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22 July 2017 07:34

FA2 Managing Financial Records

Chap 1 Practice Questions
Lecturer: Christine Colon, ACCA

Name:
Group: Date:

1 On 1st July 2011, Solida opened a stall in the market to sell books. She had saved up $1,000 to
put into her business. State the accounting equation for Solida on 1 st July:

Assets = Capital + Liabilities

2 Solida purchases a stall from Davith, who is retiring from her business in the market. The cost of
the stall is $500. She also purchases some books at a cost of $250. This leaves Solida with $250
in cash, after paying for the stall and books. State the accounting equation after these
transactions.

Assets = Capital + Liabilities

3 On 3rd July, Solida sells all of the books for $450 cash.

Assets = Capital + Liabilities

4 Solida decides to withdraw $70 for herself from the business.

Assets = Capital + Liabilities

accounting equation exercise Page 1

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On 4th July, Solida purchases more books for cash, at a cost of $470.

She decides to employ an assistant, Srey Neang, who is to be paid a wage of $15 at the end of
the day.

On 4th July, Solida and Srey Neang sold all of the books which Solida had bought for $720 cash.
Solida paid Srey Neang her wage of $15 and drew out $100 for herself.

Assets = Capital + Liabilities

6 Solida realises she is going to need more money in the business:

(i) She invests a further $500 of her own capital.

(ii) She borrows $500 from her grandmother. She can repay the loan when she has enough money:
her grandmother says she will charge Solida interest of $5, but only when she goes to the
market to sell books, i.e. no sales, no interest charge.

Solida decides to buy a second-hand van to collect books from her supplier and take them to her
stall. She buys a van on credit for $430. Solida agrees to pay for the van within the next 14 days.

Assets = Capital + Liabilities

accounting equation exercise Page 2

7 On 5th July, Solida buys books costing $530. Of this purchase, $330 is paid in cash, with the
remaining $200 on seven days’ credit.

Again, Solida employs Srey Neang and agrees to pay her $15 for the day. Solida sells all her
goods for total revenue of $870 in cash.

She decides to withdraw $140 for herself; she pays Srey Neang her $15 wage, and decides to
pay the $5 interest to her grandmother next time she sees her.

Assets = Capital + Liabilities

accounting equation exercise Page 3