1. The following information relates to Simonson Engineering as at 30 September 2010:

Plant and machinery	25,000
Trade payables	18,000
Short-term borrowings	26,000
Inventories	45,000
Property	72,000
Long-term borrowings	51,000
Trade receivables	48,000
Equity at 1 October 2009	117,500
Cash in hand	1,500
Motor vehicles	15,000
Fixtures and fittings	9,000
Profit for the year to 30 September 2010	18,000
Drawings for the year to 30 September 2010	15,000

Using this information, prepare a statement of financial position for the business

1. An accountant prepared a statement of financial position for a business. In this statement, the equity of the owner was shown next to the liabilities. This confused the owner, who argued: My equity is my major asset and so should be shown as an asset on the statement of financial position. How would you explain this misunderstanding to the owner?
2. The statement of financial position shows how much a business is worth. Do you agree with this statement? Explain the reasons for your response.
3. Compute the missing amount in the accounting equation for each business.

Name of business	Assets	Liabilities	Equity
Hudson Gift and Cards		37,000	35,000
New Street Garage	85,000		39,000
Hair Styles	92,000	53,000

At the year end, the total assets of a business were 189,000 and the total liabilities were 126,000. During the year, the owner withdrew 10,000 and introduced a further 18,000 in equity. The business began the year with total assets 180,000 and total liabilities of 112,000.

What is the profit (loss) for the year?

1. 8,000 (profit)
2. 13,000 (loss)
3. 8,000 (loss)
4. 13,000 (profit)

A company that produces a single product provides the following information: budgeted sales of 40,000 units, margin of safety 25% of budgeted sales, total fixed costs 240,000. What is the contribution per unit of the companys product?

1. 8.00
2. 4.80
3. 24.00
4. 6.00

A business makes 2,000 units of a particular product. It spent 24,000 on material and it paid its operatives 40,000. Fixed costs of running the factory were 50,000. The salesforce were also paid 18,000 and the head office costs were 100,000. In order to break even the selling price per unit will have to be:

1. 84
2. 66
3. 116
4. 32