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Accounting Equation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Accounting Equation

  • This topic has 7 replies, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • May 11, 2015 at 6:26 am #245200
    Farhaj
    Member
    • Topics: 9
    • Replies: 8
    • ☆

    Accounting equation for the repayment of loan of $10,000, plus outstanding interest $500?
    a) assets -10500, capital -10500
    b) assets -10500, liabilities -10500
    c) assets -10500, liabilities -10000, expense +500

    May 11, 2015 at 8:49 am #245226
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    What is your question?

    Have you watched the free lectures for Paper F3?
    (I cannot type out the whole lectures here!)

    (If you are wanting me to give you the answer then it is (c) )

    May 12, 2015 at 10:36 am #245461
    Farhaj
    Member
    • Topics: 9
    • Replies: 8
    • ☆

    please explain why your answer is C?

    May 12, 2015 at 12:25 pm #245472
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Have you watched the lectures? They cover the whole syllabus for Paper F3, and (again) I cannot type out all the lectures here!!

    They pay out 10,500 so cash falls (and cash is an asset).

    That repays the loan, so the loan falls (and the loan is a liability.

    The other 500 is interest, which is an expense.

    May 12, 2015 at 5:50 pm #245542
    Farhaj
    Member
    • Topics: 9
    • Replies: 8
    • ☆

    but interest payable is also a liability?

    May 12, 2015 at 7:17 pm #245557
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    I am answering your questions, but you are not answering mine!
    Have you watched the free lectures?

    The interest only becomes a liability at the end of the loan, but we have paid it.
    Interest is always an expense.

    May 13, 2015 at 3:20 am #245605
    Farhaj
    Member
    • Topics: 9
    • Replies: 8
    • ☆

    please tell me in which lecture this topic is discussed. please

    May 13, 2015 at 7:04 am #245633
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You should watch all of the lectures – it is a complete classroom course and covers everything you need to be able to pass F3.

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