INTERMEDIATE FINANCIAL ACCOUNTING AND REPORTING (ACC406)

TOPIC: ORGANISATION OF ACCOUNTING INFORMATION IN THE

PREPARATION OF FINANCIAL STATEMENT OF FLOWER AND GIFT DELIVERY

PREPARED BY:
1. SITI NOR SYAMIMI ZUHAILI BINTI MOHD ZAWAWI (2020163633)
2. SITI NURSUHAILA SYAZWIN BINTI NORDIN (2020321079)
3. NUR RIDHWAH BINTI ZULKANAIN HASSAN (2020334419)
4.SITI NUR SYAFIQAH BINTI MAMAT @ MANSOR (2020978439)

PREPARED FOR:
ROSLINA BINTI ABDUL RAHIM
 TABLE OF CONTENT

NO. CONTENT

1. INTRODUCTION

3. BACKGROUND OF THE ORGANIZATION

4. CHARACTERISTICS OF BUSINESS

5. CLASSIFICATION OF BUSINESS ITEMS

6. RECORDING PROCESS OF THE BUSINESS: THE ACCOUNTING CYCLE

7. ADVANTAGES AND DISADVANTAGES OF ACCOUNTING RECORDING

PROCESS.

8. CONCLUSION

9. APPENDICES
INTRODUCTION

As a rule, each effective organization comes out with a productive business. Business is
an association or some other gathering occupied with business, proficient or modern exercises.
Concerning exercises, which is a business action that includes giving products or
administrations an essential thought process of acquiring benefits. The business objective is the
thing that makes the business go on and lead exercises in a since quite a while ago run. It is the
motivation behind why the business exists. As per the cutting ledge idea, the basic target of each
business is consumer loyalty as this is the thing that outcomes in many benefits.

Likewise, fiscal summaries permit bookkeepers to intermittently write about the

monetary well-being of an organization. A bookkeeping report is an occasion to make an
interpretation of bookkeeping data into an effectively meaningful organization and bookkeeping
reports can examine the monetary aftereffects of specific offices, items, activities, or the
organization all in all. Bookkeeping reports feature significant monetary data and help the
peruser comprehend the explanations behind the outcomes. Seclude huge organization occasions
that might have influenced monetary outcomes. The entrepreneurs and heads perusing the report
commonly have a more extensive expansiveness of information with respect to tasks and will
join their own guess.

CONTENT

Biby Empire
Name of company

Lot 2088-R, Pengkalan Chepa, 16100

Business Address
Kota Bharu, Kelantan Darul Naim.

Name of Owner Mrs. Zuraini Binti

E-mail flowergiftshop17@gmail.com

Telephone Number 011-1192 5541

Form of Business Sole Proprietorship

Main Activity Surprise Delivery Services

 Date Start of Business 2016

Business Upgrade 2021

Capital Distribution RM 25,000.00

8.00 am – 5.00 pm (Saturday-Thursday)

Friday-Off day
Operation Hours

According to the research that visit we undertook, the business was started in 2016 by
Miss Nurul Ain Nabihan. Nurul Ain Nabihan who are the owner of a business company. This
type of business is a pastry business consisting of Surprise Delivery Service Flower and Gift.
The early history of this business only helped my mother in that field. This is a family business
that they want her to take over in this business. When a business gets a response. The owner of
the company decided to market his business online. She wants to grow her business by using
sosial media like Instagram and Facebook apps. With the persistence of this business owner, her
followers on Instagram now reach 5,400. Having grown her business, she not only does birthday
surprise services but she also does special day services like mother’s day, teacher’s day and so
on.

Objective

To produce surprise flower and gift services

Mission

To attract and attain customers with worthy products

Vision

To be the most successful and respected surprise delivery service in the country.
1.0 BACKGROUND OF THE ORGANIZATION

Owner capital

Proprietor's value is one of the three principle segments of a sole ownership's asset report
and one of the parts of the bookkeeping condition. Proprietor's value speaks to the proprietor's
interest in the business short the proprietor's draws or withdrawals from the business in addition
to the overall gain since the business started. It is the monetary commitment of the business to
the proprietor.

Moreover, the value of the owner is expressed in the capital that has been changed,
taking into account the profits or losses of the business and the withdrawals made by the owner.
The owner of Biby flower and Gift Surprise Shop is Nurul Ain Nabihan Binti Mohd Suhaimi
who started the business with her own capital. Capital circulation is RM25 000.00. It consists of
store rent, bills and costs, machines and various things.

Location

The business of i Biby flower and Gift Surprise Shop is located at Lot 2088-R,
Pengkalan Chepa, 16100 Kota Bharu, Kelantan Darul Naim.
The center highlights a wide variety of stores. This is a key area where individuals can
view the store effectively and with less traffic. It also encourages them to attract more
customers to pick up or order the item.
 Type of business

Biby flower and Gift Surprise Shop is the sole property of, owned and operated by the
administrator. All benefits are provided to the director. These are the most easily used and used
individual resources and assets to frame a business. The capital required by a sole proprietorship
to form a business is regulated entirely by the sole proprietor. Business owners alone take all the
options to maintain the business. Therefore, the sole trader has to bear all the dangers of the
business. The benefits and losses of a business will all have a place with sole proprietorship
because no one else shares with the sole proprietor.
 Business Activity

Biby flower and Gift Surprise Shope has 2 staff members consisting of her mother to
help maintain this business. This business operates from 10.0 am to 5.00 pm at Lot 2088-R,
Pengkalan Chepa, 16100 Kota Bharu, Kelantan Darul Naim.

2.0 CHARACTERISTICS OF BUSINESS

There are three types of business organizations, namely sole-proprietorship, partnership

and Limited Company. A sole proprietorship also referred to as a sole trader or a proprietorship,
is an unincorporated business that has just one owner who pays personal income tax on profits
earned from the business. A sole proprietorship is the easiest type of business to establish or take
apart, due to a lack of government regulation. As such, these types of businesses are very
popular among sole owners of businesses, individual self-contractors, and consultants. Many
sole proprietors do business under their own names because creating a separate business or trade
name isn’t necessary.

A partnership is a formal arrangement by two or more parties to manage and operate a

business and share its profits. There are several types of partnership arrangements. In particular,
in a partnership business, all partners share liabilities and profits equally, while in others,
partners have limited liability. A limited company is a general form of incorporation that limits
the amount of liability undertaken by the company shareholders. It refers to a legal structure that
ensures that the liability of company members or subscribers is limited to their stake in the
company by way of investments or commitments.

For the liabilities of Biby Flower and Gift Surprise Shop is unlimited liability because
Biby flower and Gift Surprise Shop is a sole proprietorship, if the business fails and assets are
not enough to cover the debt, the creditors have a right against the owner’s personal properties.

Biby Flower and Gift Surprise Shop is categorized under sole proprietorship, where it is
an unincorporated business that has just one owner who pays personal income tax on profits
earned from the business. Generally, sole proprietorship is a business owned and run by one
individual with no legal distinction between the owner and the business. Under registration, this
company was registered with the business registrar under the Business Registration Act 1957
where this is required under sole proprietorship in order to start a business.

As for capital, the capital for the business was contributed by the owner. The owner of
Biby Flower and Gift Surprise Shop has started this business with her own money where she
collected the money for almost 4 years which costs RM 25,000. With all the efforts that the
owner has given, the business has been able to operate properly and free of debts. Some
companies would start a loan with a bank in order to open up their business. The owner of Biby
Flower and Gift Surprise Shop has taken a safe step by not starting this business with liability.

Next, the third characteristic of a business is ownership, whereas for sole proprietorship,
the company must be owned by one person only. In this business, Biby Flower and Gift Surprise
Shop has only one owner and the owner did not share this business with anyone. Besides that,
Biby Flower and Gift Surprise Shop is managed and controlled by the owner solely, which
makes this company under Sole Proprietorship business. Under sole proprietorship, there are
unlimited liabilities. If the business fails and the assets are not enough to cover the debt, the
payable have a right against the owner’s personal properties.

In the case of Biby Flower and Gift Surprise Shop, the owner does not have any liability
except using her own money which is safe. If she plans to make a loan with a bank, the liability
will be unlimited. For example, if the owner makes a loan with CIMB Bank and is unable to pay
back due to loss, CIMB bank has the right against the owner’s personal properties. As profit or
loss, profit belongs to the owner and any losses incurred will be borne by the owner. The profit
that is gained by the owner of Biby Flower and Gift Surprise Shop solely for herself and not for
anyone else because this is not a partnership or limited company, where the owner has full right
on her company. For books and accounts, Biby Flower and Gift Surprise Shop has no legal
obligation to keep the book and prepare accounts.

3.0 CLASSIFICATION OF BUSINESS ITEMS

Assets
 Assets are a value-added resource in which an organization owns or controls where it will
provide future profits. Assets are purchased to enhance the value of the organization or to benefit
the operations of the organization. Assets can be considered useful in the future, where they can
generate cash flow, reduce expenses, or increase sales. Assets can be divided into two, namely
non-current and current assets.

Current assets are the company's cash and other value-added assets, which are used for
their business purposes for one year or less. Current assets represent all of the company's assets
that are expected to be sold, used or disposed of through the company's operations, which will be
converted into cash value over the next one year. Current assets include cash, cash equivalents,
accounts receivable, stock inventory, marketable securities, upfront liabilities, and other assets.
For current assets, Biby Flower and Gift Surprise Shop has listed that their current assets are
cash and bank cash. They let customers pay for the product through cash.

Next, non-current assets are long-term investments of the company, where the full value
cannot be realized and usually more than one year. Examples of non-current assets include
investments in other companies, intellectual property such as patents, and land, office buildings
and equipment. Non-current assets are also known as long-term assets. Non-current assets are
capitalized and not spent, where the company allocates the cost of the asset for the several years
in which the asset is used, rather than the overall cost for the accounting year in which the asset
was purchased.

Depending on the type of asset, the asset may be depreciated, amortized, or depleted.
Since Surprise Delivery Services business products, most of its assets are related to balloon air
electric pump or anything related to Surprise Delivery Services production. Therefore, their non-
current assets are storage racks, flowers, balloons, fruit baskets and similar equipment. All
equipment is required to ensure that Surprise Delivery Services activities are well produced.
Employees will use some equipment such as ribbons, gift wrapping, scissors, balloon air electric
pump and others.

Liabilities
 Generally, a liability is an obligation between one party and another that has not been
settled or paid. In the world of accounting, financial liabilities are also liabilities but are
determined by past business transactions, events, sales, exchange of assets or services, or
anything else that will provide future economic benefits. The most common liability is usually a
debt owed. Most companies will have this item in the balance sheet, as it is part of a continuous
and long-term operation. Liability is an important aspect of a company as it is used to finance
operations and pay large expenses. They can also make inter-business transactions more
effective.

Biby Flower and Gift Surprise Shop has a liability. According to the owners, they do not
make loans to start a business and for other business operations. Instead, the owner uses his own
money and puts it into this business account. This is very safe for business operations where the
owner does not have to worry about paying off debts or interest due.

Drawing

A drawing account is an accounting record kept to track down money that has been
withdrawn from a business by its owner a. The most common accounting transactions in
withdrawal accounts are credit to cash accounts and debit accounts to withdrawals. Account
acquisition is Counter-equity and is therefore reported as a reduction in the amount of equity in
the business.

Therefore, deducting the drawing account will reduce the share of assets on the balance
sheet and reduce the share of equity at the same time. The withdrawal account is not an expense,
but a reduction of the owner’s equity in the business.

Drawing is part of the business transaction of Biby Flower and Gift Surprise Shop, where
the company owner attracts the company's assets for personal use and the assets taken by the
owner are cash in the bank. Since the owner had withdrawn cash for his personal use, as a result
he lost the amount he had withdrawn, making the amount under his owner’s equity less.
 Capital

Capital is a term for financial assets, such as funds held in savings accounts or funds
derived from specialized sources of financing. Capital can also be associated with a company’s
capital assets that require large amounts of capital to finance or grow.

Capital can be owned by financial assets or derived from debt or equity financing. From
the economic perspective of financial capital, capital is an important part of doing business and
growing the economy. The company has a capital structure that includes debt capital, equity
capital, and working capital for daily expenses. Individuals hold capital and capital assets as part
of their net worth. However, individuals and companies financing working capital and investing
capital are very important for growth and return on investment.

Capital is usually cash or liquid assets held or acquired for expenses. In financial
economics, the term can be expanded to include leading capital assets. In general, capital can be
a measure of wealth as well as a source of wealth growth through direct investment or capital
project investment. For the start of the operation of Biby Flower and Gift Surprise Shop the
owner brought his own money to a company which later took advantage of it.

Revenue

Revenue is income earned from ordinary business operations and includes deductions for
returned goods. This is the main figure or gross income from which costs are reduced to
determine net income. Income is also known as income on the income statement. It is important
for a start-up company to earn a good income from the beginning of the business. Income is
profit money brought into a company by its business activities.

Its components include contributions from individuals, families, and, contributions from
government entities. When property management expenses are deducted from real estate
income, net income is the net operating income of the main business of Biby Flower and Gift
Surprise Shop is to provide a variety of surprise delivery services produced by its business. Such
services provide revenue to the company through sales, where sales contribute to the net profit
earned by Biby Flower and Gift Surprise.
 Expenses

Expenses is a reduction in the value of an asset as it is used to generate income. If the

underlying asset is used for a long period of time, its expenses will be taken in the form of
depreciation, and will be charged over the term of the asset. If the expense is for immediate use
needs, such as salary, usually the expense will be charged to the current expense. Ordinary
expenses include payments to suppliers, employee salaries, shop rentals and equipment
depreciation. Businesses are allowed to deduct deductible expenses from their income tax
returns to reduce their taxable income and thus their tax liabilities.

The main goals of the company's management team is to maximize profits. This is
achieved by increasing income while controlling costs. Reducing costs can help companies make
more money from sales. However, if a business owner invests only a little in his business, it can
also have a negative impact on a business. For example, if the entrepreneur does not invest
much in advertising, packaging or service it can not only reduce costs but, it will also have an
impact on reducing the visibility and ability of the product to reach potential customers.

Expenses incurred while running a business are salaries for employees. According to the
owner, the company did not have to pay the employee’s salary because he had no staff, even her
own mother who helped work together and they were full-time employees. In addition to
salaries, companies also have to pay monthly electricity, water bills and shop rent.

4.0 THE RECORDING PROCESS OF THE BUSINESS

The accounting cycle is a series of activities that compiles an organization’s transaction at the
end of an accounting period in order to prepare important financial statements.

Source Documents
First, a source document is the original containing the details to substantiate a transaction
entered in an accounting system. For example, a company’s source document for the recording
of merchandise purchased is the supplier’s support by the company’s purchase order and
receiving ticket. Biby Flower and Gift Surprise Shop just uses a certain document like bank
statements, purchase order and invoice in her transaction business but other documents are not
always used.

Books of Prime Entry / Journal

A journal is a detailed account that records all the financial transactions of a business, to be used
for future reconciling and transfer to other official accounting records. The type of journal in
accounting is purchase journal, sales journal, cash receipt journal, cash payment journal,
purchase return journal, sales return journal and general journal. Biby Flower and Gift Surprise
Shop not recorded the event occurs in an inappropriate journal because the owner just manages
the business by herself, not to appoint any employees to work in this area of accounting which
she just writes down in her book manually.

Ledgers
Ledger, traditionally known as T-accounts, with debits on the left side and credit on right side.
Another format of presenting ledger is a three column ledger account. Miss Nurul Ain Nabihan
who is the owner of Biby Flower and Gift Surprise Shop also not recorded the transaction that
occurred to the ledger. She just notes on her book which she wants.

Trial Balance
Trial balance is an accounting report that lists the balances in each of an organization’s general
ledger accounts. The balances of all ledgers are compiled into debit and credit account column
totals that are equal. A company prepares trial balance periodically, usually at the end of every
reporting period. Since Miss Nurul Ain Nabihan does not record the transaction of her business
in the appropriate journal and also ledger, she does not prepare the trial balance too.

Adjusted Entries
Adjustment to assets and liability accounts (and corresponding revenues or expenses) to reflect
the impact of accounting periods on underlying transactions. They commonly result in accruals
and prepayments, depreciation and inventory adjustments. Miss Nurul Ain Nabihan rarely does
adjustments in his business but in certain parts, of course these events will happen. So, she said,
she will just write down in her note book what happened in the adjustments and recalculate the
value again.

Adjusted Trial Balance

The business has not made any adjusted trial balance since from the beginning the business did
not use any proper accounting system.

Financial Statement
Financial statement presents the results of operations and the financial position of the company.
The owner also is not doing this step because of the time constraints she faced. She also did not
appoint anyone to prepare the financial statement for her. Therefore, he just knows the profit
when she calculates sales and pays all the expenses occurs like salaries and so on in monthly but
not to prepare this statement.

Reversing Entries
Reversing entries is an optional journal entry that is recorded at the beginning of an accounting
period to undo the prior period’s adjusting entries. In other words, these entries cancel out or
reverse the adjusting journal entries recorded at the end of the prior accounting period. It is
necessary to keep track of these expenses so that the transaction will be allocated properly
between the two periods. Reversing entries are way to handle such transactions. This last step is
also not done by the owner.

5.0 ADVANTAGES AND DISADVANTAGES OF ACCOUNTING RECORDING

PROCESS

Above all else, the upsides of the bookkeeping recording measure ensure the nature of
income. This is a result of Biby Flower and Gift Surprise Shop recording all the buying or
selling with money and check at the money book at the perfect spot. This will make shield our
money from running out.

Next, the benefits of the bookkeeping cycle are made as the basis for the budget
summary to help expand the benefits of the association. Assertion of money gain or loss of Biby
Flower and Gift Surprise Shop has a net profit. This will cause Biby Flower and Gift Surprise
Shop to increase their exhibition to attract their customers to order gifts and delivery services
from their store. This is on the grounds that customers consistently select quality items to meet
customer demands.

Be that as it may, the bookkeeping recording cycle will assist with keeping up the
business record of an association. This will keep up an appropriate book of records for money
related exchanges. This will screen incomes all through the business. Biby Flower and Gift
Surprise Shop consistently makes a buying and selling with the leaser and account holder. Each
all through money will be recorded to money installments and money receipts.

At that point, monetary bookkeeping kept the association from misrepresentation. This is
on the grounds that trustworthiness in working together is a critical factor in an effective
business. As the proprietor, Biby Flower and Gift Surprise Shop should be a genuine individual
in any business to guarantee that business arranging goes easily without fakes.

At last, the preferred position is the bookkeeping record cycle will help to examinations
the creation of the association. On the off chance that more account holder restored the great to
the organization since that great have some harm or bad quality creation. This will assist the
organization with improving its creation to make excellent products. A quality item will pull in
the client to get it.

APPENDICES
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