Chapter 1, Problem 1.3BE

(a)

To determine

Accounting Equation: Accounting equation refers to the equation which is based on the double entry system of accounting. This implies that if there is a change in the assets of the entity, there will be a corresponding effect on the liabilities or owner’s equity of the entity also. The accounting equation is as follows:

$\text{Assets}=\text{Liabilities}+\text{Owner's}\text{Equity}$

Assets: Assets refer to those resources that an organization owns, against which the organization derives a value in the future.

Liabilities: Liabilities refer to the debts owed by an organization towards the parties from whom the amounts are borrowed.

Owner’s Equity: Owner’s equity refers to an amount raised from the public in order to finance the business of a company. The equity holders are referred to as the owners of the business.

To Determine: Amount of owner’s equity at the end of the year

(b)

To determine

amount of total assets at the end of the year

(c)

To determine

mount of total liabilities at the end of the year.