KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

SCHOOL OF BUSINESS
DEPARTMENT OF ACCOUNTING AND FINANCE
ACF 255: FINANCIAL ACCOUNTING I

PRACTICE SET 1: ACCOUNTING EQUATION

Question 1.
Show how each of the following transactions can affect the accounting equation (Statement of
Financial Position)

i. Purchased goods for resale on credit GH¢ 250,000 from Adwoa

ii. Paid rent expenses for last month with cheque GH¢ 250
iii. Sold goods costing GH¢ 50,000 on credit GH¢ 90,000 to Anas
iv. Returned goods GH¢ 25,000 to Adwoa a trade payable
v. The business received interest GH¢ 500 on its savings account
vi. Purchased prepaid electricity card worth GH¢ 1,000 at the beginning of the month
with cash
vii. Owner gave goods worth GH¢ 3,000 to a friend as a birthday gift
viii. Paid Adwoa a trade payable GH¢ 150,000 by cheque
ix. Anas a trade receivable returned goods GH¢ 10,000 to the business for poor
packaging

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Akua Peprah-Yeboah, Kwame Mireku, A.S. Atchulo, Kwadjo Appiagyei, Albert Agyei
Question 2.
From the table below which gives the effects of individual transactions, you are required to state
as fully as possible what transaction has taken place in each case.

Assets GH¢ A B C D E

*** ‘000 GH¢ ‘000 GH¢ ‘000 GH¢ ‘000 GH¢ ‘000 GH¢ ‘000

Furniture 900 900 900 900 1150 1150

and fittings

Motor van 190 200 200 200 200 200

Office 96 96 96 96 96 96
equipment

Inventory 220 220 220 220 220 220

Debtors 376 376 376 376 376 216

Bank 54 44 44 344 94 254

Cash 30 30 22 22 22 22

1,866 1,866 1,858 2,158 2,158 2,158

Capital
and
Liabilities

Capital 1242 1242 1242 1242 1242 1242

Loan 400 400 400 700 700 700

Creditors 224 224 216 216 216 216

1,866 1,866 1,858 2,158 2,158 2,158

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Akua Peprah-Yeboah, Kwame Mireku, A.S. Atchulo, Kwadjo Appiagyei, Albert Agyei
Question 3.
Write the likely transactions that might result from these changes in the accounting equation:

i. Increase in capital and increase in Land and Building by GH¢42, 000.

ii. A decrease in stock and a corresponding decrease in capital by GH¢7, 000.
iii. An increase in equipment and an increase in long-term loan by GH¢ 16, 500.
iv. An increase in stocks and an increase in creditors by GH¢8, 000.
v. A decrease in stocks by GH¢22, 000, an increase in debtors by GH¢24, 000 and an
increase in capital by GH¢2, 000.

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Akua Peprah-Yeboah, Kwame Mireku, A.S. Atchulo, Kwadjo Appiagyei, Albert Agyei