Commerce Department Baghdad Campus IUB

Accounting Equation Practice

Questions

Question #03:
Baber Ali is setting up a new business. Before actually selling anything, he bought a van for
Rs.4,500, a market stall for Rs.2,000 and a stock of goods for Rs.1,500. He did not pay in full for
his stock of goods and still owes Rs.1,000 in respect of them. He borrowed Rs.5,000 from
Kashif. After the events just described, and before trading starts, he has Rs.400 cash in hand and
Rs.1,100 cash at bank.
Calculate the amount of his capital.

Question #04:
Fahad is starting a business. Before actually starting to sell anything, he bought fixtures for
Rs.1,200, a van for Rs.6,000 and a stock of goods for Rs.2,800. Although he has paid in full for
the fixtures and the van, he still owes Rs.1,600 for some of the goods. Basit lent him Rs.2,500.
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After the above, Fahad has Rs.200 in the business bank account and Rs.175 cash in hand.
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You are required to calculate his capital.

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Question #05:
Draw up Gohar’s balance sheet from the following information as at 31 December 20X8:
Rs.
Capital 7,200
Debtors 1,200
Van 3,800
Creditors 1,600
Fixtures 1,800
Stock of goods 4,200
Cash at bank 300

Question #06:
Draw up A Brick’s balance sheet as at 30 June 20X6 from the following items:
Rs.
Capital 10,200
Equipment 3,400
Creditors 4,100
Stock of goods 3,600
Debtors 4,500
Cash at bank 2,800

Question #07:
Use the accounting equation to answer each question that follows.

1. Amber Company’s assets are Rs.240,000, and its liabilities are Rs.90,000. What is the amount
of its owner’s equity?

2. Dawer Company’s liabilities equal one-fifth of the total assets. The owner’s equity is
Rs.40,000. What is the amount of the liabilities?

Question #08:
Use the accounting equation to answer each question that follows.

1. At the beginning of the year, Peelu Company’s assets were Rs.90,000, and its owner’s equity
was Rs.50,000. During the year, assets increased by Rs.30,000 and liabilities increased by
Rs.5,000. What was the owner’s equity at the end of the year?

2. At the beginning of the year, Cat Company had liabilities of Rs.100,000 and owner’s equity of
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Rs.96,000. If assets increased by Rs.40,000 and liabilities decreased by Rs.30,000, what was the
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owner’s equity at the end of the year?

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Question #09:
Use the following accounts and balances to prepare a balance sheet with the accounts in proper
order for Manto Company at June 30, 2014:

Accounts Receivable Rs. 3,200 Building Rs.44,000

Wages Payable 1,400 Cash ?

Owner’s Capital 57,400

Question #10:
Vicky Company had assets of Rs.280,000 and liabilities of Rs.120,000 at the beginning of the
year, and assets of Rs.400,000 and liabilities of Rs.140,000 at the end of the year. During the
year, the owner invested an additional Rs.40,000 in the business, and the company made
withdrawals of Rs.48,000. What amount of net income did the company earn during the year?

Question #11:
Use the accounting equation to answer each question that follows. Show any calculations you
make.
1. Orange Company’s assets are Rs.400,000, and its owner’s equity is Rs.155,000. What is
the amount of its liabilities?

2. Sara Company’s liabilities and owner’s equity are Rs.72,000 and Rs.79,500, respectively.
What is the amount of the assets?

3. Raheel Company’s liabilities equal one-third of the total assets, and owner’s equity is
Rs.160,000. What is the amount of its liabilities?

4. At the beginning of the year, Sun Solar Company’s assets were Rs.275,000, and its
owner’s equity was Rs.150,000. During the year, assets increased Rs.75,000 and
liabilities decreased Rs.22,500. What is the owner’s equity at the end of the year?
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Question #12:
Desi Company’s total assets and liabilities at the beginning and end of the year follow.
Assets Liabilities
Beginning of the year Rs.175,000 Rs. 68,750
End of the year 275,000 162,500
Determine Desi’s net income or loss for the year under each of the following alternatives:

1. The owner made no investments in or withdrawals from the business during the year.

2. The owner made no investments in the business but withdrew Rs.27,500 during the year.

3. The owner invested Rs.16,250 in the business but made no withdrawals during the year.

4. The owner invested Rs.12,500 in the business and withdrew Rs.27,500 during the year.

Question #13:

Question #14:
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Question #15:

Question #16:
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Question #17:
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