Assignment 1 (CLO)

Qualitative characteristics for information serve a major supporting role in the

decision usefulness, decision model approach to accounting theory. This Qualitative
characteristics are the tributes that make the information provided in financial statements
useful to users. There is four qualitative characteristics which is Understandability,
Relevance, Reliability and Comparability.

Understandability meaning is the quality of information that enables users to perceive

its significance and the benefits of information may be increased by making it more
understandable that will hence useful to a wider circle of users. Presenting information which
can be understood only by sophisticated users and not by others, create a bias which is
inconsistent with the standard of adequate disclosure. Presentation of information should not
only facilitate understanding but also avoid wrong interpretation of financial statement. Thus,
understandable financial accounting information presents data that can be understood by
users of the information and is expressed in a form and with terminology adapted to the
user’s range of understanding.

Therefore, Understandability is the quality of information that enables users to

perceive its significance. The benefits of information may be increased by making it more
understandable and hence useful to a wider circle of users. Presenting information which can
be understood only by sophisticated users and not by others, create a bias which is
inconsistent with the standard of adequate disclosure. Presentation of information should not
only facilitate understanding but also avoid wrong interpretation of financial statement. Thus,
understandable financial accounting information presents data that can be understood by
users of the information and is expressed in a form and with terminology adapted to the
user’s range of understanding.

However, Relevance is closely and directly related to the concept of useful

information Relevance implies that all those items of information should be reported that may
aid the users in making decisions and predictions. In general, information that is given greater
weight in decision-making is more relevant to a decision. American Accounting
Association’s Committee to Prepare a Statement of Basic Accounting Theory defines
relevance as “the primary standard and requires that information must bear upon or be
usefully associated with actions it is designed to facilitate or result desired to be produced”
 Reliability is described as one of the two primary qualities (relevance and reliability)
that make accounting information useful for decision-making. Reliable information is
required to form judgments about the earning potential and financial position of a business
firm. Reliability differs from item to item. Some items information presented in an annual
report may be more reliable than others. For example, information about current assets
because of differences in uncertainty of realization. Reliability is that quality which permits
users of data to depend upon it with confidence as representative of what it purport to
represent.

Lastly, Comparable financial accounting information presents similarities and

differences that arise from basic similarities and differences in the enterprise or enterprises
and their transactions and not merely from difference in financial accounting treatment.
Information will assist the decision-maker to determine relative financial strengths and
weakness and prospects or more firms or between periods in a singles firm.
Assignment 2 : (CLO 2)

a) Asset = Capital + Liabilities + Revenue – Expenses

Transaction 1

Asset = Capital + Liabilities

Cash brought Capital RM50,000
In RM 50,000

Brought off Brought off office equipment -

Office RM 12,000
equipment
RM 12,000
Asset: Capital

50,000 + 12,000 50,000 + 12,000 -

= 62,000

Asset(62,000) = Capital (62000) + Liabilities (0)

Transactions 2

Asset = Capital + Liabilities

Cash (38000) = Capital (62,000) = Cash
50,000 (Cash) – (50,000) + office equipment
12,000 brought in (12,000)
(drawing)

Office (-) Drawing (12,000)

Equipment
(12,000)

Asset = Capital : 50,000 – 12,000 +

38,000 + 12,000 12,000 = 50,000

= 50,000

Asset (50,000) = Capital (50,000) + Liabilities (0)

Transaction 3

Asset = Capital + Liabilities + Revenue

Cash (41,000) Capital - Revenue Service
= (50,000) = Charges (7000)
38,000 (cash) + Cash (38000) +
3000 (cash office
sales) equipment
brought in
(12,000)
Office
equipment
(12,000)
Asset Capital: 38,000 - Revenue : 7000
41,000 + 12,000 +12,000
+ 4000 =50,000
=57,000

Asset (57000) = capital (50000) + liabilities (0) + Revenue (7000)

Transaction 4

Asset = Capital + Liabilities + Revenue

Cash (39,000) - Revenue Service

= 41,000(cash) charges (7000)
– 2000
(purchase office
supplies)

Office
equipment
(14,000) =
Office
equipment
(12,000) +
purchase office
supply (2000)

Account
Receivable
(4000)
Asset: Capital: - Revenue: 7000

39,000 + 14,000 38,000 +

+ 4000 = 57000 12,000
=50,000
Asset (57,000) = Capital(50,000) + Liabilities(0) + Revenue (7000)
Transaction 5

Asset = Capital + Liabilities + Revenue - Expenses

Cash (38,300) Capital - Service Expenses:
=39,000 (cash) – (50,000) charges Advertising
700(Advertising (7000) Expenses
expenses) (700)

Office
equipment(14,000
) = Office
equipment
(12,000) +
purchase office
supply (2000)

Account
Receivable (4000)
Asset: Capital: Revenue: Expenses:
7000 700
38,300 + 14,000 38,000 +
+ 4000 =56,300 12,000
=50,000

Asset(56300) = Capital (50000) + Liabilities (0) + Revenue (7000) – Expenses (700)

Transaction 6

Asset = Capital + Liabilities + Revenue - Expenses

Cash Capital - Service Expenses :
(38300) (50000) charge Advertising
(12000): Expenses
Office Current (700)
equipment service
(14000) charge
(7000) +
Account new
Receivable service
(9000): charges
(5000)
Account
Receivable
(4000) +
Service
Charges
(5000)
Asset: 38300 Capital: Revenue: Expenses:
+ 14000 + 38000 + 1200 12000 700
9000 = = 50000
61300

Asset (61300) = Capital (50000)+ Liabilities (0) + Revenue (12000) – Expenses (700)

Transaction 9

Asset = Capital + Liabilities + Revenue - Expenses

Cash Capital Prepaid Service Expenses:
(35300) = (50000) service charges Advertising
37700(cash) charges (12000) Expenses
– 2400 (3000) (700) +
(salary) Salary
(3600) +
Office Rental
equipment (2400)
(14000)

Account
Receivable
(9000)
Asset: Capital Liabilities Revenue: Expenses:
38000+1200 : 12000 6700
35300 + 0 3000
14000 + = 50000
9000
=58300

Asset (58300) = capital (50000) + liabilities (3000) + Revenue (12000) – Expenses (6700)

Transaction 10

Asset = Capital + Liabilities + Revenue - Expenses

Cash
(35300)
=37700(cash)
– 2400
(salary)

Office
equipment
(13600):
office
equipment
used (400)

Account
Receivable
(9000)

Asset: Capital: Liabilities: Revenue: Expenses:

35300+13600 38000+12000 3000 12000 7100
+ 9000 = =50000
57900

Asset (57900) = capital (50000) + liabilities (3000) + Revenue (12000) – Expenses (7100)

b.)

1.

DR/CR Journal Entry RM RM

DR Cash 50000

DR Office Equipment 12000

CR Capital (Hashem) 62000

TOTAL 62000 62000

Start business with 50000 cash, and brought in 12000 of office equipment.

2.

DR/CR Journal Entry RM RM

DR Hashem (Drawing) 12000

CR Cash 12000

TOTAL 12000 12000

Cash withdrawn amounting 12000 by the owner for personal used.

3.

DR/CR Journal Entry RM RM

DR Cash 3000

DR Account Receivable 4000

CR Services Charge 7000

(Sales)
TOTAL 7000 7000

Receive payment cash worth 3000, balance by credit sales.

4.

DR/CR Journal Entry RM RM

DR Office Equipment 2000

CR Cash 2000

TOTAL 2000 2000

Office equipment purchased worth 2000.

5.
DR/CR Journal Entry RM RM

DR Advertising Expenses 700

CR Cash 700

TOTAL 700 700

Payment of advertising expenses worth 700.

6.

DR/CR Journal Entry RM RM

DR Account Receivable 5000

CR Services Charges 5000

(Sales)

TOTAL 5000 5000

Services charges provided to customer worth 5000.

7.

DR/CR Journal Entry RM RM

DR Cash 3000

CR Prepaid payment 3000

TOTAL 3000 3000

Being amount received prepaid against the service provided on account amounting 3000.

8.

DR/CR Journal Entry RM RM

DR Salary 3600

CR Cash 3600

TOTAL 3600 3600

Salary expenses been paid amounting 3600.

9.

DR/CR Journal Entry RM RM

DR Office rental 2400

CR Cash 2400

TOTAL 2400 2400

Rental expenses been paid amounting 2400.

10.

DR/CR Journal Entry RM RM

DR Office supplies 400
expenses

CR Office Equipment 400

TOTAL 400 400

Office Supplies expenses been used amounting 400.

Question 2

Kembara Enterprise

an adjusted Trial Balance as at 31 December 2019

ACCOUNT TITLE DR (RM) CR (RM)

Cash 18500

Account receivable 15200

Prepaid insurance (2400-1200) 1200

Inventory 22800

Office equipment (4500-2500) 2000

Prepaid advertising (3400-300) 3100

Furniture and fitting 22600

Salaries expenses (5800+3300) 9100

Rental expenses (13200+2200) 15400

Utilities expenses (1200+350) 1550

Prepaid insurance 1200

Office equipment expenses 2500

Prepaid advertising 300

Depreciation of furniture and fitting 2260

Interest on loan 900

Accumulated depreciation (10400+2260) 12660

Unearned sales revenue 3700

Account payable 17500

Long term loan 12900

Capital - Kembara 24000

Sales revenue 42000

Salaries payable 3300

Rental payable 2200

Utilities payable 350

TOTAL 118610 118610

b)

Kembara Enterprise

an Income Statement for the year ended 31 December 2019

Sales 42000

(-) Cost of good sold 0

Gross profit 42000

(-) Expenses

Prepaid insurance (2400-1200) 1200

Prepaid advertising 3100

Depreciation of furniture and fittings 2260

Salaries 9100

Rental 15400

Utilities 1550

Office equipment expenses 2000

Interest on loan 900 35510

Net profit 6490

c)

Kembara Enterprise

Balance Sheet as at 31 December 2019

Current asset

Cash 18500

Account Receivable 15200

Prepaid advertisement 300

Prepaid insurance 1200

Inventory 22800 58000

Non current asset

Office equipment 2500

Furniture and Fitting (22600-12660) 9940 12440

70440

Liabilities

Unearned sales revenue 3700

Account payable 17500

Long term loan 12900

Salaries payable 3300

Rental payable 2200

Utilities payable 350 39950

Equity
Capital-Kembara 24000

Retained Earning 6490 30490

70440