Chapter 3

Accounts

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 I. ACCOUNT & T- ACCOUNTS

• An account is an individual accounting record of increases and

decreases in a specific asset, liability, or owner’s equity item.
• In its simplest form, an account consists of three parts: (1) a
title, (2) a left or debit side, and (3) a right or credit side.
Because the format of an account resembles the letter T, we
refer to it as a T account
I. ACCOUNT & T- ACCOUNTS
I. ACCOUNTS & T- ACCOUNTS
 Exercise 1
Cash in bank at the beginning of the month 20,000,000 VND
During the month, the following economic transactions occurred:
1. Withdraw cash in bank to cash fund 2,000,000 VND
2. Customers pay debts to the enterprise with cash in bank 3,000,000
VND
3. Import raw materials to pay with cash in bank 1,500,000 VND
4. Use cash to cash in bank 4,000,000 VND.
5. Short-term loans to deposit money into bank account 20,000,000
VND
6. Pay salaries to employees with cash in bank 2,000,000 VND
Requirement: Open, record and close T-account ”Cash in bank -
112"
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 Exercise 2
The opening balance of the account trade payable is 20,000,000
VND
During the period, the following economic transactions occurred:
1. Purchase of goods in the warehouse without payment to the
seller 10,000,000 VND
2. Short-term loan to pay trade payable 5,000,000 VND
3. Transfer of money to the bank to pay trade payable 7,000,000
VND
4. Purchase of tangible fixed assets without payment to the seller
50,000,000 VND
Requirement: Reflect the above situation in the account ” Trade
Payable -331"
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 Exercise 3

•At a company, the following transactions occurred:

Transaction 1: Withdraw 200 million VND from the bank deposit (cash at bank)
into the cash fund.
Transaction 2: Use cash in hand to purchase some supplies worth 30 million
VND.
Transaction 3: Purchase some raw materials worth 40 million VND by using
cash at bank.
Transaction 4: Purchase equipment worth 400 million VND and paid by cash at
bank.
Transaction 5: Purchase a piece of land worth 3 billion VND and pay by cash at
bank
Transaction 6: Calculate the ending balance of accounts 111, 112, 211 knowing
that the beginning balances of these accounts are as follows:
•Account 111: 10 billion VND
•Account 112: 20 billion VND
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 Exercise 3 (continue)
•At a company, the following transactions occurred:
Transaction 7: Borrow 300 million VND from Agribank and receive it in
cash in hand.
Transaction 8: Purchase some raw materials worth 500 million VND on
credit
Transaction 9: Use cash at bank to pay 100 million VND owed to the
seller from transaction 8.
Transaction 10: Use cash in hand to pay 20 million VND in taxes to the
State.
Transaction 11: Use cash at bank to pay salaries to employees totaling 40
million VND.
Transaction 12: Calculate the ending balance of accounts 331 and 341,
knowing that the beginning balances of these accounts are as follows:
•Account 331: 500 million VND
•Account 341: 1 billion VND
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 Exercise 4
At ABC Company Limited, there are figures related to business activities
during the accounting period recorded in the following figures:
Document 1: Opening balance of some accounts:
- Account 152: 10 million VND
- Account 112: 300 million VND
- Account 411: 600 million VND
- Account 211: 400 million VND
- Account 331: 160 million VND
- Account 111: 50 million VND
Document 2: Economic transactions arising during the period:
1. Receive capital contribution from shareholders in the form of fixed assets
of 200 million VND
2. Advance payment for goods to the seller of 70 million VND cash in bank
3. Purchase of raw materials 150 million VND and without payable
4. Return part of raw materials to the seller worth 15 million VND due to
incorrect specifications, which the seller paid cash on hand
5. Deposit cash on hand into cash in bank 60 million VND
6. Return capital contribution in fixed assets to shareholders worth 100
million VND 1-9
II. Principle for recording transaction
The double- entry system

1. State the transaction.

2. Analyze the transaction to determine which accounts
are affected.
[Link] the rules of double-entry accounting by using
T-accounts to show how the transaction affects the
accounting equation.
4. Show the transaction in journal form.
Debit Account Name Amount
Credit Account Name Amount
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II. Principle for recording transaction
The double- entry system

July 1: Joan Miller invests $40,000 in cash to form Miller Design

Studio.
Analysis: An owner’s investment in the business increases the
asset account Cash with a debit and increases the owner’s equity
account J. Miller, Capital with a credit.
Debit cash (111): $40,000
Credit [Link], Capital (411) $40,000

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II. Principle for recording transaction
The double- entry system

July 3: Rents an office; pays two months’ rent in advance, $3,200.

Analysis: The prepayment of office rent in cash increases the
asset account Prepaid Rent with a debit and decreases the asset
account Cash with a credit.

Debit Prepaid Rent (242): $3,200

Credit Cash (111) $3,200

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II. Principle for recording transaction
The double- entry system

• July 6: Purchases equipment, $16,320; pays $13,320 in cash

and agrees to pay the rest next month.
• Analysis: The purchase of equipment in cash and on credit
increases the asset account Equipment with a debit, decreases
the asset account Cash with a credit, and increases the liability
account Accounts Payable with a credit.

Debit Equipment (211): $16,320

Credit Cash (111) $13,320
Credit Accounts Payable $3,000

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II. Principle for recording transaction
The double- entry system

• July 15: Performs a service for a department store by designing a

TV commercial; bills for the fee now but will collect the fee later,
$9,600.
• Analysis: A revenue billed to a customer increases the asset
account Accounts Receivable with a debit and increases the
owner’s equity account Design Revenue with a credit. Accounts
Receivable is used to indicate the company’s right to collect the
money in the future.

Debit Accounts Receivable (131): $9,600

Credit Design Revenue (511) $9,600

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 Exercise 4
At a company, the following transactions occurred:
Transaction 1: Owner A contributed 600 million VND in cash, and Owner B
contributed 700 million VND in bank deposits to establish the company.
Transaction 2: Transfer retained earnings to a reward and welfare fund with
the amount of 40 million VND.
Transaction 3: Calculate the ending balance of account 411, knowing that
the beginning balance of this account is 0 VND.
Transaction 4: The company rented a house for use as an office with a rental
fee of 10 million VND per month and paid in cash.
Transaction 5: The company advertised on television for 30 million VND,
1/4 of which was paid in cash in hand, and the remaining amount was paid
by cash at bank
 Exercise 5

At a company, the following transactions occurred:

Transaction 6: The company incurred repair costs for machinery and
equipment used in the production department amounting to 5 million
VND, which has not been paid.
Transaction 7: The company incurred repair costs for machinery and
equipment used in the office department amounting to 6 million VND, of
which 1/5 was paid in cash in hand, and the remaining amount has not
been paid.
Transaction 8: Electricity and water costs incurred in the production
department amounted to 10 million VND, and in the office department
amounted to 8 million VND, all of which have not been paid.
 Exercise 6

At a company, the following transactions occurred:

Transaction 9a: The company purchased goods worth 100 million VND
on account.
Transaction 9b: The company sold all the goods purchased in transaction
9a to Customer A for a selling price of 160 million VND, and Customer A
paid the company in cash at bank. The cost of goods sold was 100
million VND.
Transaction 10a: The company purchased goods worth 200 million VND
and paid by cash at bank
Transaction 10b: The company sold all the goods purchased in
transaction 10a to Customer B for a selling price of 280 million VND on
account. The cost of goods sold was 200 million VND