Professional Documents
Culture Documents
Current Assets
Currents assets are short term assets. These are the assets which are either in
the form of cash or which can be turned into cash relatively easily.
Current Liabilities
Currents liabilities are short term liabilities which will be paid by one year.
1
Question 1
Group of
Account
Question 2
Question 3
____________: that portion of the total assets that the owner or stockholder fully
own
____________: money the company earns from sales, and interest and
dividends on marketable securities
2
Question 4
Here is a list of assets and liabilities and references to capital. Identify which
items are assets, liabilities, capital.
s) Land t) Fittings
Question 5
No Accounts Group
1 Premises
2 Purchases
3 Sales
4 Capital
5 Salary
Trade payable/ Trade
6 payable
7 Mortgage
8 Cash
9 Bank
3
10 Loan
11 Stationery
12 Trade receivables / Trade receivable
13 Machine
14 Furniture
15 Fixtures & fittings
16 Vehicle
17 Utility bills
18 Interest received
19 Commission received
20 Wages
21 Buildings
22 Insurance
23 Rent received
24 Postage
25 Carriage inwards
26 Land
27 Carriage outwards
28 Repair and maintenances expenses
29 Office equipment
30 Overdraft bank
31 Rent expenses
32 Drawings
33 Investment
34 Fixed deposits
35 Interest on investment
36 Interest on loan
37 Service revenue
38 Delivery van
39 Commission paid
40 Bank
4
Question 6
For each of the accounts below, indicate whether it is an asset, liability, expense,
revenue or owner`s equity type of account. There is only one correct answer in each
case. Mark your choice with a tick.
5
Question 7
a) Which of the items in the following list are liabilities and which of them are
assets?
(a) Loan from A. Sangster (d) Bank overdraft
(b) We owe a supplier (e) Inventory of goods held for sale
(c) Equipment (f ) Loan to F. Wood
Assets Liabilities
Loan to C. Smith Delivery van
Mortgage on office building Accounts payable
Accounts receivable Office supplies
Warehouse Computer
Our business website Cash in hand
6
1. State the meaning of
(i) assets .................................................................................................................................
.....................................................................................................................................
(ii) liabilities .............................................................................................................................
...................................................................................................................................
(iii) capital .................................................................................................................................
......................................................................................................................................
12/O/N/18
.......................................................................................................................................
.......................................................................................................................................
11/O/N/17
3. Complete the table below using a tick (✓) to indicate if each item is an asset or a
liability. The first has been completed as an example.
Asset Liability
Inventory
Motor vehicle
Trade payables
Trade receivables
Bank loan
Cash
12/M/J/14
4. Complete the following table indicating with a tick (✓) whether each item is an asset,
liability, income or expense.
12/M/J/17
7
1. Assets (what it owns)
2. Liabilities (what it owes to other)
3. Owner's Equity (the difference between assets and liabilities) – Capital
The accounting equation (or basic accounting equation) offer us a simple way to
understand how these three amounts relate to each other. The accounting
equation for a sole proprietorship is:
ASSET LIABILITIES
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Fill the blanks
$ $ $
Business A 220 000 30 000 190 000
Business B 912 000 86 000 826 000
Business C 325 000 52 000 273 000
Business D 560 000 77 000 483 000
Business E 917 000 52 000 865 000
Business F 262 000 42 000 220 000
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Question 4
3) Calculate the amount of cash if: Total assets$10,000 Total liabilities$10,000 Total
Capital$5000
A) $ 6000
B) $ 10,000
C) $ 5000
D) $ 1000
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4) Capital increases if ______ increases
A) Expenses
B) Drawings
C) Interest on Drawings
D) Revenue
6) If the total liabilities of a business decrease by $ 5000 what will be the effect on
total asset? (assuming the amount of capital remain same)
A) Remain constant
B) Decrease by $5000
C) Increase by $5000
D) Increase by $10,000
7) If the business's owner withdraws cash for his/her private use what will be the
effect on capital?
A) Increase in capital
B) Remain the same
C) Decrease in capital
D) No effect on capital
..........................................................................................................................................
11/M/J/17
11
Exercise 1
3rd Transaction He gives services to a customer. The customer paid 25000 cash
and balance 20000 will pay later.
Exercise 2
1. Mr. Waqar started a business with cash 500000
Exercise 3
Complete the table to state the effect of each of the following transactions made by Chung in April
2017. Where there is no effect write ‘No effect’. The first transaction has been completed as
an example.
Transaction Assets Liabilities Capital
$ $ $
Purchased goods on credit at a +500 +500 No effect
cost of $500
Sold goods on credit for $700 (cost
$400)
Paid Yang, a credit supplier, $2050
in full settlement of a debt of $2200
Purchased goods, $130, and paid
in cash
7110_s17_qp
12
Question:
Affleck`s Repair shop was started on May 1 by B. Affleck. A summary of May
transaction is presented below.
1. Invested RM10,000 cash to start the repair shop.
2. Purchased equipment for RM5,000 cash.
3. Paid RM400 cash for May office rent.
4. Paid RM500 cash for supplies.
5. Incurred RM250 of advertising cost in star paper on account.
6. Received RM4,100 in cash from customer for repair service.
7. Withdrew RM500 cash for personal use.
8. Paid part time employee salaries RM1,000
9. Paid utility bills RM140
10. Provided repair service on account to customer RM 850
11. Collected cash of RM120 for service billed in transaction (10).
Prepare a tabular analysis of the transaction, using the following column headings: Cash,
Accounts Receivable, Supplies, Equipment, Account Payable, and B. Affleck, Capital.
You may use this table to answer :-
Asset Liability Capital
cash Accounts Supplies Equipment Account B.Affleck,
No.
Receivable Payable Capital
13