Accounting equation:

Resources = Other + Own

Assets = Liability + Capital

Q1. Practice Question (Solve with accounting equation):

Asset Liabilities Capital

$ $ $
a) 10,000 ? 2,029
Solution:
Asset = Liability + Capital
10,000 = x + 2,029
10,000 - 2,029 = x
7,971

Asset Liabilities Capital

$ $ $
b) 9,000 3,000 ?
Solution:
Assets = Liabilities + Capital
9,000 = 3,000 + x
9,000 - 3,000 = x
6,000

Asset Liabilities Capital

$ $ $
c) 3,000 1,090 ?
Solution:
Assets = Liabilities + Capital

Asset Liabilities Capital

$ $ $
d) ? 2,000 2,009
Solution:
Assets = Liabilities + Capital
x = 2,000 + 2,009
x = 4,009

Assets Liabilities Capital

$ $ $
e) ? 3,100 4,790
 Solution:
Assets = Liabilities + Capital
x = 3,100 + 4,790
x = 7,890

Assets Liabilities Capital

$ $ $
f) 4,723 3,232 ?
Solution:
Assets = Liabilities + Capital
4,723 = 3,232 + x
4,723 - 3,232 = x
1,491 = x

Q2. Practice Question (Solve with accounting equation):

Liabilities Capital Assets
$ $ $ Answers
a) ? 20,000 42,009
Solution:
Assets = Liabilities + Capital
42009 = x + 20,000
42,009 - 20,000 = x
22,009 = x

b) 7,009 ? 11,111 4,102

c) 3,320 ? 13,131 9,811
d) ? 2,323 4,323 2,000
e) 5,000 7,723 ? 12,723

Q3. Practice Question (Solve with accounting equation):

Asset Liabilities Capital
$ $ $
a) ? 20,000 7,000 27,000
b) 7,003 2,001 ? 5,002
c) 14,929 5,000 ? 9,929
d) ? 2,732 67 2,799
e) 17,003 ? 1,001 16,002
g) ? 6,270 2,070 8,340

Q4. Which of the items in the following list are asstes and liabilites?
a) Motor vehicle (A) b) Loan from Mr. C (L)
c) Bank (A) d) Rent payable (L)
e) Furniture (A) f) Cash (A)
 Q5. Which of the items in the following list are asstes and liabilites?
a) Stocks (A) b) Tables and chair (A)
c) Electricity bill payable (L) d) Building (A)
e) Bank loan (L)

Q6. Which of the items in the following list are asstes and liabilites?
a) Telephone bill payable (L) b) Telephone set (A)
c) Salaries payable (L) d) Cheque received (A)
e) Creditors (L)

Q7. a) Distinguish between Current Assets, Non Current Assets,

Current liabilities and Non current liabilities.
b) Distinguish between Tangible and intangible assets. (Non Current Asset)
1) Cash at bank (CA) 2) Paid rent i 3) Cash at hand (CA)
4) Stock (CA) 5) Trade recei 6) Trade payables (CL)
7) Tax payable (CL) 8) Goodwill (N 9) Land (NCA)-(Tangible)
10) Building (NCA)-(Tangibl 11) Equipment 12) Software (NCA)-(In-Tangible)
13) Property (NCA)-(Tangib 14) Copy right 15) Stationary (CA)
16) Furniture (NCA)-(Tangib 17) Bank overdr 18) 5 years bank loan (NCL)
19) Websites (NCA)-(In-Tan 20) Machinery 21) Interest payable (CL)
22) Expense payable (CL) 23) Interest re 24) 5 years investment (NCA)-(Tangible)

Q8. a) Distinguish between Current Assets, Non Current Assets,

Current liabilities and Non current liabilities.
b) Distinguish between Tangible and intangible assets. (NCA)
1) Land (NCA)-(Tangible) 2) Rent payabl3) Motor vehicle (NCA)-(Tangible)
4) Cash in hand (CA) 5) Paid fees i 6) Salary payable (CL)
7) Bank overdraft (CL) 8) Machinery 9) Building (NCA)-(Tangible)
10) Furniture (NCA)-(Tangib11) Prepaid ren12) Copy right (NCA)-(Intangible)
13) Account payable (CL) 14) Debtors (C 15) Telephone bill payable (CL)
16) Interest payable (CL) 17) Tax payable18) Goodwill (NCA)-(Intangible)
19) Wages payable (CL) 20) Van (NCA)-(21) Bank balance (CA)
22) Prepaid advertising (CA23) Table and c24) Printer paper unused (CA)
25) Creditors (CL) 26) Inventory/s27) Commission payable (CL)
28) Equipment (NCA)-(Tangi29) 6 months ba 30) Computers (NCA)-(Tangible)

Credit Suppliers (CL) = Trade payable/Account payable/Creditors

Credit Customers (CA) = Trade receivable/Account receivable/debtors
Prepaid (CA) = Paid in advance
Stock (CA) = Inventory/Merchandise inventory/Goods

Accounting equation:
At year start:
Assets = Liability + Capital
 At Year end:
Assets = Liability + Capital + Net profit - Drawing + Additional investment
OR
Assets = Liability + Capital - Net Loss - Drawing + Additional investment
OR
Net Assets = Assets - Liability
OR
Net Assets = Capital + Net profit - Drawing + Additional investment

Q9. Solve the following question with accounting equation?

a) Calculate the missing figure:

Assets $65,000 Drawing $5,000
Liabilties $18,000 Additional investment $8,000
Capital $22,000 Net profit ?

Solution:
Assets = Liabilities + Capital + Net profit -
65,000 = 18,000 + 22,000 + x -
65,000 = 43,000 + x
65,000 - 43,000 = x
22,000 = x

b) Calculate the missing figure:

Asstes $78,000 Drawing $10,000
Liabilities $15,000 Additional investment $2,000
Capital ? Net profit $30,000

Solution:
Assets = Liabilities + Capital + Net profit -
78,000 = 15,000 + x + 30,000 -
78,000 = 37,000 x
78,000 - 37,000 = x
41,000 = x

c) Calculate the missing figure:

Assets ? Drawing $8,000
Liabilites $22,000 Additional investment $18,000
Capital $18,000 Net Loss $4,000

Solution:
Assets = Liabilities + Capital - Net Loss -
 x = 22,000 + 18,000 - 4,000 -
x = 46,000

d) Calculate the missing figure:

Net Assets $85,000 Additional investment $36,000
Capital $40,000 Net profit $12,000
Drawing ?

Solution:
Net Assets = Capital + Net profit - Dawing +
85000 = 40,000 + 12000 - x +
85000 = 88,000 - x
85,000 - 88,000 - x
-3,000 - x
3000 = x

e) Calculate the missing figure:

Assets $105,000 Drawing $13,000
Liabilites ? Additional investment $10,000
Capital $42,000 Net profit $15,000

Solution:
Assets = Liabilities + Capital + Net profit -
105,000 = x + 42,000 + 15,000 -
105,000 = x + 54,000
105,000 - 54,000 = x
51,000 = x

Q10. Draw up N. Marriott's statement of financial position from the following information
as at 31 December 2011: (Accounting equation)
$
Capital 20,700
Account Receivable 800
Car 8,300
Account payable 3,600
Equipment 7,900
Inventory 5,700
Cash at bank 1,600

Solution:
Assets = Liability + Capital
Account Receivable 800 = Account payable 3,600 20,700
Car 8,300
Equipment 7,900
Inventory 5,700
 Cash at bank 1,600
24,300 = 3,600 + 20,700

Q11. Draw up Mr. M statement of financial position as at 30 June 2012 from the following
items:
$
Capital 10,200
Equipment 3,400
Account payable 4,100
Inventory 3,600
Accounts receivable 4,500
Cash at bank 2,800

Solution:
Assets = Liability + Capital
Equipment 3,400 Account payable 4,100 10,200
Inventory 3,600
Accounts receivable 4,500
Cash at bank 2,800
14,300 4,100 + 10,200
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(NCA)-(Tangible)
Dawing + Additional investment
5,000 + 8,000

Dawing + Additional investment

10,000 + 2,000

Dawing + Additional investment

 8,000 + 18,000

Additional investment
36000

Dawing + Additional investment

13,000 + 10,000