Example 1: Decide whether the following items can be recognized as assets?
Item Yes/No
Patent bought by an entity that makes possible to increase the volume of profit on
CU 50 000 annually
Booked material for production of products
New director of an entity. It is expected that he will increase net cash flows of the entity
of CU 100 000 during next 3 years
Purchase of new machinery from financial leasing
Parcel obtained from the state
Minority interest in an associate
Brand name of an entity valued for CU 150 000
Customer list
Example 2: Decide whether the following items can be recognized as liabilities?
Item Yes/No
Bill of exchange issued by an entity
Advance payments received by an entity
Deferred payment into state budget for mineral extraction
Retirement benefits for employees in excess of strict legal obligations
Product warranties provided for buyers by a manufacturing entity
Outstanding lawsuits
Example 3: For the following items determine the amount of total assets and total equities. Divide total
assets into current and non-current (fixed) assets. Divide equities into owner’s equity and liabilities.
Item Value (CU)
Material at the stock 100 000
Property, plant and equipment 1 000 000
Trade receivables 50 000
Securities held for sale 200 000
Cash 5 000
Business brand name 150 000
Cars 500 000
Cash on the bank account 200 000
Common stocks 1 065 000
Trade payables 40 000
Long-term bank loan 1 000 000
Reserves 100 000
Item Value (CU)
Total assets
Current assets
Non-current assets
Total equity
Liabilities
Owner’s equity
Example 4: Divide the following items into current and non/current assets, owner’s equity and liabilities:
Item
Assets Equities
Current Non-current Liabilities
Owner’s
equity
Car
Technological line
Building
Inventories
Parcel
Merchandise
Software
Capital shares
Animals
Own products
Cash
Incomplete production
Trade receivables
Bank credits and assistance
Cash on bank account
Securities held for sale
Trade payables
Issued long-term bonds
Liabilities to employees
Liabilities to social institutions
Deferred income tax
Reserves
Computers
Common stocks
Net profit
Retained earnings
Reserves
Non-controlling interest
Example 5: Decide what impact the following operations have on entity’s balance (notice, that every
operation should be accounted on two accounts – debiting one account and crediting another account):
Item
Assets (+/-) Equities (+/-)
Current Non-current Liabilities
Owner’s
equity
Owner invests cash
Entity pays wages with cash
Entity buys equipment with cash
Entity purchases supplies on
credit
Owner withdraws cash
Entity sells services on credit
Entity sells goods for cash
Entity sells extra equipment for
cash
Entity acquires services on credit
Entity sells services for cash
Entity borrows cash with note
payable
Entity pays rent with cash
Entity collects (cashes)
receivables
Entity buys land with note
payable
Entity discovers shortage in
inventories
Entity pays dividends
Entity pays trade payables with
bank loan
Entity acquires a stake in
associate with cash
Entity pays bank interest with
cash on bank account
Entity issues common stocks
Entity acquires a bank loan
Example 6: Decide whether following operations represent revenues or expenses and decide what
impact they have on entity’s economic result and balance (notice, that every operation should be
accounted on two accounts – debiting one account and crediting another account):
Operation
Revenue
/ Cost
Impact
on
economic
result
(+/-)
Assets (+/-) Equities (+/-)
Current
Non-
current
Liabilities
Owner’s
equity
Revenue from sale of
merchandise
Decrease of merchandise sold
Supplier’s invoice bill for repairs
Consumption of material
Invoice bill for consumption of
energy
Travel costs
Revenue from sale of services
Representation costs
Revenues from sale of material
Paid credit interests
Bank fees for organizing an
account
Revenues from sale of long-term
property
Revenue from financial
investment
Cashed interests from account
Cashed fees
Paid fees
Securities sold