s equity as a result of selling products or services to other companies or customers.

Hasil ialah satu amaun yang diperoleh daripada syarikat lain atau pelanggan atas penyerahan barang niaga atau perkhidmatan dan ia akan menambahkan nilai aset dan ekuiti pemilik dalam perniagaan.

4) Some examples of revenue are :

·         Net sales

·         Fees earned

·         Commission revenue

·         Rent revenue

·         Interest revenue

·         Dividends received

5) Expenses are the using up of assets or consuming services in the process of generating revenues.

Belanja merupakan kos perkhidmatan atau barangan yang digunakan untuk mendapatkan hasil dan ia akan mengurangkan nilai aset dan ekuiti pemilik dalam perniagaan.

6) Some examples of expense are :

·         Supplies expense

·         Wages expense

·         Rent expense

·         Miscellaneous expense

·         Utilities expense

7) The amount of withdrawals made by owner are called drawing account. Drawing are decrease the value of owner’s equity.

Ambilan merupakan pemilik mengambil tunai / barang niaga / aset-aset lain yang dipunyai oleh perniagaan atas tujuan peribadi.

The Accounting Equation

1) The resources owned by a business are its assets.

2) The rights of creditors are called liabilities while the rights of the owners are called owner’s equity.

3) The equation Assets = Liabilities + Owner’s Equity is called the accounting equation, which expresses the relationship between what is owned and what is owed by an entity.

4) It is the basis upon which the double entry accounting system is constructed.

Double-Entry Accounting System (Sistem Catatan Bergu / 复式记账法)

1) Every business transaction to be recorded in at least two accounts.

Mengikut sistem catatan bergu, setiap urus niaga yang berlaku akan mengakibatkan sekurang-kurangkan satu catatan debit dan satu catatan kredit.

会计是以复式记账系统为基础，即记录每笔交易的双重影响(debit和credit)。在复式记帐法下，每一笔经济交易都要在至少两个account中记载。

2) The total debits recorded for each transaction to be equal to the total credits recorded.

Jumlah nilai di catatan debit mestilah sama dengan jumlah nilai di catatan kredit.

3) Has specific rules of debit and credit for recording transactions in the accounts.

Dalam sistem catatan bergu, kesan sesuatu urus niaga terhadap persamaan perakaunan dapat ditunjukkan seperti di bawah ini :

Account	Increasing	Decreasing
Asset	Debit	Credit
Liability	Credit	Debit
Owner’s Equity	Credit	Debit
Revenue	Credit	Debit
Expense	Debit	Credit
Drawings	Debit	Credit

 

4) Journal is a book of original entry in a double-entry system, listing all transactions, and indicating the accounts to which they belong.

分录簿复式簿记系统中登载原始账目的账本，记录下所有的交易，并表示出它们所归的专项分类帐。

Example 1

On 1 January 2020, Mrs. Marissa established Faster Enterprise in providing courier services for the Jitra Valley. The following transactions had taken place during the first month of its operation.

 

REQUIRED:

(a)       With referring to the basic accounting equation: Assets = Liabilities + Owner’s Equity, determine the effect of the following transactions to the equation.

(b)        Journalise all of transactions for the month of January 2020.

 

January	Transactions
1	RJ had invested RM100,000 cash and RM35,000 office equipment to the business as a means of capital.   Solution for accounting equation : Cash and office equipment are a type of current assets. It means that the assets in the business increases. Invest the owner’s assets in the business is called as capital, which means the owner’s equity also increases. Assets = Owner’s Equity Cash Office Equipment   Capital + RM 100000 + RM 35000 = + RM 135000 Solution for journal entry : The increases of asset accounts (cash & office equipment) must be record at debit side while the increases of owner’s equity (capital) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 01 Cash Office equipment        Capital (Invested cash and office equipment to the business) 10000 35000       135000
6	Purchased office supplies RM10,000 on credit.  Solution for accounting equation : Office supplies is the items that will be used in the business in the future, so it are called prepaid expenses, which are assets. Hence, the assets in the business increases. Then, the liability that created by a purchase on account is called an account payable. Assets = Liability Office Supplies   Account payable + RM 10000 = + RM 10000 Solution for journal entry : The increases of asset accounts (office supplies) must be record at debit side  while the increases of liability (account payable) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 06 Office supplies        Account payable (Purchased office supplies on credit) 10000       10000
8	Purchased a second-hand van for RM35,000 in cash. Solution for accounting equation : All types of vehicles including van are a type of fixed assets. Acquisition of second-hand van causes increasing of assets while payment for the van by cash will decreases the assets in business. So, this transaction is no affect to liability and owner’s equity. Assets = Owner’s Equity Cash Vehicles - Van   -  - RM 35000 + RM 35000 = 0 Solution for journal entry : The increases of fixed assets account (vehicle - van) must be record at debit side  while the decreases of current assets account (cash) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 08 Vehicles - Van        Cash (Purchased a second-hand van in cash) 35000       35000
17	Completed services to customers for RM40,000 in cash.  Solution for accounting equation : Based on revenue recognition principle, business revenues are realizable when the business already provided goods or services to its customers. So, the completed services can be record as revenue and it called fees earned. Thus, the increases of revenue cause the increases of owner’s equity. Received cash from customers means the assets are increases. Assets = Owner’s Equity Cash   Fees earned + RM 40000 = + RM 40000 Solution for journal entry : The increases of asset accounts (cash) must be record at debit side  while the increases of owner’s equity (revenue) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 17 Cash        Fees earned (Completed services to customers in cash) 40000     40000
20	Paid creditors RM5,000 for the office supplies purchased on 6 January.  Solution for accounting equation : Paid creditors causes the total cash dan the debt (account payable) in the business decreases. Assets = Liability Cash   Account Payable - RM 5000 = - RM 5000 Solution for journal entry : The decreases of liability accounts (account payable) must be record at debit side  while the decreases of asset account (cash) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 20 Account payable        Cash (Paid creditors on account) 5000       5000
25	Completed services for customer amounting RM25,000 and billed to the account. Solution for accounting equation : The completed services can be record as fees earned and the increases of revenue causes the increases of owner’s equity. The phases ‘billed to the account’ means the customer haven’t pay the money. So, these amounts need to record in account receivable. Account receivable is a current asset. Assets = Owner’s Equity Account Receivable   Fees earned + RM 25000 = + RM 25000 Solution for journal entry : The increases of asset accounts (account receivable) must be record at debit side  while the increases of owner’s equity (fees earned) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 25 Account Receivable        Fees earned (Completed services for customer and billed to the account. ) 25000       25000
29	Paid RM5,000 for employee salaries.  Solution for accounting equation : Employee salaries is a type of expenses of a business. Expenses are decreases in owner’s equity of a business. Assets = Owner’s Equity Cash   Salaries expenses - RM 5000 = - RM 5000 Solution for journal entry : The decreases of  owner’s equity (Salaries expenses) must be record at debit side  while the decreases of assets (cash) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 29 Salaries expenses        Cash (Paid salaries expenses) 5000       5000
29	Paid electric and miscellaneous expenses for the month RM2,000 and RM2,500 respectively.  Solution for accounting equation : Electrics are utilities expenses. Assets = Owner’s Equity Cash   Utilities expenses Miscellaneous expenses - RM 4500 = - RM 2000 - RM 2500 Solution for journal entry : The decreases of  owner’s equity (Utilities expenses & Miscellaneous expenses) must be record at debit side  while the decreases of assets (cash) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 29 Utilities expenses Miscellaneous expenses        Cash (Paid electric and miscellaneous expenses) 2000 2500       4500
29	RJ withdrew cash RM10,000 for personal use. Solution for accounting equation : The amount of withdrawals made by RJ are called drawing account. Drawing are decrease the value of owner’s equity. Assets = Owner’s Equity Cash   Drawings - RM 10000 = - RM 10000 Solution for journal entry : The decreases of  owner’s equity (drawings) must be record at debit side  while the decreases of assets (cash) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 29 Drawings        Cash (RJ withdrew cash for personal use) 10000       10000
30	Customer paid his bill in full amount for the services rendered on 25 January. Solution for accounting equation : Our business received the payment from account receivable. Hence, the account receivable can be close and the cash amount is increase. So, this transaction is no affect to liability and owner’s equity. Assets = Owner’s Equity Cash Account Receivable   - + RM 25000 - RM 25000 = 0 Solution for journal entry : The increases of asset account (cash) must be record at debit side  while the decreases of asset account (account receivable) could be recorded at credit side in journal entry. Date Description Debit (RM) Credit (RM) Jan 30 Cash        Account Receivable (Customer paid his bill for the services rendered) 25000       25000

 

The Adjusting Process

1) Under the accrual basis, some of the accounts need updating at the end of the accounting period for the following reasons:

·         Some expenses are not recorded daily or weekly.

·         Some revenues and expenses are incurred as time passes rather than as separate transactions.

·         Some revenues and expenses may be unrecorded.

2) The adjusting process is a process that analyse and updating of accounts at the end of the period before the financial statements are prepared.

3) The journal entries that bring the accounts up to date at the end of the accounting period are called adjusting entries.

Prinsip Perakaunan Diterima Umum menggariskan penyimpanan rekod-rekod di pembentangan penyata atau pelaporan perakaunan dibuat dengan berdasarkan asas akruan. Hal ini mematuhi prinsip pemadanan (Matching Principle), iaitu hasil yang diperoleh hendaklah dipadankan dengan belanja yang dibuat dalam sesuatu tempoh perakaunan. Tujuannya supaya pendapatan yang diperoleh adalah sebenarnya atau yang tepat.   Bagi tujuan mengukur keberuntungan (untung atau rugi) sesebuah perniagaan dalam sesuatu tempoh perakaunan, pelarasan ke atas akaun-akaun perlu dibuat pada tarikh akhir sesuatu tempoh perakaunan. Apabila pelarasan dibuat, maka ini bermakna hasil diiktiraf semasa hasil itu terperoleh sama ada pembayaran tunai sudah diterima atau belum diterima daripada pelanggan. Manakala apabila tunai telah diterima, tetapi perkhidmatan belum disempurnakan atau barangan belum lagi diserahkan kepada pelanggan, maka penerimaan tunai itu tidak boleh dimasuk kira ke dalam hasil bagi tempoh berkenaan. Begitu juga bagi belanja-belanja dan kos jika ia telah terlibat tetapi pembayaran tunai belum dibuat kepada pemiutang-pemiutang yang berkenaan, maka belanja itu perlu diiktiraf dalam tempoh perakaunan berkenaan. Sebaliknya, jika belanja telah dibayar terlebih dahulu seperti belanja sewa premis perniagaan atau bayaran polisi insurans maka hanya bahagian yang sudah luput tempoh (bahagian servis telah digunakan) sahaja yang diiktiraf sebagai belanja. Bakinya akan ditunjukkan sebagai aset.   Penerangan di atas merujuk kepada perakaunan asas akruan, iaitu satu bentuk perakaunan dengan hasil diktiraf apabila hasil itu diperoleh dan belanja diiktiraf apabila belanja itu dilibatkan. Sumber : Daripada buku teks Oxford Fajar Ace Ahead STPM Perakaunan Penggal 1

 

4) Prepaid expenses are the advance payment of future expenses and are recorded as assets when cash is paid.

Belanja prabayar ialah perbelanjaan yang dibayar terlebih dahulu oleh perniagaan tetapi barangan atau perkhidmatan yang berkaitan belum lagi diterima daripada pembekal barangan dan perkhidmatan.

举个例子，公司已经在年头付了今年一整年的insurance费用，这笔钱可说是prepaid expenses，并不是真正的expenses，因为公司还没真正开始使用到insurance。

Extra Example: Paid the insurance expense RM 1000 for this 4 months at 1 September 2020.   Before Adjustment Entry: Recording for Sep 01 Dt: Prepaid insurance  RM 1000 Ct: Bank                      RM 1000   After Adjustment Entry: Recording for Dec 31 Dt: Insurance               RM 1000 Ct: Prepaid insurance  RM 1000

 

5) Unearned revenues are the advance receipt of future revenues and are recorded as liabilities when cash is received.

Dalam kaedah asas akruan, jika tunai diterima terlebih dahulu sebelum barang dan perkhidmatan diserahkan kepada pelanggan, maka penerimaan itu direkodkan sebagai liabiliti dan dikenali sebagai hasil belum terperoleh.

举个例子，自己公司提前收别人的租金，可是还没开始真正租房子给他们，这种交易叫做unearned revenue。Unearned revenue并非真正的revenue，因为公司还没提供货物或服务给顾客。

Extra Example: Rent revenue of RM 3000 for a three-month period covering from Oct 2020 until Dec 2020 on 1 Oct 2020.   Before Adjustment Entry: Recording for Oct 01 Dt: Bank                 RM 3000 Ct: Unearned rent   RM 3000   After Adjustment Entry: Recording for Oct 31 Dt: Unearned rent   RM 1000   (3000 / 3) Ct: Rent revenue     RM 1000

 

6) Accrued revenues are unrecorded revenues that have been earned and for which cash has yet to be received.

Hasil belum terima ialah hasil yang sudah diperoleh (barang / perkhidmatan telah diserahkan kepada pelanggan) tetapi tunai masih belum diterima oleh pelanggan.

Accrued revenues是指公司已经为顾客提供货物或服务可是还没收到顾客的钱。Accrued revenues是一种短期的asset。

Extra Example: Interest revenue RM 500 for Oct is yet to be received on Nov   Before Adjustment Entry: Recording for Oct 31 Dt: Interest receivable  RM 500 Ct: Interest revenue      RM 500   After Adjustment Entry: Recording for Nov 30 Dt: Bank                         RM 500 Ct: Interest receivable    RM 500

 

7) Accrued expenses are unrecorded expenses that have been incurred and for which cash has yet to be paid.

Belanja terakru ialah belanja yang sudah dilibatkan (barang / perkhidmatan telah diterima), tetapi pembayaran belum lagi dibuat oleh perniagaan kepada pembekal pada tarikh akhir tempoh perakaunan.

Accrued expenses是指公司还没缴付目前的费用，可算是一种短期的liability。

Extra Example: Utility expense RM 300 for Sep will be paid at the end of Oct   Before Adjustment Entry: Recording for Sep 30 Dt: Utility expense  RM 300 Ct: Utility payable   RM 300   After Adjustment Entry: Recording for Oct 31 Dt: Utility payable  RM 300 Ct: Bank                  RM 300

 

Asset	Accrued revenues	Prepaid expense
Liability	Unearned revenues	Accrued expense

 

Example 2

Firas company is a small editorial services company owned and operated by Firas. On October 31, 2019, the end of the current year, Firas company’s accounting clerk prepared the unadjusted trial balance shown below:

Firas Company Unadjusted Trial Balance October 31,2019
	Debit (RM)	Credit (RM)
Cash	7,500
Accounts receivable	38,400
Prepaid insurance	7,200
Supplies	1,980
Land	112,500
Building	150,250
Accumulated Dep.-Building		87,550
Equipment	135,300
Accumulated Dep-Equipment		97,950
Accounts payable		12,150
Unearned rent		6,750
Share capital-ordinary		75,000
Retained earnings		146,000
Dividends	15,000
Fees earned		324,600
Salaries and wages expense	193,370
Utilities expense	42,375
Advertising expense	22,800
Repair expense	17,250
Miscellaneous expense	6,075
TOTAL	750,000	750,000

 

The data needed to determine year-end adjustments are as follows:

REQUIRED:

(a)        Prepare the relevant adjusting journal entries.

	Adjustments
a.	Unexpired insurance at October 31, RM5,400.   Solution : An end of period adjustment is needed to update the prepaid expense account. At the end of October, the prepaid insurance is decreased (credited) for the amount of the prepaid insurance that has expired, so it became real insurance expenses. Hence, the insurance expense is increased (debited). The amount of insurance expense is the difference between the earlier prepaid insurance and unexpired insurance (RM 7200 – RM5400).   Date Description Debit (RM) Credit (RM) Oct 31 Insurance expenses        Prepaid insurance (Insurance expired) 1800       1800
b.	Supplies on hand at October 31, RM375   Solution : We need to do adjustment on supplies account because some of supplies have been used. So, the amount to be transferred from asset account to the expense account is computed as follows : Supplies expense = Supplies available before adjustment (balance of account) – Supplies on hand (October 31) = RM 1980 – RM 375 = RM 1605   Date Description Debit (RM) Credit (RM) Oct 31 Supplies expense        Supplies (Supplies used) 1605       1605
c.	Depreciation of building for the year, RM6,000   Solution : As time passes, all of fixed assets include building (expect land) will lose their ability to provide useful services. This decrease in usefulness is called depreciation. As fixed assets depreciates, a portion of its cost should be recorded as an expense. The periodic expense is called depreciation expense.   Date Description Debit (RM) Credit (RM) Oct 31 Depreciation expense        Accumulated depreciation - Building (Depreciation on building) 6000       6000
d.	Depreciation of equipment rate is 5% on cost per annum   Solution : Depreciation expense = RM 135300 × 5 % = RM 6765   Date Description Debit (RM) Credit (RM) Oct 31 Depreciation expense        Accumulated depreciation - Equipment (Depreciation on equipment) 6765       6765
e.	Rent unearned at October 31, RM1,350   Solution : Based on revenue recognition principle, rent revenues are realizable when the business already provided a place to the customers for rent. So, as time passes, the unearned rent is decreased (debited) for the amount of the rent revenue that has been earned, and the related rent revenue account is increased (credited).  So, the calculation is 6750 – 1350.   Date Description Debit (RM) Credit (RM) Oct 31 Unearned rent        Rent revenue (Rent earned) 5400       5400
f.	Accrued salaries and wages at October 31, RM2,900   Solution : Accrued expenses are a type of current liability.   Date Description Debit (RM) Credit (RM) Oct 31 Salaries and wages expenses        Salaries and wages payable (Accrued salaries and wages) 2900       2900
g.	Fees earned but unbilled on October 31, RM18,600. Solution : The word ‘unbilled’ means the customer haven’t pay the money. So, these amounts need to record in account receivable. Account receivable is a current asset. Date Description Debit (RM) Credit (RM) Oct 31 Account Receivable        Fees Earned (Accrued fees) 18600       18600