Chapter 01
Introduction to Accounting
(Accounting equation)
01) Show the impact on accounting equation after each of the following transactions
A) 2014.03.01 – started business with £ 95000 in bank
B) 2014.03.04 – purchased a building, £ 40000 and paid by a cheque.
C) 2014.03.05 – bought goods, £ 10000 from ABC suppliers for credit.
D) 2014.03.10 – purchased goods, £ 10000 and paid by cheque.
E) 2014.03.15 – sold goods,£ 12500 for Paul on credit
F) 2014.03.20 – sold goods, £ 2300 for cash.
G) 2014.03.22 – paid £ 10000 by Paul to the business.
H) 2014.03.24 – The business paid money £ 5000 to ABC suppliers
I) 2014.03.28 – sold goods £ 600 for cash.
J) 2014.03.30 – purchased equipment, £ 2500 and paid by a cheque.
1|Page
02) The following transactions are taken from the books of Andria.
Show the
accounting equation after each of following transactions
2014. 04. 01 – Started the business with £ 67000 in cash
2014. 04.05 – Purchased premises £ 30000 and paid by cash.
2014. 04. 10– Purchased goods £12000 from Susan for credit.
2014. 04. 15 –Sold goods £ 6000 for Lora for credit
2014. 04. 20 – Paid £ 4000 to Susan by a cheque
2014. 04. 23 –Lora gave a cheque of £ 3000
03) Michel set up a business and the following transactions are taken at the end of
the month in her books. Show the effect of each transaction by using accounting
equation.
01.05.2014 started the business with £ 150000 in bank
05.01.2014 bought goods of £ 15000 and paid by a cheque.
10.01.2014 bought goods of £ 10000 from PQ suppliers for credit.
12.01.2014 returned goods to PQ suppliers of £ 1000 due to damages.
15.01.2014
paid £ 5000 to PQ suppliers by a cheque.
17. 01.2014 sold goods of £ 10000 for JK holdings for credit.
19.01.2014 goods were returned by JK holders to business of £ 1500.
21.01.2014 paid money by JK holdings to the business of £ 5500.
29.01.2014 sold goods of £ 5000 for cash.
31.01.2014 Michel used some goods of £ 2000 for her own use.
2|Page
04) Enter the following transactions in accounting equation.
01.01.2013 started a business with £ 50000 in bank
05.01.2013
bought equipment of £ 10000 and paid by a cheque.
10.01.2013 Goods were bought by business from Karl for credit of £ 5000.
15.01.2013
sold goods to Zara of £ 2500 for credit
31.01.2013 owner took some goods of £ 250 for her own use
05)
Show the effect for the accounting equation after each of the bellow transactions
2014 January
01 – Started the business with £ 60000 in bank
03 - Purchased equipment, £ 15000 and paid by cheque
04 - Purchased goods, £ 30000 from PS suppliers for credit
05 – Sold goods £ 15000 for cash
06 – Purchased goods, £ 10000 and paid by cash
07 – Sold goods to HND company £ 10000 on credit
10 – Paid £ 30000 by cheque to PS suppliers
15 – Paid £ 10000 by HND Company to the business by cheque
20 – Business took a loan (long term loan) £ 20000 and they gave a
Cheque
25 – Sold goods £ 5000 to TQM holdings on credit
30 – Paid £ 5000 by TQM holdings in cash
3|Page