Does anyone know how the accountancy equation works?

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John Wallis
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Does anyone know how the accountancy equation works?

Post by John Wallis »

Hi guys can you help?

I'm trying to understand the accounting equation which can be used in many ways below is a simple example. I don't know how it works but I came out with the answer of £128.00. Do you know how it works?

Cheers

John


Using the accounting equation fill in the gaps in the following table

Capital Current Liabilities Fixed Assets Current Assets
£66 £12 £74 ?


One of these answers is correct:-

£128
£20
- £4
- £128
£4
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Bradleisure
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Post by Bradleisure »

Think it goes something like this

Capital (Value) = Assets (Things we have or are owed) - Liabilities (Things we owe)

Capital = (Fixed Assets + Current Assets) - (Current Liabilities)

£66 = (£74 + ?) - £12

Now Transpose (shift about) the formula

£66 + £12 = £74 + ?

£66 + £12 - £74 = ?

? = £66 + £12 -£74

Current Assets = Capital + Current Liabilities - Fixed Assets

Current Assets = £66 + £12 - £74 = £4 !!!!

Been a long time but I think that's about it..... :oops:
Fly Safe & Fly Far ;)
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Bradleisure
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Post by Bradleisure »

Balance sheet

Capital + Liabilities = Assets

In plain English

Where value (money) came from = Where value (money) is now
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Post by milleboy »

Rocking Sunday you guys are having...... :(
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Advance, Nova, Gin, Airwave, Ozone, Flytec, Sup Air, Woody Valley, Kortel..............................the list is endless!
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Bradleisure
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Post by Bradleisure »

Anything to get out of work for a while when it's not flyable! :x
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John Wallis
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Post by John Wallis »

Hi Steve :) it's all good stuff :o

Tony many thanks that's a great help.
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