2 accountancy equation

Question 1

The accounting equation is correctly expressed as:
A Assets + profits – drawings – liabilities = closing capital
B Assets – liabilities – drawings = opening capital + profit
C Assets – liabilities – opening capital + drawings = profit
D Opening capital + profit – drawings – liabilities = assets

Answer 1

C Assets – liabilities – opening capital + drawings = profit
The accounting equation is most commonly expressed as assets = capital + liabilities. Capital can be
expanded to opening capital + profit − drawings. This can then be rearranged as: Assets – liabilities –
opening capital + drawings = profit.

Question 2

accounting equation in basic form

Answer 2

asset = capital + liabilities

Question 3

statement of profit and loss definition

Answer 3

is a performance statement in which two key elements of financial statements income and expenses are matched to arrive to profit or loss