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Chapter 3
The Accounting Equation

PROBLEM 1: TRUE OR FALSE

1. FALSE – control, not legal ownership
2. FALSE
3. FALSE
4. TRUE
5. FALSE – also from contracts and other operations of the law
6. TRUE
7. FALSE – minus
8. FALSE – past events only, meaning control over a resource
must have been obtained first before an asset is recorded
9. TRUE
10. FALSE – minus

PROBLEM 2: TRUE OR FALSE

1. TRUE
2. TRUE
3. FALSE – the shoes still have future economic benefits and you
can prevent others from obtaining those benefits
4. TRUE
5. TRUE
6. FALSE – not always necessary
7. FALSE – never
8. TRUE
9. TRUE
10. FALSE - increases
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PROBLEM 3: TRUE OR FALSE

1. FALSE - ₱4
2. TRUE
3. TRUE
4. FALSE - ₱9
5. FALSE – profit
6. TRUE
7. TRUE
8. FALSE - ₱10
9. TRUE
ASSETS = LIABILITIES + EQUITY + PROFIT / - LOSS
20 10 3 7

10. FALSE - ₱1
ASSETS = LIABILITIES + EQUITY + INCOME - EXPENSES
20 10 3 6 ?

? = ₱1

PROBLEM 4: COMPUTATIONS – BASIC EQUATION

ASSETS = LIABILITIES + EQUITY

1. ₱350,000 ₱290,000 ₱60,000
2. ₱530,000 ₱260,000 ₱270,000
3. ₱920,000 ₱790,000 ₱130,000
4. ₱820,000 ₱500,000 ₱320,000
5. ₱220,000 ₱80,000 ₱140,000
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PROBLEM 5: COMPUTATIONS – BASIC EQUATION

ASSETS = LIABILITIES + EQUITY

1. ₱480,000 ₱290,000 ₱190,000
2. ₱690,000 ₱420,000 ₱270,000
3. ₱920,000 ₱790,000 ₱130,000
4. ₱1,020,000 ₱700,000 ₱320,000
5. ₱2,200,000 ₱890,000 ₱1,310,000

PROBLEM 6: COMPUTATIONS – EXPANDED EQUATION

ASSETS = LIABILITIES + EQUITY + INCOME - EXPENSES

1. ₱180,000 ₱80,000 ₱40,000 ₱210,000 ₱150,000
2. ₱940,000 ₱280,000 ₱140,000 ₱900,000 ₱380,000
3. ₱280,000 ₱20,000 ₱280,000 ₱60,000 ₱80,000
4. ₱360,000 ₱170,000 ₱70,000 ₱180,000 ₱60,000
5. ₱1,540,000 ₱880,000 ₱470,000 ₱680,000 ₱490,000

PROBLEM 7: COMPUTATIONS – EXPANDED EQUATION

ASSETS = LIABILITIES + EQUITY + INCOME - EXPENSES

1. ₱290,000 ₱110,000 ₱20,000 ₱240,000 ₱80,000
2. ₱780,000 ₱310,000 ₱240,000 ₱380,000 ₱150,000
3. ₱980,000 ₱120,000 ₱450,000 ₱600,000 ₱190,000
4. ₱640,000 ₱430,000 ₱170,000 ₱1,900,000 ₱1,860,000
5. ₱1,540,000 ₱880,000 ₱470,000 ₱680,000 ₱490,000
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PROBLEM 8: COMPUTATIONS - ACCOUNTING EQUATION

ASSETS = LIABILITIES + EQUITY

Ex. ₱20 0 ₱20
1. ₱10 0 ₱10
2. ₱200 ₱200 0
3. ₱2,000 0 ₱2,000
4. (₱800) 0 (₱800)
5. ₱1,430 ₱200 ₱1,230

PROBLEM 9: MULTIPLE CHOICE

1. D
2. D
3. D
4. B
5. A
6. B
7. C
8. D
9. B
10. D

PROBLEM 10: MULTIPLE CHOICE

1. C
2. A
3. C
4. A
5. B
6. D
7. D
8. B
9. B
10. C
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PROBLEM 11: MULTIPLE CHOICE

1. B (220,000 + 90,000) = 310,000

2. C (380,000 – 129,000) = 251,000

3. D (780,000 – 220,000) = 560,000

4. A (570,000 – 320,000) = 250,000

5. A (62,000 – 91,000) = (29,000) loss

6. B (29,000 + 30,000) = 59,000

7. B (53,000 – 38,000) = 15,000

8. B
Solution:

Assets = Liabilities + Equity + Income - Expenses

67,000 = 15,000 + 8,000 + ? - 29,000

Answer: Total income = 73,000

9. C
Solution:
Assets = Liabilities + Equity + Income - Expenses
89,000 = 36,000 + 18,000 + 57,000 - ?

Total expenses = 22,000

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10. C
Solution:

Equity, beginning 52,000

Add: Income 87,000
Less: Expenses (63,000)
Equity, ending 76,000

PROBLEM 12: MULTIPLE CHOICE

1. C
Solution:

Equity, beginning 123,000

Add: Income 59,000
Less: Expenses (81,000)
Equity, ending 101,000

2. B
Solution:

Equity, beginning 62,000

Add: Income 98,000
Less: Expenses (squeeze) (73,000)
Equity, ending 87,000

3. D
Solution:

Equity, beginning 62,000

Add: Income (squeeze) 98,000
Less: Expenses (73,000)
Equity, ending 87,000
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4. B

5. B

6. B

7. C
(20 x 4 weeks in a month) - ? = 10 profit
? = 70 total expenses in a month ÷ 4 weeks = 17.5 weekly spending

8. C (20 allowance – 20 spending – 16 cost of balut) = (16) loss

9. A (20 x 52) – 936 = 104

10. A

11. D

12. C

13. C

14. C
Solution:

Assets = Liabilities + Equity

Beg. Irrelevant = Irrelevant + 87,000
Profit Irrelevant 52,000
End. ? = 84,000 + 139,000

Answer: Ending total assets = (84,000 liabilities, end. + 139,000

equity, end.) = 223,000
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15. A
Solution:

Assets = Liabilities + Equity

Beg. 140,000 = 49,000 + 91,000
Decrease in liabilities/ Profit 15,000 52,000
End. ? = 64,000 + 143,000

Answer: Ending total assets = (64,000 + 143,000) = 207,000