FINAL PROJECT

INTERMEDIATE FINANCIAL ACCOUNTING & REPORTING

(ACC406)

- ACCOUNTING SIMULATION -

PREPARED BY:
FATIN AMIRAH BINTI TAJUL 'ARUS
2017481602
NUR FARHANA BINTI MOHD SUFI
2017696158
FATIN HUDA BINTI ADNAN
2018841526
MIMI AINUR AZUWA BINTI BADRUZZAMAN
2018649942

GROUP: NBO1B

PREPARED FOR:
MADAM SITI SYAQILAH BINTI HAMBALI
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ACKNOWLEDGEMENT

The accomplishment and finishing outcome of this assignment required a lot of guidance
and assistance from people involved. We are very grateful to have got this all along the
completion of our group assignment work. Hence, we would like to take this opening to thanks
to them. Not to forget a special thanks to our lecturer, Madam Siti Syaqilah binti Hambali who
giving us an opportunity to do this assignment work and providing us the support and guidance
in order to complete this group assignment on time.

This report would not been possible without the essential and courteous support of Ms
Fatin Nabila binti Tajul ‘Arus, a sole-proprietor of perfume trading. Her willingness to share the
information contributed tremendously to our report. In addition, we would like to thank to her on
providing good environment and facilities to complete this report.

Finally, we are really grateful because we managed to complete this assignment within
the time given by Madam Siti Syaqilah binti Hambali. This assignment cannot be completed
without the effort and cooperation from our group members; Farhana, Fatin Huda, Fatin Amira
and Mimi. We also would like to express our gratitude to our friends for the support and
willingness to spend some time with us.

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ACKNOWLEDGEMENT………………………………………………………………….….. 2

TABLE OF CONTENTS………………………………………………………………….….. 3

1. Introduction……………………………………………………………………………. 4
2. Content:
i. Organization Background…………...………………………………………. 5
ii. Business Transactions……………………………………………..………… 6-7
iii. Accounting Transactions ……………………………………………………. 8-10
iv. Specialized Journals…………………………………………………………..11-13
v. Subsidiary Ledgers Account …..……………………………………………..14-19
vi. Trial Balance Statement……………………………………………………… 20
3. Conclusions………………………………………….……......................................... 21

BIBLIOGRAPHY/REFERENCES…………………………………….………………………. 22

APPENDICES

I. Appendix 1
II. Appendix 2

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1. INTRODUCTION

According to Financial Accounting for Non-Accounting Students 5 th Edition (Fatimah Abd

Rauf, Amla Abu and Radziah Mahmud), sole proprietorship referred to a business owned and
run by one individual with no legal distinction between owner and the business. In Malaysia,
sole proprietorship registered under the Registration of Business Act 1956, which is under the
jurisdiction of Companies Commission of Malaysia (CCM) under the Domestic Trade and
Consumers Affairs Ministry.

As the sole proprietor is not a legal entity, the owner is entitled to all profits made from
the business. However, the owner’s liability is unlimited, not just when the business is having
financial difficulty, but also when business fails and faces bankruptcy. There are difficulties
concerning to the availability of accounting information as there is no obligation for sole
proprietorship businesses to submit audited accounting reports to CCM every year. Therefore,
most owners of sole proprietorships tend to neglect the preparation of proper accounting
records. Some owners also exaggerate or underestimate the business’s financial position for
their own purposes. So, it becomes a tedious process to access the sole proprietor’s true
financial stability when, for instance, the owner wishes to apply for a bank loan.

In accounting process, various details and information about the business transactions
of the organization must be collected. The obtained information will be recorded and then
organize to come up with a proper report. In this topic, we will learn the accounting process
which starting with identifying and analyzing business transactions, then maintaining the records
of transactions in a journal, then posting a transaction to a ledger, and continue with the trial
balance before we can prepare the financial statements.

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2. ORGANIZATION BACKGROUND

Name of company : Fragrance Secrets

Date commencement : 01/08/2018
Nature of business : Perfume Retail
Capital contributed : RM10,500.00
Owned by : Fatin Amirah binti Tajul ‘Arus
Address : No 15A, Lorong Mewah 10, Bandar Tun
Razak, 56000 Cheras, Kuala Lumpur
Telephone num : 018-3244096

Fragrance Secrets is a retailer selling perfumes as its product to a diversity of

range of customers. It used approaches to promote the business through establishing
relationships with people in the community. There are a number of selections of perfume
offered in this business. Products available are Paco Rabanne, Ralph Lauren, Chanel
Paris, Marc Jacobs, Dior, DKNY, Giorgio Armani, Hugo Boss, Mont Blanc, CK, YSL and
Lacoste brands. Like other organizations, Fragrance Secrets also use marketing
strategy in order to acquire its customers. It use few ways in order to approach the
customer. One method is to hold inventory, which buy products in bulk, unpack them,
and ship them to customers to generate sales.

Second method is to promote using website or e-commerce and ship individual

items directly to customer. The Internet has become a new way of distributing perfumes,
despite the fact that consumers cannot test the fragrance before buying. It’s easy and
cheap to set up and manage, flexibility on running ecommerce business from anywhere,
and possible profit and scale of business are unlimited. Besides, the owner also use
strategy communicates with consumers directly by using face-to-face interactions and
other promotions which encourages consumers to demand a particular perfume. At this
point, the business owner can acquire new customers by allow them to test the
fragrance before they buy the products.

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3. BUSINESS TRANSACTIONS BETWEEN BUSINESS, SUPPLIER AND

CUSTOMERS

In Fragrance Secrets, the accounting process starts with recording of business transactions
that are taken from several of source document, depends on type of the transactions. Source
documents used are invoices, receipts, cheque stub, Good Return Note and others. They are
classified and recorded in books of prime entry. The business transactions in this sole trading
business as per below:

1) Credit transactions:
i. On 2nd August 2018, Fragrance Secrets bought furniture and fittings on credit
from Saidina Furniture into the business amounting to RM7,500.
ii. On 3rd August 2018, purchase goods on credit from Acharr Wholesale worth
RM10,000.
iii. On 8th August 2018, sold goods on credit to Sheerina Trading worth RM3,500.
iv. On 25th August 2018, credit sales to Sara worth RM500.

2) Return transactions:
i. On 5th August 2018, returned defective goods amounting RM500 to Saidina
Furniture.
ii. On 15th August 2018, receive returned damaged goods worth RM300 from Zarina
Trading.

3) Cash transactions:
i. On 1st August 2018, Fragrance Secrets started the business and deposited cash
in bank, RM3,000.
ii. On 1st August 2018, Fragrance Secrets bought perfume testers and shelves
using owner’s cash amounting RM3,000.
iii. On 12th August 2018, sold goods to Zarina Trading worth RM4,000 by cash.
iv. On 24th August 2018, issued an invoice to Scent Enterprise worth RM5,000

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4) Drawing transactions:
i. On 20th August 2018, owner took out goods worth RM100 for her sister’s birthday
present.
ii. On 27th August 2018, owner withdraws RM1,000 from business for his own use.

5) Operating expenses transactions:

i. On 4th August 2018, RM400 was paid for advertising.
ii. On 30th August 2018, paid utility bill by cash RM250.

6) Other revenue transactions:

i. On 29th August 2018, owner received rent RM500 by cheque for half of shop lot
rented.
ii. On 31st August 2018, owner received commission by cash RM300.

7) Other transactions:
i. On 25th August 2018, owner invest RM1,500 cash to Unit Trust for business.
ii. On 26th August 2018, owner brought in further cash RM3,000 into the business.
iii. On 28th August 2018, owner paid the amount owed to Saidina Furniture by
issuing a cheque, RM3,500

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4. ACCOUNTING TRANSACTIONS

Business transactions comprises of five categories of account which is assets, owner’s

equity, liability, revenues and expenses. The basic accounting equation of Assets = Capital +
Liabilities forms the basis of the whole double entry bookkeeping system. Every transaction will
have double effects on the accounting equation.

The accounting transactions as per below:

Date Effect Action BOPE

1/8/2018 Increase in Asset Debit Bank account Cash Receipt
Increase in Capital Credit Capital Journal
1/8/2018 Increase in Asset Debit Equipment
General Journal
Increase in Capital Credit Capital
2/8/2018 Increase in Asset Debit Furniture
General Journal
Increase in Liability Credit Saidina Furniture
3/8/2018 Increase in Asset Debit Purchases
Purchase Journal
Increase in Liability Credit Acharr Wholesale
4/8/2018 Decrease in Asset Debit Advertising expenses Cash Payment
Increase in Expenses Credit Cash Journal
5/8/82018 Decrease in Asset Debit Saidina Furniture Return Outwards
Decrease in Liability Credit Return Outwards Journal
8/8/2018 Increase in Revenue Debit Sheerina Trading
Sales Journal
Increase in Asset Credit Sales
12/8/2018 Increase in Revenue Debit Cash Cash Receipt
Increase in Asset Credit Sales Journal
15/8/2018 Increase in Asset Debit Return Inwards Return Inwards
Decrease in Revenue Credit Zarina Trading Journal

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Date Effect Action BOPE

20/8/2018 Increase in Drawing Debit Drawing
General Journal
Decrease in Asset Credit Purchases
24/8/2018 Increase in Revenue Debit Scent Enterprise
Sales Journal
Increase in Asset Credit Sales
25/8/2018 Increase in Revenue Debit Sara
Sales Journal
Increase in Asset Credit Sales
25/8/2018 Decrease in Asset Debit Unit Trust account Cash Payment
Increase in Asset Credit Capital Journal
26/8/2018 Decrease in Asset Debit Cash Cash Receipt
Increase in Capital Credit Capital Journal
27/8/2018 Increase in Drawing Debit Drawing
General Journal
Decrease in Asset Credit Cash
28/8/2018 Decrease in Liability Debit Saidina Furniture Cash Payment
Decrease in Asset Credit Bank account Journal
29/8/2018 Increase in Asset Debit Bank account Cash Receipt
Increase in Revenue Credit Rent receivable Journal
30/8/2018 Decrease in Asset Debit Utility bill Cash Payment
Increase in Expenses Credit Cash Journal
31/8/2018 Increase in Revenue Debit Cash Cash Receipt
Increase in Asset Credit Commission receivable Journal

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General Journal
Date Accounts Folio Debit (RM) Credit (RM)
1/8/2018 Debit Bank account CRL 3,000
Credit Capital CRL 3,000
1/8/2018 Debit Office Equipment GL 3,000
Credit Capital GL 3,000
2/8/2018 Debit Furniture GL 7,500
Credit Saidina Furniture GL 7,500
3/8/2018 Debit Purchases PL 10,000
Credit Acharr Wholesale PL 10,000
4/8/2018 Debit Advertising expenses CPL 400
Credit Cash CPL 400
5/8/2018 Debit Saidina Furniture ROL 500
Credit Return Outwards ROL 500
8/8/2018 Debit Sheerina Trading SL 3,500
Credit Sales SL 3,500
12/8/2018 Debit Cash CRL 4,000
Credit Sales CRL 4,000
15/8/2018 Debit Inwards Journal RIL 300
Credit Zarina Trading RIL 300
20/8/2018 Debit Drawing GL 100
Credit Purchases GL 100
24/8/2018 Debit Scent Enterprise SL 5,000
Credit Sales SL 5,000
25/8/2018 Debit Sara SL 500
Credit Sales SL 500
25/8/2018 Debit Unit Trust CPL 1,500
Credit Capital CPL 1,500
26/8/2018 Debit Cash CRL 3,000
Credit Capital CRL 3,000
27/8/2018 Debit Drawing GL 1,000
Credit Cash GL 1,000
28/8/2018 Debit Saidina Furniture CPL 3,500
Credit Bank CPL 3,500
29/8/2018 Debit Bank account CRL 500
Credit Rent receivable CRL 500
30/8/2018 Debit Utility bill CPL 250
Credit Cash CPL 250
31/8/2018 Debit Cash CRL 300
Credit Commission received CRL 300

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5. SPECIALISED JOURNALS

1) General Journal
General journal is in which only those transactions are recorded that cannot be recorded in
special journals.
Date Particular Debit (RM) Credit (RM)
1/8/2018 Perfume testers & Shelves 3,000
Capital 3,000
2/8/2018 Furniture & Fittings 7,500
Saidina Furniture 7,500
20/8/2018 Drawing 100
Purchases 100
27/8/2018 Drawing 1,000
Cash 1,000

2) Cash Receipts Journal 

Cash receipts journal is used to keep track of the sales of items when cash is received,
by crediting sales and debiting cash and transactions related to receipts. Cash receipts
journal is only records the cash inflow of the business.

Official
Amount (RM)
Date Account Receipt/
Folio
credited Cheque Bank Cash Discount Debtor Sales Other
Aug
No Allowed Account
2018 Dr. Dr. Cr. Cr.
Cr. Cr.
1st Bank CRL 3,000 3,000

12th Sales No 1001 CRL 4,000 4,000

26th Cash CRL 3,000 3,000
Rent
29th 350900 CRL 500 500
receivable
Commission
31st CRL 300 300
receivable
31st Total 3,500 7,300 4,000 6,800

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3) Cash Payment Journal 

Cash payments journal is used to record all cash or cheque payments made by a
company. Major cash payments in business are payments to creditors, cash purchases
of merchandise, supplies, assets, cash payments and cash refunds to customers.
Example of source document are cheque stubs and debit notes.

Amount (RM)
Date Account Cheque
Folio
debited No Bank Cash Discount Creditor Purchase Other
Aug
Received Account
2018 Cr. Cr. Dr. Dr.
Cr. Dr.
Advertising 400 400
4th CPL
expenses
25th Unit Trust CPL 1,500 1,500
Saidina
28th 370100 CPL 3,500 3,500
Furniture
30th Utility bill CPL 250 250
31st Total 3,500 2,150 3,500 2,150

4) Sales Journal

The sales journal is a specialized journal used to record credit sales. The sales journal is
basically a chronological list of the sales invoices and to avoid cluttering the general
ledger with too much detail, and to allow for segregation of duties. The sales journal only
includes credit sales to customers for merchandise.

Date Particular Invoice No Folio Amount (RM)

8/8/2018 Sheerina Trading SL 3,500

24/8/2018 Scent Enterprise FS10025 SL 5,000

25/8/2018 Sara SL 500

31/8/2018 Transfer to Sales Account GL1 9,000

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5) Purchases Journal
A purchases journal is a specialized journal in which is use to store information about
purchasing transactions. Any transaction entered into the purchases journal involves a
credit to the accounts payable account and a debit to the expense or asset account to
which a purchase relates. Example of source document used is purchase invoice.

Date Particular Invoice No Folio Amount (RM)

3/8/2018 Archarr Wholesale AW200-01 PL 10,000

31/8/2018 Transfer to Purchase Account GL2 10,000

6) Return Outwards Journal

Returns outwards journal, also known as purchases returns journal is a specialized
journal in which is use to records returns or allowance in respect of goods purchased.
They are goods which were purchased from customer, however, because of being
unsatisfactory or a different reason were returned back to the suppliers.

Date Particular Debit Note No Folio Amount (RM)

5/8/2018 Saidina Furniture DN0818-01 ROL 500

31/8/2018 Transfer to Return Outwards Account GL3 500

7) Return Inwards Journal

Returns inwards journal, also known as sales returns journal is a specialized journal in
which is use to records returns or allowance in respect of goods sold. They are goods
which is returned to the selling entity by the customer, due to outright returns of goods.

Date Particular Credit Note No Folio Amount (RM)

15/8/2018 Zarina Trading CN0818-01 RIL 300

31/8/2018 Transfer to Return Inwards Account GL4 300

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6. SUBSIDIARY LEDGERS ACCOUNT

Bank Account
Date Particulars Ref. Amount Date Particulars Ref. Amount
(RM) (RM)
1/8/18 Capital CRL 3,000 27/8/18 Drawing GL 1,000
29/8/18 Rent received CRL 500 28/8/18 Saidina Furniture CPL 3,500
31/8/18 Bal c/d 1,000
4,500 4,500
1/9/18 Bal b/d 1,000

Capital
Date Particulars Ref. Amount Date Particulars Ref. Amount
(RM) (RM)
1/8/18 Bank CRL 3,000
1/8/18 Perfume testers & GL 3,000
Shelves
25/8/18 Unit Trust CPL 1,500
26/8/18 Cash CRL 3,000
31/8/18 Bal c/d 10,500 10,500
1/9/18 Bal b/d 10,500

Perfume testers & Shelves

Date Particulars Ref. Amount Date Particulars Ref. Amount
(RM) (RM)
1/8/18 Capital GL 3,000
3,000 1/9/18 Bal b/d 3,000
31/8/18 Bal c/d 3,000

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Furniture & Fittings

Date Particulars Ref. Amount Date Particulars Ref. Amount
(RM) (RM)
2/8/18 Saidina Furniture GL 7,500
7,500 1/9/18 Bal b/d 7,500
31/8/18 Bal c/d 7,500

Saidina Furniture
Date Particulars Ref. Amount Date Particulars Ref. Amount
(RM) (RM)
5/8/18 Return Outwards ROL 500 2/8/18 Furniture & Fittings GL 7,500
28/8/18 Bank CPL 3,500
31/8/18 Bal c/d 3,500
7,500 7,500
1/9/18 Bal b/d 3,500

Purchases
Date Particulars Ref. Amount Date Particulars Ref. Amount
(RM) (RM)
3/8/18 Acharr Wholesale PL 10,000 20/8/18 Drawing GL 100
1/9/18 Bal b/d 9,900
10,000 10,000
31/8/18 Bal c/d 9,900

Advertising Expense
Date Particulars Ref. Amount Date Particulars Ref. Amount
(RM) (RM)
4/8/18 Cash CPL 400
400 1/9/18 Bal b/d 400
31/8/18 Bal c/d 400

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Cash
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
26/8/18 Capital CRL 3,000 4/8/18 Advertising expense CPL 400
31/8/18 Commission CRL 300 29/8/18 Utility bill CPL 250
received
31/8/18 Bal c/d 2650
3,300 3,300
1/9/18 Bal b/d 2,650

Sales
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
8/8/18 Sheerina Trading SL 3,500
12/8/18 Zarina Trading CRL 4,000
24/8/18 Scent Enterprise SL 5,000
25/8/18 Sara SL 500
31/8/18 Bal c/d 13,000 13,000
1/9/18 Bal b/d 13,000

Acharr Wholesale
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
3/8/18 Purchases PL 10,000
31/8/18 Bal c/d 10,000 10,000
1/9/18 Bal b/d 10,000

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Sheerina Trading
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
8/8/18 Sales SL 3,500
3,500 1/9/18 Bal b/d 3,500
31/8/18 Bal c/d 3,500

Zarina Trading
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
12/8/18 Sales CRL 4,000 15/8/18 Return Inwards RIL 300
1/9/18 Bal b/d 3,700
4,000 4,000
31/8/18 Bal c/d 3,700

Scent Enterprise
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
24/8/18 Sales SL 5,000
5,000 1/9/18 Bal b/d 5,000
31/8/18 Bal c/d 5,000

Sara
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
25/8/18 Sales SL 500
500 1/9/18 Bal b/d 500
31/8/18 Bal c/d 500

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Return Outwards
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
5/8/18 Saidina Furniiture ROL 500
500 1/9/18 Bal b/d 500
31/8/18 Bal c/d 500

Return Inwards
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
15/8/18 Zarina Trading RIL 300
300 1/9/18 Bal b/d 300
31/8/18 Bal c/d 300

Drawing
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
20/8/18 Purchases GL 100
27/8/18 Bank GL 1,000
1,100 1/9/18 Bal b/d 1,100
31/8/18 Bal c/d 1,100

Unit Trust
Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
25/8/18 Capital CPL 1,500
1,500 1/9/18 Bal b/d 1,500
31/8/18 Bal c/d 1,500

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Rent Received account

Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
29/8/18 Bank CRL 500
500 1/9/18 Bal b/d 500
31/8/18 Bal c/d 500

Utility Bill
Date Particulars Ref. Amount Date Particulars Ref. Amount
(RM) (RM)
30/8/18 Cash CPL 250
250 1/9/18 Bal b/d 250
31/8/18 Bal c/d 250

Commission Received account

Amount Amount
Date Particulars Ref. Date Particulars Ref.
(RM) (RM)
31/8/18 Cash CRL 300
300 1/9/18 Bal b/d 300
31/8/18 Bal c/d 300

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7. TRIAL BALANCE

Trial Balance is a list of closing balances of ledger accounts on a certain date and is the
first step towards the preparation of financial statements. It is usually prepared at the end of an
accounting period to assist in the drafting of financial statements. Ledger balances are
segregated into debit balances and credit balances. Asset and expense accounts appear on the
debit side of the trial balance whereas liabilities, capital and income accounts appear on the
credit side.
Fragrance Secrets
Trial balance as at 31 August 2018
Particulars Debit (RM) Credit (RM)
Capital 10,500
Cash in bank 1,000
Cash in hand 2,650
Perfume testers and Shelves 3,000
Furniture and Fittings 7,500
Purchases 9,900
Sales 13,000
Advertising expense 400
Unit Trust 1,500
Utility expense 250
Rent received 500
Commission received 300
Returns inwards 300
Returns outwards 500
Account payables 13,500
Account receivables 12,700
Drawings 1,100
Total: 39,300 39,300

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8. CONCLUSION

In business, the accounting process starts with recording of business transactions that
are taken from several of source document, depends on type of the transactions. They are then
classified and recorded in books of prime entry such as journals. Accounting transactions
comprises of five categories of account, which is assets, owner’s equity, liability, revenues and
expenses.

The basic accounting equation of Assets = Capital + Liabilities forms the basis of the
whole double entry bookkeeping system. The equality of the accounting equation is always
maintained regardless of the number of transactions recorded in the business. Every transaction
will have double effects on the accounting equation. The effects will be an increase or decrease
whether in assets, liabilities or capital.

After that, the total will be posted to the appropriate accounts in the ledgers. In financial
accounting, journal is referring to a record of all the transactions of a business which occur
within a specific time period. The business transactions are recorded chronologically in a journal
each one with a short description. Specialized Journals are used by business which involved in
numerous transactions each day.

A subsidiary ledger is a group of similar accounts whose combined balances equal the
balance in a specific general ledger account. The combined balance of every account in this
subsidiary ledger equals the balance of accounts receivable in the general ledger.

At the end of month, trial balance is prepared. The purpose is to check whether
transactions have been recorded correctly in the books of accounts. Adjustment have to be
made if there are errors. If all accounting entries are recorded correctly and all the ledger
balances are accurately extracted, the total of all debit balances appearing in the trial balance
must equal to the sum of all credit balances.

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REFERENCES

1. http://www.readycompanies.com/SoleProprietor.htm

2. https://www.guru99.com/basic-transactions.html

3. https://accountingexplained.com/financial/introduction/journal

4. http://www.accounting-basics-for-students.com/Balancing-T-Accounts.html

5. Nabila, F. (28 July, 2018). How to Setup Sole Trading Perfume business. (F. Amirah,
Interviewer)

6. Financial Accounting for Non-Accounting Students 5th Edition by Fatimah Abd Rauf,
Amla Abu and Radziah Mahmud

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APPENDICES
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