Question

1. Define Asset, Liabilities and Equity and give two examples of each of these account types.

           2. Define Normal Balance, list the 6 types of accounts mentioned in class (AEDLRC), and list the normal balance for each of those 6.

           3. Create a sample T Account with several debit and credit amounts and then calculate the balance of the account and explain the balancing process.

Answer 1

Anser 1

Assets: Assets are resources owned by a company have future economic value that can be measured and can be expressed in monetry value.  Examples include cash, land & buildings

Liability: A liability is an obligation arising from a past business event resulting in outflow of economic future benefits. Examples : Account payable, Debt or loans payable.

Equity : Equity is the value attributable to the owners of a business. Can be calculated as total Assets - Liability. Example : Equity Share, Retained earnings.

Answer 2

Asset and Expenses Accounts are Debited when it value is increased, and Laibilities and Revenue Accounts are Credited when their value is increased.

• Machine Account: Always have debit balance
• Cash Account : Debit Balance
• Salary A/c : Debit Balance
• Loan A/c: Credit Balance
• Creditors : Credit Balance
• Sales A/c: Credit Balance

Answer 3

				Amount in $
	Cash
	Particulars	Amount	Particulars	Amount
	To Kendall Boy A/c	3572	By Equipment A/c	5800
	To Reynold Management A/c	4512
	To Elks Lodge Men A/c	8300
	Total	16384	Total	5800
	End. bal	10584

	Equipments A/c
	Particulars	Amount	Particulars	Amount
	to Cash	5800
	Total	5800	Total	0
	End. bal	5800

	Service revenue A/c
	Particulars	Amount	Particulars	Amount
			By Kendall Boy A/c	3800
			By Trade discount A/c	500
			By Reynold Management A/c	4800
			By Elks Lodge Men A/c	8300
			By Myers manufacturing A/c	8400
			By MBA group a/c	28000
	Total	0	Total	53800
	End. bal			53800

	Loan Account
	Particulars	Amount	Particulars	Amount
			By Cash A/c	8400
	Total	0	Total	8400
	End. bal			8400

Hope the above meet your understanding.

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