Our team of reviewers are established professionals with decades of experience in areas of personal finance and hold many advanced degrees and certifications. If you have difficulty answering the following questions, learn more about this topic by reading our Accounting Equation (Explanation). You will receive your score and answers at the end. I. Started business with cash value of Rs. 500,000.
You have correctly added the capital introduced and the profit for the year but you have not deducted the drawings of £15,000. £10,000 is the capital introduced by Marina into the business at the start of the year. The profit for the year has to be added to this figure and then drawings deducted to arrive at the capital account balance at the end of the accounting period.
Featuring the latest information on accounting methods and standards, the information in Accounting For Dummies is valuable for anyone studying or working in the fields of accounting or finance. Finance Strategists is a leading financial literacy non-profit organization priding itself on providing accurate and reliable financial information to millions of readers each year. Receive instant access to our graded Quick Tests (more than 1,800 unique test questions) when you join AccountingCoach PRO.
They are for personal use by the original purchaser only. We do not allow our digital products to be reproduced or distributed elsewhere.Feel free to print, annotate and add them to your notes. X. Withdrew inventory for personal purpose by owner of worth Rs. 6,000. Equipment of Rs. 1,200 was withdrawn from business for Zahid Shah’s personal use. Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs.
- For fill-in-the-blank questions, press or click on the blank space provided.
- Featuring the latest information on accounting methods and standards, the information in Accounting For Dummies is valuable for anyone studying or working in the fields of accounting or finance.
- She is a licensed CPA in Minnesota and is a member of the State Board of Accountancy.
- Finance Strategists is a leading financial literacy non-profit organization priding itself on providing accurate and reliable financial information to millions of readers each year.
- You have correctly added the capital introduced and the profit for the year but you have not deducted the drawings of £15,000.
For fill-in-the-blank questions, press or click on the blank space provided. Dummies has always stood for taking on complex concepts and making them easy to understand. Dummies helps everyone be more knowledgeable and confident in applying what they know.
This equation ensures that all changes in an enterprise’s financial position are accounted for. Test your knowledge of the accounting equation by answering the 10 short questions given below. Kenneth Boyd is the owner of St. Louis Test Preparation (). He provides online tutoring in accounting and finance. Kenneth has worked as a CPA, Auditor, Tax Preparer, and College Professor.
Video Lecture: Accounting Equation Problems and Solutions
You have correctly deducted the loss for the year but you have then incorrectly deducted the capital introduced of £50,000 and added the drawings of £120,000. Remember that for a sole trader, the equity/capital account balance at the end of the year is the capital at the start of the year (£152,000) + capital introduced (£50,000) – the loss for the year (£25,000) – any drawings of money from the business for personal use (£120,000). You have added all the figures together when you should be adding the capital introduced and the profit for the year and then deducting the drawings. Francis Limited has non-current assets of £242,000, current assets of £68,000, current liabilities of £52,000 and non-current liabilities of £100,000. Using the accounting equation, calculate the figure for equity. Edmund Limited has non-current assets of £101,356, current assets of £52,618, current liabilities of £42,615 and non-current liabilities of £42,000.
- I. Started business with cash value of Rs. 500,000.
- You have correctly deducted the loss for the year but you have then incorrectly deducted the capital introduced of £50,000 and added the drawings of £120,000.
- Commence business with cash Rs. 200,000 and Land Rs. 50,000.
- £10,000 is the capital introduced by Marina into the business at the start of the year.
- Kenneth has worked as a CPA, Auditor, Tax Preparer, and College Professor.
You have correctly added the capital introduced of £10,000 to the profit for the year of £25,000 and deducted the drawings of £15,000 to give you the correct capital account balance at 31 December 2019. You have correctly added the capital at the start of the year (£152,000) to capital introduced (£50,000), deducted the loss for the year (£25,000) and deducted the drawings from the business for personal use (£120,000). This digital product is a .zip file consisting of 25 Accounting Equation practice questions along with the corresponding answers. In accounting, equity represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debt was paid off.
Why You Can Trust Finance Strategists
Whether it’s to pass that big test, qualify for that big promotion or even master that cooking technique; people who rely on dummies, rely on it to learn the critical skills and relevant information necessary for success.
Commence business with cash Rs. 200,000 and Land Rs. 50,000. Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications. Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others. Our goal is to deliver the most understandable and comprehensive explanations of financial topics using simple writing complemented by helpful graphics and animation videos.
Comments for Accounting Equation Questions and Answers
He is the author of CPA Exam For Dummies. Kate Mooney has been teaching accounting to both undergraduates and MBA students at St. Cloud State University since 1986, after earning her PhD from Texas A & M University. She is a licensed CPA in Minnesota and is a member of the State Board of Accountancy. Having a look at the basis of the entire accounting process, this quiz and corresponding worksheet will help you gauge your knowledge of using the accounting equation.
If you find it difficult to answer any of these questions, read our article on the accounting equation to learn more. The Accounting Equation can be used to track the changes in an enterprise’s assets, liabilities, and shareholders’ equity over time. This information can help you understand your business’s financial position and make informed decisions about growing your business. The Accounting Equation is a fundamental Principles of Accounting that states that the value of an enterprise’s assets must equal its liabilities and shareholders’ equity.
Here are a couple of practice questions to help you get familiar with this formula. As a member, you’ll also get unlimited access to over 88,000 lessons in math,
English, science, history, and more. Plus, get practice tests, quizzes, and personalized coaching to help you succeed. Our digital products are copyright © Accounting Stuff Pty Ltd.
What is the first step in an accounting cycle called?
Topics you’ll need to know to pass the quiz include understanding the first step in the accounting cycle as well as knowing how to analyze a transaction. Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. He is the sole author of all the materials on AccountingCoach.com. If you need more practice on this and other topics from your accounting course, visit Dummies.com to purchase Accounting For Dummies!
They regularly contribute to top tier financial publications, such as The Wall Street Journal, U.S. News & World Report, Reuters, Morning Star, Yahoo Finance, Bloomberg, Marketwatch, Investopedia, TheStreet.com, Motley Fool, CNBC, and many others. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. Carbon Collective does not make any representations or warranties as to the accuracy, timeless, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Carbon Collective’s web site or incorporated herein, and takes no responsibility therefor. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. We suggest that you try to answer each question yourself before clicking on the “See answer” button. For multiple-choice and true/false questions, simply press or click on what you think is the correct answer.