A Malaysia Accounting Firm uses journals to keep track of business transactions and events, i.e. a historical account of all recordable transactions, for any commerical operation. Generally three steps are involved. First, identifying the the business transaction that took place. Second, analysing these transactions
for their economic impact and how they have changed the accounting equation. Third, journalising the business transactions and events that have been identified and analysed. Each journal entry is typically accompanied by the transaction date, title and description of the event. Since many different types of business transactions exist, Malaysia Accounting Services usually categorise them and record them in separate journals to facilitate organisation and tracking. For instance, if cash was used to purchase an item, the transaction would most likely be recorded in the cash disbursements journal. Other dedicated journals include a sales journal, purchases journal and accounts receivable journal.
Malaysia Accounting Services
Some basic rules governing journal entries include:
- Include a date of when the transaction occurred.
- The debit account title(s) always come first and on the left.
- The credit account title(s) always come after all debit titles are entered, and on the right.
- The titles of the credit accounts will be indented below the debit accounts.
- You will have at least one debit (possibly more).
- You will always have at least one credit (possibly more).
- The dollar value of the debits must equal the dollar value of the credits or else the equation will go out of balance.
- You will write a short description after each journal entry.
- Skip a space after the description before starting the next journal entry.
(Source: OpenStax, Rice University)
Understanding Nominal Accounts, Real Accounts and Personal Accounts
Nominal Accounts only store business transactions for one year, before transferring the balances into Real Accounts at the end of every accounting period. Nominal Accounts collect transaction information relating to revenues, expenses, gains and also losses, items that typically appear in the company’s income statement. A Malaysia Accounting Firm will journalise entries related to the nominal accounts by debiting losses and expenses incurred and crediting gains and incomes earned.
Real Accounts maintain all of the company’s balances continuously. All asset, liability and equity accounts to be aggregated into the company’s balance sheet fall under the Real Account category. When recording transactions involving Real Accounts, debit entries are used to record anything that comes into the company, and credit entries are used to record anything that goes out of the company. Some examples of real accounts are cash account, bank balance, plant and machinery and others.
Personal Accounts are directly relevant to an individual, an organisation or a business. Malaysia Accounting Services always record the transactions in the personal accounts by debiting the recipient and crediting the giver.