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Accounting Equation

The accounting equation, Assets = Liabilities + Equity, is fundamental to the double-entry accounting system, illustrating how a company's assets are financed. The document includes examples and exercises to calculate equity and liabilities based on given assets and financial transactions. It emphasizes the relationship between assets, liabilities, and owner’s equity through various scenarios.

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tirokristinamae4
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8 views14 pages

Accounting Equation

The accounting equation, Assets = Liabilities + Equity, is fundamental to the double-entry accounting system, illustrating how a company's assets are financed. The document includes examples and exercises to calculate equity and liabilities based on given assets and financial transactions. It emphasizes the relationship between assets, liabilities, and owner’s equity through various scenarios.

Uploaded by

tirokristinamae4
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Accounting Equation

Accounting Equation
• The accounting equation is considered to be
the foundation of the double-entry accounting
system.
• The accounting equation shows on a
company's balance sheet whereby the total of
all the company's assets equals the sum of the
company's liabilities and owner’s equity.
Accounting Equation
• The accounting equation is considered to be the
foundation of the double-entry accounting system.

• Both liabilities and owner’s equity represent how


the assets of a company are financed.

Assets= Liabilities + Equity


1.ASSETS= P760,000
LIABILITIES= P360,000
OE=400,000
2. ASSETS= P860,000
OWNER’S EQUITY= P592,000
OE=268,000
3. LIABILITIES= P108,000
OWNER’S EQUITY= P760,000
A=868,000
4. LIABILITIES= P800,00
OWNER’S EQUITY=
1. Song Hye Kyo Laundry
Services has assets of P600,000
and owner’s equity of P450,000.
2. Kwon Song Woo Plumbing
Contractor has liabilities of
P350,000 and equity of
P410,000.
3. Hyun Bin Dance has assets of
P624,000 and liabilities of
P237,000.
Exercises:

1.If a company has assets of


₱50,000 and liabilities of ₱20,000,
what is the equity?
2. A business owns ₱80,000 in
assets and has ₱30,000 in equity.
Calculate its liabilities.
Complete the table below.
Assets Liabilities Equity
45,000 25,000 3.?
4.? 18,000 32,000
90,000 5.? 40, 000
50,000 6.? (10,000)
100,000 25,000 7.?
Given the accounting equation, analyze how
each transaction impacts the equation

8. The owner invests ₱10,000 into the


business.

9. The company takes out a loan of ₱15,000


from the bank.
10. The business purchases equipment
worth ₱5,000 in cash.

11. The business earns ₱12,000 in


revenue, which is added to equity.
12.A business starts with ₱100,000 in assets and
₱60,000 in equity. During the year:
 The company takes out a loan of ₱20,000.
 Purchases equipment worth ₱15,000, paying
₱5,000 in cash and the rest on credit.
 The owner withdraws ₱8,000.
 The business earns ₱25,000 in revenue
Calculate the final balances for assets,
liabilities, and equity.

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