Every business undertakes transactions in order to conduct its day to day operations. A business transaction is an undertaking that involves exchange of economic consideration between parties involved. Such an exchange has a two way impact. This is because a transaction involves give and take aspect. Such an aspect leads to recording an exchange in at least two accounts. For instance, if a business purchases a laptop on cash for Rs. 80,000, the payment of cash pertains to the ‘Give’ effect. Whereas the delivery of the laptop pertains to the ‘Take’ aspect of the transaction. Additionally, every business transaction is accompanied by an issue of a document that certifies its occurrence. These documents may include a cash memo, invoice, pay-in-slip, cheque, sales bill, salary slips etc. In case there is no documentary evidence for certain petty expenses, a document known as a voucher or source document is issued. Now, this dual effect of every business transaction is based on the ‘Dual Aspect Concept’ of accounting. This is one of the fundamental accounting principles. This principle states that every business transaction has a two way effect in accounting. Thus, a business transaction involves a minimum of two accounts when recorded in books of accounts. This system of recording both the aspects of a transaction is termed as ‘Double Entry System of Accounting’. It is based on the principle of duality which is the very foundation of accounting equation.

1. FINANCIAL ACCOUNTING
TOPIC 3
THE DOUBLE ENTRY
SYSTEM FOR ASSETS,
LIABILITIES AND CAPITAL
PUAN LYANA NATASHA BINTI MOHAMMAD FAIZUL

2. Contents
The Double Entry System
The Accounts For Double Entry
1
2

3. DOUBLE ENTRY SYSTEM
•What is double entry?
•Double entry bookkeeping is a systematic method of
recording an enterprise’s transactions in a book called ‘ledger’.

4. Functions of Double Entry System
To ascertain the total amount of each type of
income, expenditure, assets, liabilities and
equities.
To ascertain the profit/loss of the company for a given
accounting period and to prepare the statement of
financial position at the end of the period.
Fungsi Sistem Beregu
Untuk mengetahui jumlah hasil, perbelanjaan,
asset, hutang dan ekuiti.
Untuk mengetahui untung/rugi perniagaan dalam tempoh perakaunan
dan untuk menyediakan penyata kedudukan kewangan di akhir tempoh perakaunan.

5. The Principles of
Double Entry System…
1. In double entry system, every ledger is split into
two halves.
•Left = Debit
•Right = Credit
(di dalam sistem bergu, setiap lejar akan dibahagikan
kepada dua bahagian)
- Kiri: Debit
- Kanan: Kredit

6. left right

7. The Principles of
Double Entry System…(cont)
2. The ledger is divided into sections called
accounts.The value of each transaction is
entered once on each side of ledger in different
accounts.
(Lejar akan dipecah-pecahkan kepada akaun, dan nilai untuk
setiap transaksi akan dicatit di bahagian debit/kredit lejar, dalam
akaun-akaun yang berbeza.)

8. 1 2
3

9. The Principles of
Double Entry System…(cont)
3. When the total amount of money on the debit
side is greater than that on the credit side, the
account has a debit balance.
When total amount of money on credit side is
greater than that on debit side, the account has
a credit balance.
(Apabila jumlah di bahagian debit lebih besar
berbanding di bahagian kredit, akaun itu mempunyai
baki debit. Sementara apabila jumlah di bahagian kredit
lebih besar berbanding di bahagian debit, akaun itu
mempunyai baki kredit.)

10. Credit balance
Debit balance

11. The Effects of BusinessTransaction:Asset, Liability
and Capital.

12. Example:
•Noni started a business by investing RM 25,000 in cash
on 1 April 2018.
Effects of transaction Increase of capital
Increase of cash
Action need to be taken Debit cash account
Credit capital account

13. CASH IN HAND
Date Particulars Amount Date Particulars Amount
2018 RM RM
CAPITAL
Date Particulars Amount Date Particulars Amount
RM 2018 RM

14. The Effects of BusinessTransaction: Revenue and
Expenses.

15. Example:
• Noni paid postage of RM 35 by cash on 9 April 2018.
Effects of transaction Increase of postage
Decrease of cash
Action need to be taken Debit postage account
Credit cash account

16. CASH IN HAND
Date Particulars Amount Date Particulars Amount
RM 2018 RM
POSTAGE
Date Particulars Amount Date Particulars Amount
2018 RM RM

17. The Accounts for Double Entry
DATE TRANSACTIONS
2018
Apr 1
Joe commenced business with a capital of RM10,000 in a
bank account.
Apr 2 Paid RM5,000 cheque for rent on a shop
Apr 3 Bought office equipment by cheque at a cost of RM1,400
Apr 4 Bought goods costing RM630 from Elfora on credit
Apr 6 Paid postage of RM35 by cheque
Apr 9 Purchases by cheque for RM420
Apr 11 Sold goods on credit to Salsabila for RM880

18. Exercise
• Prepare the ledger accounts for the transaction of SPACE
SHOPPE.
SPACE Shoppe is a business selling souvenirs.The following
transactions took place in the month of April 2018.

19. Date Transactions
2018
Apr 1 Owner invested cash into the business bank account amounted
RM50,000
Apr 3 Purchased a motor van from BWM Motors costing RM35,000. Deposit
RM5,000 was paid by cheque and the balance to be paid by
instalment starting from May
Apr 6 Received invoices from Ameer RM4,000 and Harraz RM1,500 for
goods purchased
Apr 8 Sold goods on credit to Maisarah Rm2,400 and Humaira RM1,800
Apr 15 Issue a debit note for the damaged goods returned to Harraz RM300
Apr 20 Received a cheque from Gimuda Berhad for investment income of
RM7,500
Apr 23 Paid RM600 to Tenaga Nasional Berhad for electricity expense
Apr 26 Received a cheque for cash sales amounting to RM5,000
Apr 29 The owner withdrew goods worth RM170 for personal use

20. THANKYOU!