1.2 The accounting equation Check your progress Read the unit objectives below. Tick the column that best describes your progress in each. explain the meaning of assets, liabilities and owner’s equity explain and apply the accounting equation.
Support 1
Total assets are $89 000 and total liabilities are $23 500. Calculate the value of the owner’s equity.
2
Liabilities total $11 200 and the owner’s equity is valued at $47 500. Calculate the value of the business assets.
3
Use the following information to calculate the value of the owner’s equity. Equipment
$560
Bank $1120
Bank loan $260
Practice 4
A business has the following assets and liabilities at the year end. Calculate the value of the owner’s equity for the business. $ Bank
1 890
Machinery
15 700
Vehicle
4 310
Inventory
5
600
Loan
5 000
Amounts owing to credit suppliers
1 110
Use the following information to prepare a statement of financial position. $ Business van
11 900
Owner’s equity
12 000
Equipment Trade receivables
2
4 155 990
Trade payables
2 310
Bank
1 109
Inventory
656
Bank loan
4 500
Chapter 1: The fundamentals of accounting
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