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The following information relates to Simonson Engineering as at 30 September 2010:
The following information relates to Simonson Engineering as at 30 September 2010:
  £ Plant and machinery 25,000 Trade payables 18,000 Short-term borrowings 26,000 Inventories 45,000 Property 72,000 Long-term borrowings 51,000 Trade receivables 48,000 Equity at 1 October 2009 117,500 Cash in hand 1,500 Motor vehicles  15,000 Fixtures and fittings 9,000 Profit for the year to 30 September 2010 18,000 Drawings for the year to 30 September 2010 15,000
  £ Plant and machinery 25,000 Trade payables 18,000 Short-term borrowings 26,000 Inventories 45,000 Property 72,000 Long-term borrowings 51,000 Trade receivables 48,000 Equity at 1 October 2009 117,500 Cash in hand 1,500 Motor vehicles  15,000 Fixtures and fittings 9,000 Profit for the year to 30 September 2010 18,000 Drawings for the year to 30 September 2010 15,000
  £
 
 
£
£
£
Plant and machinery 25,000
Plant and machinery
Plant and machinery
25,000
25,000
Trade payables 18,000
Trade payables
Trade payables
18,000
18,000
Short-term borrowings 26,000
Short-term borrowings
Short-term borrowings
26,000
26,000
Inventories 45,000
Inventories
Inventories
45,000
45,000
Property 72,000
Property
Property
72,000
72,000
Long-term borrowings 51,000
Long-term borrowings
Long-term borrowings
51,000
51,000
Trade receivables 48,000
Trade receivables
Trade receivables
48,000
48,000
Equity at 1 October 2009 117,500
Equity at 1 October 2009
Equity at 1 October 2009
117,500
117,500
Cash in hand 1,500
Cash in hand
Cash in hand
1,500
1,500
Motor vehicles  15,000
Motor vehicles 
Motor vehicles 
15,000
15,000
Fixtures and fittings 9,000
Fixtures and fittings
Fixtures and fittings
9,000
9,000
Profit for the year to 30 September 2010 18,000
Profit for the year to 30 September 2010
Profit for the year to 30 September 2010
18,000
18,000
Drawings for the year to 30 September 2010 15,000
Drawings for the year to 30 September 2010
Drawings for the year to 30 September 2010
15,000
15,000
 
Using this information, prepare a statement of financial position for the business 
An accountant prepared a statement of financial position for a business. In this statement, the equity of the owner was shown next to the liabilities. This confused the owner, who argued: ‘My equity is my major asset and so should be shown as an asset on the statement of financial position’. How would you explain this misunderstanding to the owner? The statement of financial position shows how much a business is worth. Do you agree with this statement? Explain the reasons for your response. Compute the missing amount in the accounting equation for each business.
An accountant prepared a statement of financial position for a business. In this statement, the equity of the owner was shown next to the liabilities. This confused the owner, who argued: ‘My equity is my major asset and so should be shown as an asset on the statement of financial position’. How would you explain this misunderstanding to the owner?
The statement of financial position shows how much a business is worth. Do you agree with this statement? Explain the reasons for your response.
Compute the missing amount in the accounting equation for each business.
Name of business Assets Liabilities Equity Hudson Gift and Cards   37,000 35,000 New Street Garage 85,000   39,000 Hair Styles 92,000 53,000  
Name of business Assets Liabilities Equity Hudson Gift and Cards   37,000 35,000 New Street Garage 85,000   39,000 Hair Styles 92,000 53,000  
Name of business Assets Liabilities Equity
Name of business
Name of business
Name of business
Assets
Assets
Assets
Liabilities
Liabilities
Liabilities
Equity
Equity
Equity
Hudson Gift and Cards   37,000 35,000
Hudson Gift and Cards
Hudson Gift and Cards
 
 
37,000
37,000
35,000
35,000
New Street Garage 85,000   39,000
New Street Garage
New Street Garage
85,000
85,000
 
 
39,000
39,000
Hair Styles 92,000 53,000  
Hair Styles
Hair Styles
92,000
92,000
53,000
53,000
 
 
 
What is the profit (loss) for the year?
£8,000 (profit) £13,000 (loss) £8,000 (loss) £13,000 (profit)
£8,000 (profit)
£13,000 (loss)
£8,000 (loss)
£13,000 (profit)

£8.00 £4.80 £24.00 £6.00
£8.00
£4.80
£24.00
£6.00

£84 £66 £116 £32
£84
£66
£116
£32

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