ACTIVITY 2: Fundamentals of Accounting 1 July 12, 2018

General Instruction: Do not write anything on the test paper. Please write your answers on a separate sheet of paper. Strictly
no erasure, answers with erasures will be marked wrong.

Part I : Computations – Basic Equation

Instruction : Compute for the missing amounts.

Assets Liabilities Equity

1. P480,000 P290,000 ?
2. P690,000 ? P270,000
3. ? P790,000 P130,000
4. P1,020,000 ? P320,000
5. P2,200,000 P890,000 ?

Part II : Computations – Expanded Equation

Instruction : Compute for the missing amounts.

Assets Liabilities Equity Income Expenses

1. P290,000 P110,000 P20,000 P240,000 ?
2. P780,000 P310,000 P240,000 ? P150,000
3. P980,000 P120,000 ? P600,000 P190,000
4. P640,000 ? P170,000 P1,900,000 P1,860,000
5. ? P880,000 P470,000 P680,000 P490,000

Part III : Answer the following questions. Show your computations.

1. If the total owner’s equity of Grand Services is P180,000 which is 2/3 of the total assets, what would be the amount
of its total liabilities?
2. If the economic obligations of a business amount to P696,000 and its residual interest amounts to P385,000, what is
the amount of the economic resources of the business?
3. Entity A had total assets, liabilities, and equity of P160,000 , P73,000 and P87,000 respectively, at the beginning of the
period. During the period, Entity A’s total liabilities increased to P84,000. Entity A reported a profit of P52,000. How
much is Entity A’s ending total assets?
4. Entity A had total assets, liabilities, and equity of P140,000, P49,000 and P91,000, respectively, at the beginning of the
period. During the period, Entity A’s total liabilities increased by P15,000. Entity A reported a profit of P52,000. How
much is Entity A’s ending total assets?
5. If the owner’s equity is P333,000 which is 1/3 of the total assets, how much is the total liabilities of the business?

Part IV : Answer the following independent situations. Show your computations.

1. The business was put up from a cash of P200,000, the initial capital of the owner. Then, P40,000 of the cash was used
to purchase an equipment to be used in business. The purchase of the equipment resulted in a liability of P20,000.
How much are the total assets of the business?
2. A business had a beginning equity of P62,000 and ending equity of P87,000. If the total income for the period is
P98,000, how much is the total expenses?
3. In the expanded basic accounting equation, why are expenses deducted from equity?
a. Because expenses increase equity
b. Because expenses decrease equity
c. Because expenses do not affect equity
d. Because Fra Luca Pacioli says so
4. Which of the following is not an essential element of an asset?
a. Control over the resource
b. A past event resulting to control over the resource
c. Inflows of future economic benefits
d. Ownership over the resource
5. It is a present obligation that have resulted from a past event and is expected to require the giving up of resources
on its settlement at some future date
a. Assets c. Expense
b. Liability d. Income