TUTORIAL QUESTION SET TWO PRINCIPLES OF

ACCOUNTING
QUESTION ONE
What is the accounting equation, and explain why it is true?
QUESTION TWO
What is relationship between accounting equation and dual aspect concept?
QUESTION THREE
Write out the figures which make up the accounting equation (assets – liabilities = capital)
after each of the following consecutive transactions.

(i) owner starts in business with capital of TZS.10,000,000 comprising TZS.9,000,000 in

the bank and TZS.1,000,000 in cash
(ii) Buys office equipment for TZS.2,500,000 paying by cheque
(iii) Obtains a loan of TZS.2,000,000 by cheque from a friend
(iv) Buys factory machinery for TZS.8,000,000 paying by cheque
(v) Buys office equipment for TZS.2,000,000 on credit from City Office Supplies

QUESTION FOUR
The table below sets out account balances from the books of a business. The columns (a)
to (f) show the account balances resulting from a series of transactions that have taken place
over time. You are to compare each set of adjacent columns, ie (a) with (b) with (c), and so
on, and state, with figures, what accounting transactions have taken place in each case.
Figures are in thousands (‘000)

(a) (b) (c) (d) (e) (f)

TZS. TZS. TZS. TZS. TZS.
Assets TZS.
Office equipment – 5,000 5,000 5,500 5,500 5,500
Machinery – – – – 6,000 6,000
Bank 7,000 2,000 7,000 7,000 1,000 3,000
Cash 1,000 1,000 1,000 500 500 500
Liabilities
Loan – – 5,000 5,000 5,000 5,000
Capital 8,000 8,000 8,000 8,000 8,000 10,000
QUESTION FIVE
Use the accounting equation to work out the missing amounts.
A O L
1 TZS.380,000,000 TZS.? TZS.120,000,000
2 TZS.? TZS.648,000,000 TZS.240,000,000
3 TZS.810,000,000 TZS.520,000,000 TZS.?
4 TZS.? TZS.140,000,000 TZS.60,000,000
5 TZS.735,000,000 TZS.? TZS.40,000,000
6 TZS.450,000,000 TZS.380,000.000 TZS.?

QUESTION SIX
The following are balances extracted from the D’s Enterprise for the year ended 30 September,
2023. Use accounting equation to show that the financial position does balance
Cash 8,000,000
Capital Stock 120,000,000
Inventory 16,000,000
Notes Payable 45,000,000
Retained Earnings 29,000,000
Building 158,000,000
Equipment 30,000,000
Accounts Payable 11,000,000
Salaries Payable 7,000,000

QUESTION SEVEN
Show the effect of the following business transactions on assets, liabilities and capital through
accounting equations:
1. Commenced business with cash 2,000,000
2. Goods purchased on credit 700,000
3. Furniture purchased paying cash 300,000
4. Paid cash to creditors 200,000
5. Amount withdrawn by the proprietor 400,000
6. Creditors accepted a bill for payment 150,000
7. Interest on capital 100,000
8. Transfer from capital to loan 500,000
9. Paid cash to creditors 100,000

QUESTION EIGHT
Calculate the missing figure using the Basic Accounting Equation (BAE).
Cash 10,000,000
Debtors 30,000,000
Buildings 200,000,000
Fixtures and fittings 80,000,000
Creditors 50,000,000
Capital ?