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Chapter 1

Example 1: Solution (cont.)

Finally, Ahmed made a payment to his supplier, reducing the funds in the
business bank account, and also reducing the amount of the liability due to the
supplier. The accounting equation now looks like this:
Assets = Liabilities + Capital
Bank $95.00 = Payables $15.00 + Capital $100.00
Cash $13.00 + Profit $10.50
Inventory $12.50 – Drawings ($5.00)

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$120.50 = $15.00 + $105.50
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Illustrations and further practice

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