The recordings in this chapter show students how to
1) Calculate missing value using the accounting equation (refer to Section 1)
2) Calculate missing value using the expanded accounting equation (refer to Section 2)
3) State the effect of transaction on Assets, Liabilities and Equity (refer to Section 3)
The basic accounting equation:
Assets = Liabilities + Equity
Note: Equity can be found in the same way.
Equity is expanded in the expanded accounting equation.
Sole proprietorship: Assets = Liabilities + Capital + Income - Expenses - Drawings
Private limited company: Assets = Liabilities + Share Capital + Income - Expenses - Dividends Declared
Note: Liabilities and Capital can be found in the same way.
Note: Expenses can be found in the same way.
Note: The question in this recording is from 2021 GCE O-Level P1 Q2.
Since Equity = Capital + Income - Expenses - Drawings,
When there is Capital or Income, Equity increases.
Where there is Expenses or Drawings, Equity decreases.