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The Accounting Equation

Accounting Equation for ABM Students in Grade 11

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editsf296
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4 views

The Accounting Equation

Accounting Equation for ABM Students in Grade 11

Uploaded by

editsf296
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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9/24/2022

The Accounting Equation


Learning Objectives
1. Illustrate the accounting equation.
2. Perform operations involving simple cases
with the use of accounting equation.

Chapter 3: The Accounting Equation (FAR


by: Millan)

The Accounting Equation

Assets = Liabilities + Equity

Chapter 3: The Accounting Equation (FAR by: Millan)

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9/24/2022

Definitions
• ASSETS – are the economic resources you
control that have resulted from past events
and can provide you with economic benefits.
• LIABILITIES – are your present obligations
that have resulted from past events and can
require you to give up economic resources
when settling them.
• EQUITY – is assets minus liabilities.
Chapter 3: The Accounting Equation (FAR by: Millan)

The Expanded Accounting Equation

Assets = Liabilities + Equity + Income - Expenses

Chapter 3: The Accounting Equation (FAR by: Millan)

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Definitions
• INCOME – is increases in economic benefits during the
period in the form of increases in assets, or decreases in
liabilities, that result in increases in equity, excluding
those relating to investments by the business owner.

• EXPENSES – are decreases in economic benefits during


the period in the form of decreases in assets, or
increases in liabilities, that result in decreases in equity,
excluding those relating to distributions to the business
owner.

• The difference between income and expenses represents


profit or loss.
Chapter 3: The Accounting Equation (FAR by: Millan)

Applications of the accounting


equation
1. If total assets is ₱10,000 and total liabilities is
₱6,000, how much is the total equity?
2. If total liabilities is ₱5,000 and total equity is
₱4,000, how much is the total assets?
3. If total assets is ₱10,000 and total equity is
₱3,000, how much is the total liabilities?
4. If total income is ₱10,000 and total expenses
are ₱3,000, how much is the profit or loss?
5. If total income is ₱10,000, total expenses are
₱8,000, total liabilities is ₱7,000, and total
equity (before profit or loss) is ₱6,000, how
much is the total assets?
Chapter 3: The Accounting Equation (FAR by: Millan)

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ASSET = LIABILITIES + EQUITY + INCOME - EXPENSES


P590,000 P380,000 P130,000 P210,000 ?
P490,000 P280,000 P40,000 ? P180,000
P860,000 P220,000 ? P360,000 P80,000
P360,000 ? P90,000 P180,000 P70,000
? P410,000 P170,000 P480,000 P190,000
P920,000 P710,000 P290,000 P440,000 ?
P870,000 P310,000 P240,000 ? P150,000
P890,000 P240,000 ? P600,000 P190,000
P740,000 ? P170,000 P1,900,000 P1,860,000
? P780,000 P470,000 P680,000 P490,000

Chapter 3: The Accounting Equation (FAR


by: Millan)

APPLICATION OF
CONCEPTS

PROBLEM 3: FOR CLASSROOM DISCUSSION

Chapter 3: The Accounting Equation (FAR by: Millan)

4
9/24/2022

 QUESTIONS????
 REACTIONS!!!!!

Chapter 3: The Accounting Equation (FAR


by: Millan)

END

Chapter 3: The Accounting Equation (FAR


by: Millan)

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