Expanded Accounting Equation: Long Answer Questions

 

Long Answer Questions in Accounting Equation 

Long answer questions are the best collection of long answer type and analytical. Questions are set to understand upper entire the chapter.

Students and learners are suggested to solve first brief answer type questions; then solve short answer questions; then long answer type questions.

First, starts to study and practice from beginning of the chapter; after that, if you feel something is confusion you should comment on comment box without any hesitation.

 

 

PROBLEMS AND ANSWERS

Long Answer Questions

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

LAQ: 1                 Service Owner’s Equity

Queen Beauty Parlour has following ending financial data of first quarter 2020:

Opening balance: Cash Rs 9,000; account receivable Rs 40,000; office supplies Rs 12,000; office equipment Rs 35,000; owner’s equity Rs 78,000 and account payable Rs 18,000.

Other information for the month current month July 2020:

July 5, Payment collected earlier client (account receivable) Rs 18,000.

July 8, Billed client for the service Rs 35,000.

July 10, Office supplies purchased on account Rs 4,000.

July 15, Commission received from job endorsed Rs 25,000.

July 16, Insurance premium paid Rs 6,000 for 12 months which includes Rs 1,500 advance.

July 18, Office equipment purchased Rs 3,000.

July 20, 10% Loan took Rs 32,000.

July 22, Payment made to account payable Rs 12,000.

July 25, Withdrew cash for house purpose Rs 23,500.

July 26, Office supplies purchased on account Rs 1,500.

July 28, Office rent paid Rs 4,000.

July 30, Salary paid to staff Rs 9,000.

Required: Accounting equation in expended form

[Answer:  Assets = 26,500; 57,000; 17,500; 38,000; 1,500;

Owner’s equity = 97,000; Liabilities = 11,500; 32,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

LAQ: 2                 Service Shareholders’ Equity

EP Online Study LLC has the following transaction for the month of April:

(4) Invested cash into business and converted into common stock of Rs 200,000.

(6) Purchase office supplies on account Rs 32,000.

(8) Office equipment purchased on account Rs 72,000.

(10) Office equipment purchased in cash Rs 80,000.

(12) Billed to client for service on account Rs 120,000.

(16) Service revenue received in cash Rs 84,000.

(18) Office expenses paid Rs 10,000.

(20) Cash collected from client Rs 80,000 from April 12.

(22) Paid 50% amount of equipment purchased on account bill.

(25) Paid full amount of office supplies purchased on account on April 6.

(30) Rent paid for the month Rs 4,000 and advance for Rs 16,000.

Required: Accounting equation in expended form

[Answer:  Assets = 228,000; Nil; 40,000; 152,000; 40,000;

Shareholders’ equity = 200,000; RE = 200,000; Liabilities = 36,000]

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Click on link for YouTube videos topic wise :
Accounting Equation	http://tiny.cc/c89jkz
Basic Journal Entries in Nepali	http://tiny.cc/uaakkz
Basic Journal Entries	http://tiny.cc/8aakkz
Journal Entry and Ledger	http://tiny.cc/caakkz
Ledger Account	http://tiny.cc/haakkz
Subsidiary Book	http://tiny.cc/399jkz
Cash Book	http://tiny.cc/889jkz
Trial Balance and Adjusted Trial Balance	http://tiny.cc/c59jkz
Bank Reconciliation Statement (BRS)	http://tiny.cc/q59jkz
Depreciation	http://tiny.cc/ugakkz
Click on link for YouTube videos chapter wise:
Financial Accounting and Analysis (All videos)	http://tiny.cc/jlersz
Accounting Process	http://tiny.cc/mlersz
Accounting for Long Lived Assets	http://tiny.cc/plersz
Analysis of Financial Statement	http://tiny.cc/slersz

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

LAQ: 3                 Service Shareholders’ Equity

EP Education Consultancy LLC has the following transaction for the month of May:

May 2, Invested cash into business and converted into ordinary shares of Rs 500,000.

May 4, Office supplies purchased for cash Rs 5,000.

May 5, Purchase office equipment for cash Rs 20,000.

May 8, Office equipment purchased on account Rs 30,000.

May 10, Consultancy fee received in cash Rs 20,000.

May 15, Communication bills paid Rs 1,000.

May 20, Paid half amount of equipment purchased on account bill.

May 25, Salary paid to office assistant Rs 5,000.

May 30, Total rent paid Rs 36,000 on demand of house owner; including rent for the current month Rs 6,000.

May 31, Depreciation charged on equipment Rs 900.

Required: Accounting equation in expended form

[Answer:  Assets = 438,000; 5,000; 49,100; 30,000;

SHE = 500,000; RE = 79,100; Liabilities = 15,000]

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

LAQ: 4                 Trading Owner’s Equity

KK Enterprises, grain wholesaler, has following information on September 2020:

a.     Opening balance: cash Rs 50,000; debtor Rs 150,000; furniture Rs 30,000; capital Rs 230,000.

b.    Goods purchased from Bharat Rs 150,000; paid Rs 30,000 in cash and balance on-credit. 

c.     Unused furniture costing Rs 5,000 was disposed-off for Rs 2,000.

d.    A debtor of Rs 30,000 settled its account receiving cash discount of Rs 1,500.

e.     Goods withdrawn by proprietor for personal use Rs 3,000.

f.       Goods sold on credit costing Rs 100,000 for Rs 130,000 and received Rs 90,000 partially.

g.     Settled Bharat’s account by paying Rs 118,000.

h.    Telephone and internet bill paid Rs 1,550.

i.       Goods distributed as charity at Corona Pandemic Rs 13,250.

j.       Rent paid to house owner Rs 12,000 which includes Rs 2,000 as advance.

k.     Salary paid Rs 5,000 and still payable for the month Rs 7,500

Required: Accounting equation in expended form

 [Answer:  Assets = 3,950; 160,000; 25,000; 33,750; 2,000;

Owner’s equity = 217,200; Liabilities = Nil; 7,500]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

LAQ: 5                 Trading Shareholders’ Equity  

PK Glass LLC has following financial data:

a.     Investment received Rs 700,000 to start business and converted into 70,000 equity shares @ Rs 10.

b.    Cash withdrew from bank Rs 185,000.

c.     Equipment purchased by cheque Rs 65,000.

d.    Goods purchased in cash 150,000 and on account Rs 250,000.

e.     Insurance premium paid Rs 4,500.

f.       Goods sold for cash costing Rs 70,000 for Rs 150,000.

g.     Goods sold on account costing 30,000 for Rs 50,000.

h.    Cheque issued to supplier Rs 75,500.

i.       Cash received from customers Rs 22,500

j.       Defective goods returned to supplier worth Rs 2,500.

k.     Customer returned excess goods of Rs 4,200.

l.       Utilities bills (electricity, phone, internet, water bill) paid Rs 3,000.

m. Salary paid in cash Rs 40,000 and still payable Rs 20,000.

n.    Rent paid for Rs 25,000 by cheque.

Required: Accounting equation

[Answer:  Assets = 349,500; 160,000; 65,000; 293,300; 23,300;

SHE = 700,000; RE = 7,500; Liabilities = 172,000; 20,000]

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