2.3.

3 Discussion - Accounting Equation

1111 unread replies.1212 replies.
Instruction: Answer the questions below. For #4 question, answer it using the
accounting equation.
Scenario: You lack financial resources to pursue your studies as a college student. You
decide to engage in a small business activity, i.e., sell snacks in school, to help support
your studies. You have P500 on hand (your accumulated savings from your daily school
allowance) that you wish to put into your business. But you reckon you need P1,500 to
buy the food supplies you need. So you borrow P1,000 from relatives to complete the
P1,500 start-up fund for your business.
Questions:

1. Upon starting your business, how much money/property does your

business have?

I have a beginning balance of P1,500.00.

2. How much does your business owe? P1,000

I have an amount of P1,000.00 owed to my relatives

3. How much is your financial claim on what the business owns?

I have accumulated P500.00 from my daily school allowance.

4. The answers to these questions would yield the basic equation used in
accounting. Write down below how you believe this equation looks like,
as well as the answers to the above questions.

Assets = Liabilities + Owner’s Equity

P1,500.00 = P1,000.00 + P500.00

5. How much is total assets? How much is total liabilities and total owner's
equity?

Total Assets = P1,500.00

Total Liabilities = P1,000.00

Total Owner’s Equity = P500.00