Page 37 - Book-keeping for Secondary Schools Student’s Book Form One
P. 37
Application of the double entry system
Habibu’s statement of affairs as at 1 January 2020
st
Details TZS
Assets:
Shaving machines 480,000
FOR ONLINE READING ONLY
Furniture 620,000
Fittings 216,000
Consumables (soap, creams, and towels) 115,000
Cash 510,000
Total Assets 1,941,000
Capital and liabilities:
Liabilities -
Total liabilities -
Capital 1,941,000
Total capital and liabilities 1,941,000
The example shown does not provide other alternatives for getting resources in relation
to Habibu’s efforts in starting his barber shop business. One alternative is that Habibu
had enough money for only shaving machines, consumables, and a necessary amount
of cash to meet daily running costs. If Habibu had only TZS 1,105,000 and still
needed furniture and fittings to start the business, he would arrange with the supplier
(Mwakapande) for furniture and fittings to be supplied on credit. This would mean
that the amount for furniture and fittings would be paid later. The transaction means
that Habibu will now have an obligation to pay TZS 836,000 (TZS 620,000 and TZS
216,000 for furniture and fittings respectively, assuming the same costs as per the data
given above).
In this situation, the accounting equation will as follows:
ASSETS = CAPITAL + LIABILITIES, and in figures for Habibu’s business, there will be
TZS 1,941,000 = TZS 1,105,000 + 836,000.
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Book Keeping Form 1 New 2024 FINAL.indd 29 18/10/2024 10:14
