Question 1

Transaction A
Stocks (+27,000), Trade Creditors (+27,000)
The company purchased stocks worth 27,000 on credit, which increased its trade creditors
account.
Transaction B
Land and building (+ 35000), Loan (+35000)
The company purchased land and building worth 35,000 by borrowing a loan, which
increased its loan account.

Transaction C
Stocks (-20000), Trade Debtors (+30000), Capital (+10000)
Trade debtors worth 30,000 were added by selling company stocks that cost 20,000, and the
owner brought personal stock that cost 10,000 to the business, which would lead to an
increase in capital.

Transaction D
Trade debtors (-13000), cash at bank (+13000)
A total of 13,000 cash at bank had been received from the trade debtor, which led to trade
debtor account decrease of 13,000.

Transaction E
Trade debtors (-2000), capital (-2000)
The company received a payment of 2,000 from trade debtors, and the owner withdrew the
money.

Transaction F
Cash at bank (-8000), capital (-5000), accrued expenses (-3000)
The owner withdrew a total of 5,000 and 3,000 was paid to the accrued expenses account.
Both transactions are done by cash.
Transaction G
Equipment (-30000), cash at bank (+21000), capital (-9000)
Equipment that cost 30,000 have been sold. Cash at bank with 21,000 was received, and the
owner withdrew 9,000.

Transaction H
Stocks (-1000), capital (-1000)
The stocks cost 1,000 and had been sold, and the owner withdrew the money.

Transaction I
Cash on hand (-6000), capital (-6000)
i. The owner withdrew 6,000 company’s cash on hand.
ii. The company experiences a loss of 6,000, affecting the capital and cash on hand
accounts.
Question 2
a) We must check our general journal accounts if a trial balance fails to
agree. Besides that, we need to check whether the debits and credits for
every transaction in Ledger Accounts are equal. Moreover, we need to
check the closing balance amount from the ledger accounts. Lastly, we
need to check the debits and credits column of the trial balance to see
whether each item is placed on the right side.
b) Identifying errors: Preparing a trial balance allows us to check for
account errors. If the total debits and credits do not balance, it indicates
an error in one or more accounts. This will enable us to identify and
correct the mistakes before preparing the financial statements, which
ensures that the statements are accurate.
Ensuring accuracy: A trial balance helps ensure the financial statements'
accuracy by providing a quick and easy way to verify that all the
transactions have been properly recorded. This helps to prevent errors
from being carried forward into the financial statements.
Facilitating adjustments: If there are any errors in the trial balance,
adjustments can be made before preparing the financial statements. This
ensures that the statements reflect the true financial position of the
business.
Saving time and effort: Preparing a trial balance before the financial
statements save time and effort in the long run. It allows you to identify
and correct errors early in the process, saving time and effort later.
Organized Record-Keeping: The trial balance clearly records all accounts
and balances, making it easier for us to prepare financial statements. The
trial balance summarizes all ledger accounts and their balances, making
understanding the business’s financial position easier.
Question 3
a)
Expense Accounts Revenue Accounts
i) Commissions Account i) Royalties Receivable
ii) Subscriptions Account Account
iii) Rent Account ii) Rent Receivable
iv) Motor Expenses Account Account
v) Postages Account iii) Bank Interest Account
vi) Telephone Account
vii) Stationery Account
viii) General Expenses
Account
ix) Wages Account
x) Overdraft Interest
Account
xi) Audit Fees Account
xii) Insurance Account

b) CASE 1
Assets (RM200 - RM30) = RM170
Liabilities = RM80
Capital = RM170-RM80 = RM90

When the business spends RM30 in cash hiring a van, the asset of the
business will decrease by RM30. This leads to the asset decrease from
RM200 to RM170, whereas the liability remains unchanged. Therefore,
according to Capital = Assets – Liabilities, the capital will decrease from
RM120 to RM 90.

CASE 2
Assets = RM200
Liabilities =RM80 + RM30= RM110
Capital = RM 200-RM110= RM90

When the business hires a van for a day at a cost of RM30 and is given
one month to pay the bill, the capital decrease from RM120 to RM 90 due
to Capital = Assets – Liabilities. This is due to the business haven’t pay
for it. Therefore, the liability will increase.