Group Project Account ( Group 6) PDF

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MADAM SITI MAZNAH BINTI MOHD ARIFGROUP PROJECT(PASTRY SHOP)ACCINTERMEDIATE FINANCIAL ACCOUNTING & REPORTINGGROUP 6NAME: ID NUMBER:ANIS KHAIRUNISA BINTI ZAINUDDIN 2021988669SITI JAMAIAH BINTI SAMSUDIN 2019257598NOR SYAMIMI BINTI MAT JUSOH 2021744821NUR ANISAH SOLEHAH BINTI MOHD DIN 201880510412 J...

Description

MADAM SITI MAZNAH BINTI MOHD ARIF

GROUP PROJECT (PASTRY SHOP)

ACC406 INTERMEDIATE FINANCIAL ACCOUNTING & REPORTING

GROUP 6 NAME:

ID NUMBER:

ANIS KHAIRUNISA BINTI ZAINUDDIN

2021988669

SITI JAMAIAH BINTI SAMSUDIN

2019257598

NOR SYAMIMI BINTI MAT JUSOH

2021744821

NUR ANISAH SOLEHAH BINTI MOHD DIN

2018805104

12 JUNE 2021

TABLE OF CONTENT

NO

CONTENT

0.0

7.0

TABLE OF CONTENT 0.1 Table of Content ACKNOWLEDGEMENT 1.1 Acknowledgement INTRODUCTION 2.1 Introduction BACKGROUND OF THE ORGANIZATION 3.1 Company Background CHARACTERISTICS OF THE CHOOSEN BUSINESS 4.1 Liability 4.2 Number of Owner 4.3 Books and Accounts Keeping 4.4 Business Establishment 4.5 Profit Sharing CLASSIFICATION OF POSSIBLE BUSINESS ITEM 5.1 Assets 5.2 Liabilities 5.3 Drawing 5.4 Capital 5.5 Revenues 5.6 Expenses RECORDING PROCESS FOR THE BUSINESS 6.1 Business Transaction 6.2 Source of Documents 6.3 Journals 6.4 Books of Prime Entry 6.5 Transaction 6.6 Ledger 6.7 Trial Balance 6.8 Financial Statement ADVANTAGES AND DISADVANTAGES

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7.1 Advantages 7.2 Disadvantages CONCLUSION

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8.1 Conclusion REFERENCES

1.0 2.0 3.0 4.0

5.0

6.0

PAGE

1 2 3 4-5

6-8

9 - 11

12 - 16

17 -18

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20 9.1 References

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1.0 ACKNOWLEDGEMENT

1.0 Acknowledgement

Assalamualaikum w.b.t and greetings,

We are grateful to Allah S.W.T. for everything, alhamdulillah. Finally, we were capable of completing our group project on schedule. We can develop our understanding of this subject through completing towards this assignment.

We have taken efforts in this project. However, it would not have been possible without the kind support and help from all the group members. We would like to extend my sincere thanks to all of team.

Besides, we would like to thank our lecturer Madam Siti Maznah Binti Mohd Arif lecturer for this subject ACC406 Intermediate Financial Accounting & Reporting who helped by giving us guideline and providing the detail what we needed. We very much appreciate what she did to explain for this group project. May Allah reward her for all her efforts.

Lastly, it is hoped that the lecturer would accept this assignment. Some care and empathy in reviewing this assignment would be deeply appreciated.

Thank you very much.

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2.0 INTRODUCTION

2.1 Introduction

This group project assignment allocates us to form our own business company that applies accounting principles into the business. Accounting is concerned with the provision of information, which will be useful to those who are directly or indirectly affiliated with an organization. The purpose of accounting information is to know the financial status of the organization whether the business is making a profit or loss and take the correct action to improve the situation. The information provided will be useful for both in assessing the performance of those who manage the organization and the financial position of the organization itself.

In the task given, we are given two choices to form a business whether partnership or trading. However, we have decided to open a partnership business which is Bread Talk and Pastry, and the main product are bread, cake and pastry. A partnership is a form of business where two or more people share ownership, as well as the responsibility for managing the company and the income or losses the business generates. That income is paid to partners, who then claim it on their personal tax returns which the business is not taxed separately, as corporations are on its profits or losses.

We choose to name our company as Bread Talk and Pastry as we believe bread can talk itself when it come into customer’s mouth and talk about our quality of product which give customer satisfaction to come again. We choose pastry shop because this product is our daily basis and it was difficult to find a tasty handmade bread, cake and pastry that offered an affordable price. Based on our observation and experience, in a mall there will be a lot of common pastry shops but we guarantee it’s not comparable with the taste of our products. Thus, we choose to open Bread Talk and Pastry to give customer wonderful taste of bread, cake and pastry based on their expectation.

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3.0 BACKGROUND OF THE ORGANIZATION

3.1 Company Background

Company Name

Owner

BREAD TALK AND PASTRY

MADAM HAZEL BINTI AHMAD LIM MR HARRY BIN AHMAD LIM

Address

No. 40G Jalan Putra Mahkota, 7/6B Bandar Puteri, 47650 Puchong, Selangor

Telephone Number

03-8060 0284

Fax Number

03-8060 0285

Year Operation Begin

2018

Income Per Capital

RM 312,000.00

Number of Employee

4 workers

Main Product

Bread, Cake and Pastry

Market

Klang Valley Achieve the company goals which is profit in the pastry business and the

Future Plan

implementation of the business with more effective and efficient. Shall give the best service into this industry, and meet customer satisfaction

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Bread Talk and Pastry opened in 2018 as a relatively small-scale family run bakery. With 4 employees and many of the products being manually produced. Bread Talk & Pastry began business by supplying the region with white breads, wheat breads, filled and variety of topping bun, sourdough, birthday cake, and pastry such as scone, egg tart, plain or flavor croissant, and peach strudel.

Our business operating hours starting from 9.00am until 9.00pm daily except Friday. We hired 4 local staffs with their salary RM1800 per person.

We have started our business on 1st January 2018, located at No. 40G Jalan Putra Mahkota, 7/6B Bandar Puteri, Puchong 47650 Selangor. We are in partnership business with consists of 2 owners. Our capital amounted RM 300,000.00 including loan from bank RM12,000. So that each one of us contributed for the capital RM 150,000 cash each. Our business brings in approximately RM 20,500 per month on average in revenue. The profit averages out to approximately RM 10,500 per month.

Mission: To deliver a diverse range of high-quality, great-tasting, healthy, and pleasant bakery and culinary products that are visible, accessible, and appealing to customers.

Motto: "Professional, convenient, friendly service and competitive pricing" The ambition for this business is to achieved the goals of profit in the pastry business. Doing the job with more effective and efficient and give best service to the society. Other than , we hoping this business will run smoothly with a proper accounting method to avoid any issue in the future.

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4.0 CHARACTERISTICS OF THE CHOOSEN BUSINESS 4.1 Liability

The nature of liability of partners is the same as in case of sole proprietorship. The liability of partners is both individual and collective. The creditors have a right to recover the firm’s debts from the private property of one or all partners, where firm’s assets are insufficient.

4.2 Number of Owner

The minimum number of persons required to constitute a partnership is two. The Act, however, does not mention the upper limit. For this a recourse has to be taken to the Companies Act, 1956 [Section 11 (1) & (2)]. It states that the maximum number of persons is 10. In our partnership business, we have 2 of us:

4.3 Books and Accounts Keeping The Bread Talk and Pastry has their accounting cycle for keeping their financial record in track. Even though the owner only shows us their purchase of inventories receipt, they do records other types of source’s document from their business within their book of prime entries. In order to record the transaction that occurs within their business, they will identify each and every source of document such as purchase invoice, receipt and many more that has been made within transaction. Every transaction that has been made and identified must be separated. For example, any purchase of their inventories in a form of receipts will be recorded within their book whereas their non-current assets such as car and motorcycle will not recorded will not record within their book of original entries.

Besides that, they will do the process of journalizing their own document accordingly in chronological order. After they are journalizing it within the book of original entry, the journal entries then will be posted to general ledger where all transaction that has been made within their business will be recorded for the future use. Apart from that, the trial balance for the Bread Talk and Pastry will be settled at the end of accounting period in one month. The total balanced from their book of original entries and ledger will be calculated for their financial statement. After they done calculating their total balanced from the business, the trial balanced that have been adjusted 6

including income statement, balanced sheet and many more will be prepared while preparing their own financial statement for one year.

4.4 Business Establishment

We have started our business on 1st January 2018, located at No. 40G Jalan Putra Mahkota, 7/6B Bandar Puteri, Puchong 47650 Selangor. We are in partnership business with consists of 2 owners.

Non-transferability of Interest: No partner can assign or transfer his partnership share to any other person so as to make him a partner in the business without the consent of all other partners.

Registration of Firm: Registration of a partnership firm is not compulsory under the Act. The only document or even an oral agreement among partners required is the ‘partnership deed’ to bring the partnership into existence. The Act explains that persons who have entered into partnership with one another are called individually “partners” and collectively “a firm”.

Existence of Business: Partnership is formed to carry on a business. As stated earlier, the Partnership Act, 1932 [Section 2 (6)] states that a “Business” includes every trade, occupation, and profession. Business, of course, must be lawful.

Fusion of Ownership and Control: In the eyes of law, the identity of partners is not different from the identity of partnership firm. As such, the right of management and control vests with the owners and partners.

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4.5 Profit Sharing

The goal of a partnership should be to make money and share it with others. In the absence of a written agreement, the partner should split profits (and losses) equally. We split our profits evenly in our business, and since there are two of us, each of us will receive half of the profit each month. No. Name Profit sharing ratio: 1. MADAM HAZEL BINTI AHMAD LIM 50% 2. MR. HARRY BIN AHMAD LIM

50%

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5.0 CLASSIFICATION OF POSSIBLE BUSINESS ITEM

5.1 Assets

An asset is any resource which the company owns. Any tangible or intangible things that can be owned or controlled to produce positive economic value that can be measured and expressed in Malaysian Ringgit (Averkamp, n.d.). There are two types of assets:

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Current Assets

Current assets represent all the assets of a company that are expected to be conveniently sold, consumed, used, or exhausted through standard business operations within one year. Current assets appear on a company's balance sheet, one of the required financial statements that must be completed each year. It includes cash, cash equivalents, account receivables, stock inventory, prepaid expenses and others liquid assets. Bread Talk and Pastry current assets are inventory, debtors or accounts receivables, bank and cash.

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Non – current Assets.

Non – current assets are the company’s long – term investment for which the full value will not be realized within the accounting year. Non – current assets cannot be converted to cash easily. Non – current assets may include items such as, land, building, machinery, office equipment, franchise, goodwill, trademark and others. There are three categories under non – current assets which are tangible non – current asset, intangible non – current asset and investment. Bread and Talk non – current assets are baking equipment, cashier machine, and vehicles.

5.2 Liabilities

Liability can be characterized as current obligations that a corporation plans to fulfil in the future at any time. Such responsibilities derive from legal or administrative requirements which place limitations on the company’s use of assets for its own purposes. Liabilities are the resulting from past transactions requiring the company to pay money, provide products or carry out services in the future. The existence of past transactions is an important element in the definition of liabilities. There are two types of liabilities which are current liabilities and Non-current liabilities 9

•

Current Liabilities

Current liabilities also known as short-term liabilities are debt or obligations that need to be paid within a year. Current liabilities should be closely controlled by management to ensure that the company has adequate liquidity from existing assets to ensure that the debts or commitments can be fulfilled. It includes bank overdrafts, creditors or accounts payable, short – term debt and accrued expenses (Bragg, 2018). Current liabilities in Bread Talk and Pastry is creditors or accounts payables and wages payables.

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Non – current Liabilities

Non-current liabilities also known as long-term liabilities that are due more than a year. Long-term liabilities are an important part of a company long-term financing. Companies take on long-term debt in order to raise immediate capital to finance the purchase of capital assets or to invest in new ventures. Long-term liabilities are decisive in determining the long-term solvency of a company. If companies cannot repay their long-term liabilities as they become due, then the company will face a crisis of solvency. Bread Talk and Pastry non – current liabilities are bank loans which is the amount RM12,000.

5.3 Drawing

Drawing occurs by withdrawing cash from a business account, but it also can include anything that is considered a business asset, such as products or equipment that is removed from the business for personal use. Drawing needs to be recorded in the balance sheet as a reduction in the assets and a reduction in the owner’s equity. Accounting records need to be maintained to track money withdrawn from the business. Bread Talk and Pastry did not make any drawings yet but the money can be used if there is an emergency matter or anything related to the owners.

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5.4 Capital

Capital is a term for financial assets, such as funds held in deposit accounts and funds obtained from special financing sources. Capital can also be associated with capital assets of a company that requires significant amounts of capital to finance or expand. Capital can be held through financial assets or raised from debt or equity financing. It is important to distinguish money from capital because they are not the same thing where capital lasts longer than money and used to develop something and build profits. In partnership business, the capital is contributed by the owners where they spent RM 312,000.00 as a start to run the business and each of them provided RM150,000 into the Bread Talk and Pastry excluded the loan from bank RM12,000.

5.5 Revenues

Revenue earned from providing services and the amount of merchandise sold (Averkamp, Revenue Definition, n.d.). It is the top line or gross income figure from which costs are subtracted to determine net income. A few examples of revenue include sales of goods or services, the commission received, and interest received.

5.6 Expenses

Expenses are the cost of assets consumed or services used in the process of earning revenues. In other words, it costs money to make money. A business must incur expenses items which are necessary for the continuing operation of the business. The owners of Bread Talk and Pastry spent for rent, stock and staff salaries under expenses. For rent and stock, owners spent RM 15,000.00 roughly per month and for staff wages and salaries, Bread Talk and Pastry had 4 full time workers and they were paid by RM 1,800.00 per month. The owners spent around RM 7,200.00 a month to pay for salaries.

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6.0 RECORDING PROCESS FOR THE BUSINESS

6.1 Business Transaction

Recording, analysis and reporting are the parts of accounting where the events that are materially significant to a company. Records of changes to assets, liabilities, shareholders' equity, revenues and expenses are the content of accounting. The basic sequence of steps in the recording process includes analysis, preparation of journal entries and posting these entries to the general ledger. Subsequent accounting processes include preparing a trial balance and compiling financial statements.

6.2 Source of Documents

● Invoices A client went to Bread Talk & Pastry to look for a birthday cake. The client purchased the cake by paying for deposit and company give invoices to the client to pay the remaining amount when picking up the cake with respect to the invoices date.

Bread Talk & Pastry has invoices recorded in their records. The invoices are recorded once customers buy goods such as custom birthday cake and wedding cake. The owner only shares with us a blank invoice and does not want to share the rest. So, we can assume the company has invoice as one of their sources of documents but with improper records.

● Receipts A receipt could be a record issued to a client after they have paid in full sum of the products sold to them. Bread Talk & Pastry goes along with the recording process of the trade and has recorded a receipt issued to the client after they have paid the sum of the goods sold to them.

Receipts are found as one of the sources of documents for Bread Talk & Pastry. The owner is likely wanting to disclose their receipts with us and a black receipt is given to us for our references. Bread Talk & Pastry follows the recording process of the business and has recorded a receipt issued to customers after they have paid the amount of the goods sold to them. So, we can assume the company has receipts as one of their sources of documents but with improper records. 12

● Cheque In recording a transaction, cheque is one of the vital sources of records. Cheque is one of the critical sources of record in recording a transaction. Bread Talk & Pastry has issued a cheque upon installment to the supplier to purchase baking appliances such as mixer, oven, chiller, freezer and a few items more in order to supply products to customers.

Bread Talk & Pastry has a cheque book in recording a transaction and used in company’s expenses. The owner only shared with us a blank cheque as our reference and do not want to disclose further. Bread Talk & Pastry has issued a cheque upon payment to suppliers to buy the air conditioner in order to provide good surrounding to customers. We can assume that the company has a cheque records but with improper records.

6.3 Journals

● Petty Cash Journal A journal which records how much cash in han...