Principles of Accounts Introduction to The Accounting Equation http://www.accountantsonline.com.hk

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Principles of AccountsIntroduction to The
Accounting Equationhttp//www.accountantsonline.c
om.hk

• What is the accounting equation?
• What is capital?
• What are assets?
• What are liabilities?
• Games

by Ng Lai Ping (4A)
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What is the accounting equation?

• The whole of accounting is based upon a very
  simple idea. This is called the accounting
  equation which sounds complicated, but is in fact
  easy to understand.
• The equation is
• Assets Capital Liabilities
• It can be seen that the two sides of the
  equation will have the same totals. This is
  because we are dealing with the same thing from
  two different points of view.

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What is a capital?

• Capital is the total amount of resources
  supplied to a business by its owner.
• e.g Owner pays more cash into the
  company .

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What are Assets?

• Assets are resources owned by a business.
• Also benefits such as debts owed by customers,
  the amount of money in the bank account and the
  cash at hand are included.
• Other examples Buildings, machinery, stock of
  goods, and motor vehicles.

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What are Liabilities?

• Liabilities are the total of money owed for
  assets supplied to a business by people other
  than the proprietor.
• e.g Buy goods 400 on credit.
• 400 is our companys liabilities.
• (i.e. we owe creditors 400)

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Games back

• 1. Which one is an example of assets?
• (a)Athlete (b)Table
  (c)Dancer

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• Wrong!
• Do it again!
• (1),(2),(3),(4)
• Answer

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Answers

• 1. (b) Table
• 2. (a) Owner pays 150 in to business
• 3. (c) Buy goods on credit
• 4. (a) Assets Capital Liabilities
• (80000 50000 30000)
• Question 1
• Question 2
• Question 3
• Question 4

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Right!

• Question 1
• Question 2

Question 3 Question 4
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Wrong!

• Question 1
• Question 2

Question 3 Question 4
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Games back

• 2.Which one is Capital?
• (a) Owner pays 150 (b) Boss (c) House
• into business

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Games back

• 3. Which one is an example of liabilities?
• (1) Worker (2) Owner pays 10 (3) Buy
  goods
• in to company
  on credit
• 
  

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Games back

• 4.Which one shows the accounting equation?
• Capital50000,Assets80000,Liabilities30000
• (a)AssetsCapitalLiabilities (800005000030000)
  
• (b)LiabilitiesAssetsCapital (300008000050000)
  
• (c)CapitalLiabilitiesAssets
  (500003000080000)