ACCOUNTING EQUATION

EXCERCICE 1
Dolly Barton began Barton Office Services in October and during that mo
1. Invested $10,000 cash, and $15,000 of computer equipment.
2. Paid $500 cash for an insurance premium covering the next 12 months
3. Completed a word processing assignment for a customer and collected
4. Paid $200 cash for office supplies. A
5. Paid $2,000 for October's rent.

ASSET = LIABITILIES
Cash Equipment Short-term prepaid insurance Supplies Current L.
Tiền Máy móc thiết bị Bảo hiểm trả trước ngắn hạn Công cụ dụng cụ Nợ ngắn hạn
1 10,000 15,000
2 (500) 500
3 1,000
4 (200) 200
5 (2,000)

8,300 15,000 500 200 -

24,000 28,000
d during that month completed these transactions:

next 12 months.
r and collected $1,000 cash.
= L+ OE
+ C.C. + Revenue -Expenses

LIABITILIES + OWNER'S EQUITY

Non-current L. Contributed Capital Revenue - Expense
Nợ dài hạn Gốp vốn CSH Doanh thu Chi phí
25,000

1,000

2,000

- 25,000 1,000 2,000

-Withdrawals -Divident
(rut von chu so huu)
 EXCERCICE 2
Flora Accounting Services completed these transactions in February:
1. Purchased office supplies on account, $300.
2. Completed work for a client on credit, $500.
3. Paid cash for the office supplies purchased in (1).
4. Completed work for a client and received $800 cash.
5. Received $500 cash for the work described in (2).
6. Received $1,000 from a client for accounting services to be performed in March.
ASSET = LIABITILIES
Cash Account Receivable Supplies Account Payable
Tiền Phải thu khách hàng Công cụ dụng cụ Phải trả người bán
1 $300 $300
2 $500
3 ($300) bo 300 ($300)
4 $800
5 $500 ($500) bo 500
6 $1,000
$2,000 $0 $300 = $0
$2,300 = $2,300
Tổng tài sản = Tổng nguồn vốn
ormed in March.
LIABITILIES + OWNER'S EQUITY
Unearned Revenue Contributed Capital Revenue
Doanh thu chưa thực hiện Gốp vốn CSH Doanh thu
$0 th1
bo 500 $500 $0 th1
$0 th2
bo 800 $800 $0 th1
$0 th3
$1,000 bo 1000 $0 nhan coc th1
$1,000 $0 $1,300

uồn vốn
 EXCERCICE 3
No Date In December:
1 1-Dec Began a financial services practice by investing $15,000 cash and office
2 2-Dec Purchased $1,200 of office equipment on account.
3 3-Dec Purchased $300 of office supplies on credit
4 4-Dec Completed work for a client and immediately received a payment of $900
5 8-Dec Completed work for Acme Loan Co. on credit, $1,700.
6 10-Dec Paid for the supplies purchased on account on December 3.
7 14-Dec Paid for the annual $960 premium on an insurance policy
8 18-Dec Recceived payment in full from Acme Loan Co. for the work completed
9 27-Dec Leonard withdrew $650 cash from the practice to pay personal expenses.
10 30-Dec Paid $175 cash for the December utility bills.
11 30-Dec Received $2,000 from a client for financial services to be rendered next y

ASSETS Short-term =
Account prepaid
Cash Receivable Equipment insurance Supplies
Tiền Phải thu khách hàng
Máy móc thiếtChi
bị phí trả trước ngắn hạn
Công cụ dụng cụ Phải trả ngườ
1-Dec
2-Dec
3-Dec
4-Dec
8-Dec
10-Dec
14-Dec
18-Dec
27-Dec
30-Dec
30-Dec
$0 $0 $0 $0 $0
$0 =
Tổng tài sản =
0 cash and office equipment having a $500 value.

a payment of $900 cash.

work completed on December 8.

ersonal expenses.

be rendered next year.

LIABITILIES + OWNER'S EQUITY

Account Unearned
Payable Revenue Owner, Capital - Owner, Withdrawals Revenue
Phải trả ngườiDoanh
bán thu chưa thực hiệnGốp vốn CSH Rút vốn CSH Doanh thu

$0 $0 $0 $0 $0
$0
Tổng nguồn vốn
- Expense
Chi phí
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Chapter 1 exercises 4
Cool Tours had beginning equity of $72,000; net income of $25,000, and withdrawals by own
1
$9,000. Calculate the ending equity.
2 Della's Donuts has revenues of $83,000 and expenses of $64,000. Calculate its net income.
3 ParFour's total liabilities are $130,000 and its equity is $340,000. Calculate the company's
total assets.
At 31 Dec, 2018, the assets and liabilities of Bike Co. are as follows: Cash $4,000; Accounts
4 Receivable, $850; Inventories, $5,200; Equipments $13,000; Accounts Payable, $1,530; Salari
payable $2,000. What is the amount of owner's equity as of Dec 31, 2018?

1. Cool Tours:
Plus: Investment by owner
Net icome
$0
Less: Withdrawals by owner
Cool Tours, end of period $0

2. Della's Donuts
Net income = Revenues - Expenses =

3. ParFour
Assets = Liabilitites + Owner's Equity
Assest =

4. Bike Co.
Assets $0 Liabilites $0

Assets = Liabilitites + Owner's Equity

Owner's Equity = Assets - Liabilitites =
nd withdrawals by owners of

ulate its net income.

ulate the company's

ash $4,000; Accounts

Payable, $1,530; Salaries
18?

OE
EXCERCICE 5
Answer the following questions.
a) At the beginning of the year, Addison Company’s assets are $300,000 and its equity is $100,0
During the year, assets increase $80,000 and liabilities increase $50,000. What is the equity at
b) Office Store has assets equal to $123,000 and liabilities equal to $47,000 at year-end.
What is the total equity for Office Store at year-end?
c) At the beginning of the year, Quaker Company’s liabilities equal $70,000. During the year, as
by $60,000, and at year-end assets equal $190,000. Liabilities decrease $5,000 during the year
What are the beginning and ending amounts of equity?
a) A L E
Beginning 300,000$ 200,000$ 100,000$
During 80,000 50,000 30,000$
Ending 380,000$ 250,000$ 130,000$
the equity at the end of the year is 130,000$
b) A L E
Ending 123,000$ 47,000$ 76,000$
the equity at year-end is 76,000$
c) A L E
Beginning (190,000-60,000) 70,000$ 60,000
During 60,000 - 5,000 55,000
Ending 190,000 65,000 125,000
The beginning equity is $60,00 and the ending equity is $125,000
nd its equity is $100,000.
. What is the equity at the end of the year?
0 at year-end.

00. During the year, assets increase

$5,000 during the year.
EXCERCICE 6
Presented below is selected information related to Kirby Company at December 31, 2019.
Kirby reports financial information monthly.

Accounts Payable $ 3,000 Salaries and Wages Expense $ 16,500

Cash 6,500 Notes Payable 25,000
Advertising Expense 6,000 Rent Expense 10,500
Service Revenue 53,500 Accounts Receivable 13,500
Equipment 29,000 Owner’s Drawings 7,500

a) Determine the total assets of Kirby Company at December 31, 2019.

b) Determine the net income that Kirby Company reported for December 31, 2019.
c) Determine the owner’s equity of Kirby Company at December 31, 2019.
 Multiple choices
1 Which of the following equations properly represents a derivation of the fundamental accounting equation?
a. Assets + liabilities = owner's equity.
b. Assets = owner's equity.
c. Cash = assets.
d. Assets – liabilities = owner's equity.

Wilson Company owns land that cost $100,000. If a “quick sale” of the land was necessary to
2 generate cash, the company feels it would receive only $80,000. The company continues to report the
asset on the balance sheet at $100,000. Which of the following concepts justifies this?
a. The historical-cost principle.
b. The value is tied to objective and verifiable past transactions.
c. Neither of the above.
d. Both "a" and "b".

3 Retained earnings will change over time because of several factors. Which of the
following factors would explain an increase in retained earnings?
a. Net loss.
b. Net income.
c. Dividends.
d. Investments by stockholders.

4 Which of these items would be accounted for as an expense?

a. Repayment of a bank loan.
b. Dividends to stockholders.
c. The purchase of land.
d. Payment of the current period's rent.

5 Which of the following transactions would have no impact on stockholders’ equity?

a. Purchase of land from the proceeds of a bank loan.
b. Dividends to stockholders.
c. Net loss.
d. Investments of cash by stockholders.

6 Which of the following would not be included on a balance sheet?

a. Accounts receivable.
b. Accounts payable.
c. Sales.
d. Cash.

7 Remington provided the following information about its balance sheet. Based on the information
provided, how much are Remington’s liabilities?
Remington
Balance sheet
Cash $ 100
A/R $ 500
Stockholders' equity $ 700
A/P $ 200
 Bank loans $ 1,000

a. $200.
b. $900.
c. $1,200.
d. $1,700.

Gerald had beginning total stockholders’ equity of $160,000. During the year, total assets increased
by $240,000 and total liabilities increased by $120,000. Gerald’s net income was $180,000. No
8
additional investments were made; however, dividends did occur during the year. How much were the
dividends?
a. $20,000.
b. $60,000.
c. $140,000.
d. $220,000.
The personal assets of the owner of a company will not appear on the
9
company's balance sheet because of which principle/guideline?
a. Cost
b. Economic Entity
c. Monetary Unit
Which principle/guideline requires the company's financial statements to have
10 footnotes containing information that is important to users of the financial
statements?
a. Conservatism
b. Economic Entity
c. Full Disclosure

Which principle/guideline is associated with the assumption that the company

11
will continue on long enough to carry out its objectives and commitments?
a. Economic Entity
b. Going Concern
c. Time Period
Which principle/guideline directs a company to show all the expenses related to
12 its revenues of a specified period even if the expenses were not paid in that
period?
a. Cost
b. Matching
c. Monetary Unit
ental accounting equation?

necessary to
ontinues to report the
this?

the information
tal assets increased
$180,000. No
. How much were the

on the

ments to have
e financial

t the company
mitments?

enses related to
paid in that