Accounting Equation notes basic financial accounting formula grade 8-12 ems
- A rental company rents out a delivery truck for a 10 months contract for R2500 per month , cost price of
the vehicle is R75 000,
- The company made loan of R50 000 rands from xyz bank as contribution towards their first delivery
truck purchase.
Required :
Compile an accounting equation using the above-mentioned transactions and balance sheet statement
Formula for accounting equation
Assets =owner’s equity +liabilities
Solution
Assest=R75 000(delivery Truck)
Equals to
Owner’s equity=
Rental income. R25000
(2500x10months)
Plus
liability= R50 000 (truck loan)
Financial statements(balance sheet) breakdown of accounting equation :-
Assets
Non current /fixed assets
Delivery vehicle. R75 000
Current assets
0
Total assets R75000
Equity and liabilities
Non current liabilities
Delivery vehicle loan. R50 000
Current liabilities
Amount payable. R0
Equity
- A rental company rents out a delivery truck for a 10 months contract for R2500 per month , cost price of
the vehicle is R75 000,
- The company made loan of R50 000 rands from xyz bank as contribution towards their first delivery
truck purchase.
Required :
Compile an accounting equation using the above-mentioned transactions and balance sheet statement
Formula for accounting equation
Assets =owner’s equity +liabilities
Solution
Assest=R75 000(delivery Truck)
Equals to
Owner’s equity=
Rental income. R25000
(2500x10months)
Plus
liability= R50 000 (truck loan)
Financial statements(balance sheet) breakdown of accounting equation :-
Assets
Non current /fixed assets
Delivery vehicle. R75 000
Current assets
0
Total assets R75000
Equity and liabilities
Non current liabilities
Delivery vehicle loan. R50 000
Current liabilities
Amount payable. R0
Equity
