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    Accounting Equation Exercise

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    Lhaiela Amanollah
    The document provides two tests to determine the effects of various business transactions on the accounting equation. Test I lists 10 transactions and indicates whether the assets, liabilities, and owner's equity will increase, decrease, or not be affected. Test II provides the transactions of a new business over the month of August and requires preparing a table to show the effects on the accounting equation.

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    Download as DOCX, PDF, TXT or read online from Scribd

    Accounting Equation Exercise

    Uploaded by

    Lhaiela Amanollah
    10K views2 pages
    The document provides two tests to determine the effects of various business transactions on the accounting equation. Test I lists 10 transactions and indicates whether the assets, liabilities, and owner's equity will increase, decrease, or not be affected. Test II provides the transactions of a new business over the month of August and requires preparing a table to show the effects on the accounting equation.

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    The document provides two tests to determine the effects of various business transactions on the accounting equation. Test I lists 10 transactions and indicates whether the assets, liabilities, and owner's equity will increase, decrease, or not be affected. Test II provides the transactions of a new business over the month of August and requires preparing a table to show the effects on the accounting equation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    10K views2 pages

    Accounting Equation Exercise

    Uploaded by

    Lhaiela Amanollah
    The document provides two tests to determine the effects of various business transactions on the accounting equation. Test I lists 10 transactions and indicates whether the assets, liabilities, and owner's equity will increase, decrease, or not be affected. Test II provides the transactions of a new business over the month of August and requires preparing a table to show the effects on the accounting equation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Test I.

    For each transaction, tell whether the assets, liabilities, and owner’s equity will increase (I),
    decrease (D), or is not affected (NE).
    A L E
    1. The owner invests personal cash in the business. I NE I
    2. The owner withdraws business assets for personal use. D NE D
    3. The company receives cash from a bank loan. I I NE
    4. The company repays the bank that had lent money. D D NE
    5. The company purchases equipment with its cash. NE NE NE
    6. The owner contributes her personal truck to the business. I NE I
    7. The company purchases supplies on credit. I I NE
    8. The company purchases land by paying half in cash I I NE
    and signing a note.
    9. The owner withdraws cash for personal use. D NE D
    10. The company repays the suppliers. D D NE

    Test II.
    Jerome Garcia started a new business and completed these transactions during August: 
    Aug.     1     Garcia invested PHP48,000 cash in the business.             
                1     Rented office space and paid PHP800 cash for the August rent. 
          3     Purchased exploration equipment for PHP22,000 by paying PHP12,000 cash and
    agreeing to pay the balance in 3 months. 
    5 Purchased office supplies by paying PHP1,500 cash. 
    6 Completed exploration work and immediately collected PHP420 cash for the work. 
    7 Purchased PHP1,350 of office equipment on credit. 
    15     Completed exploration work on credit in the amount of PHP8,000. 
    18     Purchased PHP700 of office supplies on credit. 
    20     Paid cash for the office equipment purchased on August 8.
    24     Billed a client PHP2,400 for work completed; the balance is due in 30 days. 
    28     Received PHP5,000 cash for the work completed on August 15. 
    30     Paid the assistant’s salary of PHP1,100 cash for this month. 
    30     Paid PHP340 cash for this month’s utility bill. 
    30     Garcia withdrew PHP1,050 cash from the business for personal use. 

    Required:
    Prepare a table showing the effects of the above transactions to the accounting equation.
    Jerome Jerome
    Accounts Office Office Exploration Accounts OWNER'S
    Date Cash Garcia, Garcia, Revenues Expenses ASSETS LIABILITIES
    Receivable Supplies Equipment Equipment Payable EQUITY
    Capital Withdrawals

    8/1/21 ₱48,000 ₱48,000 ₱48,000 ₱48,000

    8/1/21 -₱800 ₱800 -₱800 ₱800

    8/3/21 -₱12,000 ₱22,000 ₱10,000 ₱10,000 ₱10,000

    8/5/21 -₱1,500 ₱1,500 ₱-

    8/6/21 ₱420 ₱420 ₱420 ₱420

    8/8/21 ₱1,350 ₱1,350 ₱1,350 ₱1,350

    8/15/21 ₱8,000 ₱8,000 ₱8,000 ₱8,000

    8/18/21 ₱700 ₱700 ₱700 ₱700

    8/20/21 -₱1,350 -₱1,350 -₱1,350 -₱1,350

    8/24/21 ₱2,400 ₱2,400 ₱2,400 ₱2,400

    8/28/21 ₱5,000 -₱5,000 ₱-

    8/30/21 -₱1,100 ₱1,100 -₱1,100 ₱1,100

    8/30/21 -₱340 ₱340 -₱340 ₱340

    8/30/21 -₱1,050 ₱1,050 -₱1,050 ₱1,050

    ₱35,280 ₱5,400 ₱2,200 ₱1,350 ₱22,000 ₱10,700 ₱48,000 ₱1,050 ₱10,820 ₱2,240 ₱66,230 ₱10,700 ₱55,530

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