ACC030: Topic 2 Tutorial 3/…1

ACC030 TOPIC 2 TUTORIAL 3

EFFECT OF TRANSACTIONS

PART A: Effect and Journal Entries

Question 1

State the effect and action to be taken for each transaction below.

Example:

Transaction Related Accounts Effect Journal Entries

1. Purchase a van by 1. Motor vehicle A/C + Asset DR Motor Vehicle A/C
cash 2. Cash A/C - Asset CR Cash A/C

Transaction Related Accounts Effect Journal Entries

1 Purchase a personal
computer on credit from
ABC Digital.
2 Sold old printer for cash.

3 Received a cheque for

dividend.
4 Paid an advertisement by
cheque.
5 Owner started the business
with cash.
6 Received cash being
commission on sales.
7 Paid utilities bill by cheque.

8 Owner took a cheque for

personal use.
9 Paid salaries by cash.

10 Bought stationery on credit

from Mia Supplies.

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…2

Question 2

State the effect and action to be taken for each transaction below.

Example:

Transaction Related Accounts Effect Journal Entries

1. Purchase a van by 1. Motor vehicle A/C + Asset DR Motor Vehicle A/C
cash 2. Cash A/C - Asset CR Cash A/C

Transaction Related Accounts Effect Journal Entries

1 Adrini, the owner of AD Heaven
Enterprise introduces cash at
bank as a capital.
2 Adrini brought in furniture for
business use.

3 Adrini also brought her computer

and fax machine into the
business.
4 Received invoice from Aileen
Trading for goods purchased.

5 Adrini took out money from the

business bank account to put in
the business petty cash box.
6 She used the business cash to pay
for office stationeries.

7 Issued a cheque to Aileen Trading

for settling half of its account.

8 The cash sales had been banked

in the same day.

9 Business issues an invoice to

Amani Boutique.

10 Cheques have been issued to the

workers as salaries for the month.

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…3

Question 3

Identify the effects (increase/decrease) of the following transactions to asset, expense, owner’s
equity, revenue, and liability and state the journal entries using the following format. The
answer for the first transaction was provided as example:

Date Transactions
May
20X1
1 Started business with cash in the bank account RM100,000. (Example)
5 Bought delivery van for office use by cheque RM30,000.
12 Paid utility expenses RM1,000 by cash.
16 Bought goods on credit RM8,000 from Samara Enterprise
20 Returned goods to Samara Enterprise RM300.
22 Purchase office stationery by cheque RM900.
28 The owner bought office printer RM4,000 by using his own money

Answer:

Date Effects Journal Entry

May Increase Decrease Debit Credit
1 Asset Bank A/C Capital A/C
Owner’s Equity
5

12

16

20

22

28

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…4

Question 4

Identify the effects (increase/decrease) of the following transactions to asset, expense, owner’s
equity, revenue, and liability and state the journal entries using the following format. The
answer for the first transaction was provided as example:

Date Transactions
August
20X2
1 Started a business putting RM50,000 into a bank account.
6 Withdrew RM500 from the bank and place it in the cash box in the office.
9 Bought a second-hand lorry on credit from Cergas Motor RM30,000.
16 Purchased goods on credit RM2,000 from Mia Trading.
19 Sold goods to Ayie Entreprise RM3,000 on credit.
25 Paid rental RM1,000 by cheque.

Answer:

Date Effects Journal Entry

August Increase Decrease Debit Credit
1 Asset Bank A/C Capital A/C
Owner’s Equity
6

16

19

25

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…5

Question 5

Identify the effects (increase/decrease) of the following transactions to asset, expense, owner’s
equity, revenue, and liability and state the journal entries using the following format. The
answer for the first transaction was provided as example:

Date Transactions
October
20X3
1 Balqis started business by depositing RM80,000 into the business bank.
4 Paid cheque of RM4,000 to Imran for purchase of goods.
8 Goods worth RM8,000 were sold to Syarikat Sunshine on credit.
16 Balqis brought in computer worth RM5,000 into the business.
23 Balqis took goods worth RM660 for her personal use.
28 Paid electricity bills of RM200 by issuing cheque.
30 Received commission of RM1,900 by cheque.

Answer:

Date Effects Journal Entry

October Increase Decrease Debit Credit
1 Asset Bank A/C Capital A/C
Owner’s Equity
4

16

23

28

30

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…6

Question 6

Identify the effects (increase/decrease) of the following transactions to asset, expense, owner’s
equity, revenue, and liability and state the journal entries using the following format. The
answer for the first transaction was provided as example:

Date Transactions
July
20X4
1 Maliq, the owner of Maliq Trading started his business by depositing cash
into the business bank account, RM15,000.
5 Purchased of goods on credit worth RM4,400 from Idaman Kalbu Bhd.
9 Sold goods to Yusri and received cash RM880.
11 Bought an aircond for office use and issued a cheque valued RM2,200.
16 Sold goods to Gulam Trading worth RM3,300 and payment will be received
within two weeks.
18 Received defect goods returned by Gulam Trading worth RM100.
23 Paid the wages of office cleaners with cash totalled RM550.
27 Maliq issued a business cheque valued RM770 for his family travelling
expenses.

Answer:

Date Effects Journal Entry

July Increase Decrease Debit Credit
1 Asset Bank A/C Capital A/C
Owner’s Equity
5

11

16

18

23

27

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…7

Question 7

Identify the effects (increase/decrease) of the following transactions to asset, expense, owner’s
equity, revenue, and liability and state the journal entries using the following format. The
answer for the first transaction was provided as example:

Date Transactions
June
20X5
1 Owner deposited RM50,000 into the business’ bank account.
3 Purchased goods by credit from Jamila Enterprise RM5,000.
5 Returned damaged goods to Jamila Enterprise RM90.
12 Purchased an office furniture by credit from Hebat Sdn Bhd RM5,000.
21 Sold goods to Perniagaan Haji Brahim and received cash RM4,500.
28 Paid cash to salesman as sales commission RM350.
30 Received interest on fixed deposit from Bank Islam Bhd. RM500.

Answer:

Date Effects Journal Entry

June Increase Decrease Debit Credit
1 Asset Bank A/C Capital A/C
Owner’s Equity
3

12

21

28

30

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…8

PART B: MCQ

Determine the most appropriate answer for each of the following questions.

1. The effect of acquiring a motor vehicle on credit are

A. Assets and liabilities increased by the same amount

B. Assets, capital, and liabilities increased by the same amount
C. Assets and expenses increased by the same amount
D. Assets and revenues increased by the same amount

2. A debit entry could lead to

A. an increase in assets or decrease in expenses

B. an increase in revenues or an increase in liabilities
C. a decrease in revenues or decrease in assets
D. a decrease in liabilities or an increase in expenses

3. Encik Ahmad, the owner of ASZ Enterprise hired two (2) employees in May 2021. At
the end of the month, these employees are paid a monthly salary totalling RM2,000.
Describe the effects of the transaction on the accounting equation.

A. Increase asset and decrease expenses by RM2,000

B. Decrease asset and increase expenses by RM2,000
C. Increase asset and decrease asset by RM2,000
D. No effect

4. The business purchased a machinery worth RM15,000 on credit from Trex Machinery
Sdn Bhd. Determine the effect of this transaction on the accounting equation.

A. Increase in asset and decrease in asset

B. Increase in asset and decrease in liability
C. Increase in asset and increase in liability
D. Increase in asset and increase in owner’s equity

5. The effects of acquiring office furniture on credit from Chai Furniture Sdn Bhd are
__________.

A. Increase in both asset and liability

B. Increase in asset and decrease in liability
C. Increase in liability and decrease in asset
D. Decrease in both asset and liability

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…9

6. Sumayah, a sole proprietorship took goods from her business as a birthday gift to her
nephew. The double entry for this transaction is:

A. Debit Drawing, and Credit Goods

B. Debit Goods, and Credit Drawing
C. Debit Drawing, and Credit Purchases
D. Debit Drawing, and Credit Cash

7. Which of the following double entries is INCORRECT?

Double entry
Transaction Debit Credit
A. Paid employees’ salaries by cash. Salaries account Cash account
B. Cash sales. Sales account Cash account
C. Bought goods on credit from Purchases account Account payable –
Winne Trading. Winne Trading
D. Received rental by cash from Cash account Rental received
Bubble Shop. account

8. Which of the following double entries is CORRECT?

Double entry
Transaction Debit Credit
A. Muhamad returns goods to the Return outwards Account receivable –
business. Muhammad
B. Sold goods on credit to Umairah. Sales account Account receivable –
Umairah
C. Paid water and electricity by cash. Water and Cash account
electricity account
D. Bought goods for cash. Purchases account Bank account

9. Which of the following double entries is used to record a motor vehicle brought into a
business by the owner?

A. Debit Capital account, and Credit Motor vehicle account

B. Debit Motor vehicle account, and Credit Cash account
C. Debit Motor vehicle account, and Credit Bank account
D. Debit Motor vehicle account, and Credit Capital account

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…10

10. What is the effect and double entries to record the transfer of cash amounted to RM5,000
into the business’s bank account?

A. Asset increase, and asset decrease

Debit Bank account, and Credit Cash account
B. Asset increase, and asset decrease
Debit Cash account, and Debit Bank account
C. Asset increase, and Owner’s equity increase
Debit Bank account, and Credit Capital account
D. Asset increase, and Owner’s equity increase
Debit Cash account, and Credit Capital account

11. A decrease in revenue is recorded on _____of the revenue’s account.

A. the credit side

B. the debit side
C. both side
D. neither side

12. The followings show the effect of a transaction on the elements in the accounting
equation that requires a credit entry EXCEPT _____

A. Decrease in asset
B. Increase in liability
C. Increase in owner’s equity
D. Increase in expenses

13. Sana Enterprise purchases office equipment from Sinu Sdn Bhd by cash. Describe the
effect of this transaction.

A. Decrease in liability and increase in asset

B. Increase in asset and increase in liability
C. Decrease in both asset and liability
D. Increase in asset and decrease in asset

14. Describe the effect of transaction where there is a cash sale of RM600.

A. Increase asset and increase expense by RM600

B. Increase asset and increase revenue by RM600
C. Increase asset and decrease revenue by RM600
D. Increase asset and decrease expense by RM600

15. Receipt of bank loan by cheque affects the element of the accounting equation in the
following way:
A. Increase assets and decrease owner`s equity
B. Decrease assets and increase liabilities
C. Increase assets and decrease liabilities
D. Increase assets and increase liabilities

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC030: Topic 2 Tutorial 3/…11

PART C: True or False Questions

Statement True / False

1. The increase in asset account showed that the asset account will
be debited.
2. When the owner took goods for his family use, the Drawings
account will be credited.
3. A new cash purchase of motor van will decrease the liability
account.
4. Withdrawal of cash by the owner will decrease owner’s equity.

5. A return of goods previously purchase from supplier must be

debited to return inwards account.
6. Payment of business debt to its supplier will be recorded at the
Debit side of creditor account.
7. When a business paid for a small repair of its machine, an asset
has increased, and Machine account need to be debited.
8. A credit in the revenue account indicates a decrease in the account.

9. In general ledger, electricity expenses are to be recorded on the

debit side when its paid.
10. Payment of insurance by cash is recorded by debiting the
Insurance account and crediting the Cash account.
11. Cash drawings made by owner of the business will increase the
Capital account.
12. Purchases account is to record the purchases of goods on cash
basis only.

Pn.Azura Mohd.Noor
UiTM Perlis