Equations

Question 1

(Accounting) Profit

Answer 1

Income ‘earned’ – Expenses ‘incurred’

Question 2

Assets (+)

Answer 2

Liabilities + Capital

Question 3

Assets (+ + -)

Answer 3

Liabilities + [Capital+ Profit – Drawings]

Question 4

Assets (+ - -)

Answer 4

Liabilities + [Capital- Loss – Drawings]

Question 5

Cost of sales or cost of goods sold (COGS)

Answer 5

(Opening Inventory + Purchases) = (x)

(x) Cost of Goods available for sale - Closing Inventory = (xx)

(xx) Cost of sales (COGS)

Question 6

Retained Earnings (RE) or undistributed profit at the end of accounting period

Answer 6

Opening Balance (RE) + Profit for the year - Dividends if any =

Closing Balance (RE)

Question 7

Straight Line Method for Depreciation (SLM)

Answer 7

Cost x Depreciation Rate

OR

(Cost- Scrap value) ÷ Useful life

Question 8

Reducing Balance Method for Depreciation (RBM)

Answer 8

Carrying amount (Net book Value) x Depreciation Rate

Carrying amount (Net book Value) = Cost – Accumulated depreciation

Question 9

Net Realisable Value (NRV)

Answer 9

Expected Selling Price - (costs to get items ready for sale + selling costs)