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Accounting Worksheet-Ch-2

The document outlines the fundamentals of the accounting equation and the preparation of a statement of financial position for a sole trader. It includes questions about liabilities, owner’s equity, assets, and definitions related to financial statements. Additionally, it provides a practical example involving calculations of owner’s equity and categorization of financial items.

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Naisha Mehta
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16 views3 pages

Accounting Worksheet-Ch-2

The document outlines the fundamentals of the accounting equation and the preparation of a statement of financial position for a sole trader. It includes questions about liabilities, owner’s equity, assets, and definitions related to financial statements. Additionally, it provides a practical example involving calculations of owner’s equity and categorization of financial items.

Uploaded by

Naisha Mehta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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The Accounting Equation

1. Why is a statement of financial position prepared by a sole trader?

A To calculate the loss for the year

B To calculate the owner’s equity for the year

C To record the transactions that took place during the financial


year

D To summarise what the business owns and what it owes [1


mark]

2. Which of these is a liability of a business?

A Debts owing by credit customers

B Debts owing by credit suppliers

C Debts owing to credit suppliers

D Loan given to a family member [1 mark]

3. What increases owner’s equity?

A Business expenses paid by owner from his personal bank


account

B Business inventory taken by owner for personal use

C Cash taken out of the business for owner’s personal use

D Rent for owner’s personal house, paid using business cash [1


mark]

4. Which statement is not true?

A Machinery is a current asset

B Resources supplied to the business resources owned by the


business

C The accounting equation is reflected in the statement of


financial position

5. When an owner takes inventory for his own use it is called


--------------- [1 mark]
Drawings
6. Which is a business liability?

A Bank loan

B Cash
C Machinery

D Premises [1 mark]

6 State the accounting equation. [1 mark) Assets=Liabilities+Capital

7. Define the following:


An asset [1 mark]
What is owned by the business
A liability [1 mark]
What is owed by the business (eg. debts)
Owner’s equity [1 mark]
Anything put into the business by the owner.
The statement of financial position [1 mark]
A financial statement that summarizes the business’s assets,
liabilities, and capital at a specific point in time.
A trade payable [1 mark]
Liability owed to suppliers for products purchased on credit.

8. Sylvester, a sole trader, had the following assets and liabilities on 31


December 2019:
$
Equipment 50 000
Motor vehicle 10 000
Balance at bank 2 500
Debts owing to suppliers 3 800
Calculate Sylvester’s owner’s equity on 31 December 2019. Show
your workings. [2 marks]
Equipment = $50,000
Motor vehicle = $10,000
Balance at bank = $2,500
Total assets = $62,500. Debts owing to suppliers = $3,800
Owner’s equity = Assets - Liabilities
Owner’s equity = $62,500 - $3,800 = $58,700

Complete the following table by placing a tick () in the correct


column to indicate whether each item is an asset or a liability. [10
marks]
9. Complete the following table to calculate the value of the missing
items. [6 marks]

10. Complete the following table with the words ‘decrease’ or


‘increase’ to show which effect each transaction would have on the
assets, liabilities and owner’s equity of a business. The first one has
been completed as an example. [9 marks]

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