Exercise 1

Put (x) in the appropriate column:

items

                           assets

                                 liabilities

                                            equity

Cash




Equipment




Trade receivables




Net loss – current year




Trade payables




Building




Loans Outstanding – current




Share capital




Wages




Long-term Debt




Retained earnings




Lands




Inventory





Exercise 2

Put (x) in the appropriate box:

items

                     revenue

                            expenses

Salaries


                            x

Interest rate on loan


                            x

Sales of goods

                     x


Rent


                            x

Loan fees


                            x

Material consumption


                            x

Sales of products

                     x


Depreciation


                            x

Interest on deposits

                     x


Sales of services

                     x





Exercise 3

A company reported the following data for the year:
  * Assets: $1,200,000
  * Liabilities: $500,000

Calculate the company's equity.


Exercise 4

Company XYZ started operations with an initial investment of $1,000,000. During the first year, it
had revenue of $600,000 and expenses of $400,000. What is the net income, and how does equity
change?

Exercise 5

A company had revenue of $3,000,000 and expenses of $2,200,000 in 2023. Calculate the net profit.


Exercise 6

ABC company starts a business and introduces capital of $20,000. He also obtains a loans of $12,000
to purchase non-current assets.

·         What is the amount of his opening net assets?

·         Record the change in balance sheet items

·         Determine the value of assets, liabilities and equity


Exercise 7

A company has the following items on 31 December. Land $60,000, trade payables $8,000, inventory
$18,000, amounts owed for rent on 31 December $1,800, cash in hand $5,000, loans $6,800, trade
receivables $7,200 and equipment $10,000, sales $5,500.

a)      How much is the company worths – i.e. what is its capital (equity) on 31 December?

b)      If, six months later, the capital has increased by $8,000, what reasons could account for
this?

c)      If, six months later, the capital has decreased by $4 ,000, what could be the reason for
this decrease?

Exercise 8

Alan sets up a business. Before he actually sells anything, he has bought the following:

·         Motor vehicles $2,000

·         Premises $5,000

·         Goods for resale $1,000

He did not pay in full for the goods for resale and still owes $400 for them. He borrowed $3,000
from a friend for the business. After the above transactions, he has $100 cash in hand and $700 in
the bank.

Calculate the owners´ equity (OE) of the business.



Exercise 9

Prepare:

·         An income statement

·         A retained earnings statement

·         A statement of financial position (balance sheet)

·         A statement of cash flows

Items:

1.      equipment $7,000

2.      sales for service $4,700

3.      cash payments for expenses $7,000

4.      salaries and wages $900

5.      dividends paid $1,300

6.      inventory $1,600

7.      utilities expense $200

8.      cash receipts from revenues $15,050

9.      cash ?

10.  accounts payable $1,600

11.  advertising $250

12.  accounts receivable $1,400

13.  rent $600


Exercise 10

Prepare:

·         An income statement

·         A retained earnings statement

·         A statement of financial position (balance sheet)

·         A statement of cash flows

Items:

1.      Equipment – $8,500

2.      Sales for service – $5,200

3.      Cash payments for expenses – $6,800

4.      Salaries and wages – $1,100

5.      Dividends paid – $1,500

6.      Inventory – $2,000

7.      Utilities expense – $300

8.      Cash receipts from revenues – $14,750

9.      Cash ?

10.  Accounts payable – $1,900

11.  Advertising – $400

12.  Accounts receivable – $1,700

13.   Rent – $700