Page 41 - Book-keeping for Secondary Schools Student’s Book Form One
P. 41
Application of the double entry system
Habibu’s statement of affairs as at 6 January 2020
th
Details TZS
Assets:
Shaving machines 480,000
Furniture 620,000
FOR ONLINE READING ONLY
Fittings 216,000
Sterilising machine 240,000
Consumables (soap, creams, towels, and air freshener) 129,000
Cash 500,000
Total 2,185,000
Capital and liabilities:
Payable to Mwakapande 836,000
Payable to Usafi traders 240,000
Total liabilities 1,076,000
Liabilities
Capital 1,109,000
Total capital and liabilities 2,185,000
The effects of revenue and expenses on the equity element of accounting can lead to an
extended accounting equation which appears as follows:
ASSETS = CAPITAL + (REVENUE – EXPENSES) + LIABILITIES
Arithmetically, this equation can be re-arranged. For ease of understanding the double
entry principle, the re-arrangement of the extended accounting equation is as follows:
ASSETS + EXPENSES = CAPITAL + REVENUE + LIABILITIES
Exercise 3.1
1. Assume your father is running a farming business. For it to run smoothly, it
requires different assets. List any ten different types of assets that the business
will need.
2. Complete the gaps in the following table.
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Book Keeping Form 1 New 2024 FINAL.indd 33 18/10/2024 10:14
