Accounting Equation

pirate
pirate Registered Posts: 469 Dedicated contributor 🦉
in AAT Level 4 (Level 8 in Scotland)
Hi guys

this is maybe an odd question but the accounting equation is A-L=E
but also A=E+L

with the new layouts under the IAS stadards a SofFP is presented as A=E+L but the book even the new ones still referr to the Accounting equation as A-L=E (see page 16 of the osbourne book)
my question is therefore if we were asked this on the paper which one would be correct or expected as they are both correct.

Many thanks

Comments

  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
    pirate wrote: »
    Hi guys

    this is maybe an odd question but the accounting equation is A-L=E
    but also A=E+L

    with the new layouts under the IAS stadards a SofFP is presented as A=E+L but the book even the new ones still referr to the Accounting equation as A-L=E (see page 16 of the osbourne book)
    my question is therefore if we were asked this on the paper which one would be correct or expected as they are both correct.

    Many thanks

    Its Assets = Liabilities + Equity now. It changed when I was doing this I dont know if you would get away with using either anymore. Think they only let you off for so long.
  • Marga
    Marga Registered Posts: 981 Epic contributor 🐘
    hi Karen , my kaplan book still uses as well the Equity = Assets - Liabilities

    as far as i know SFP's are drawn as

    Non current assets
    Current assets
    Current liabilities
    Net current assets
    non current liabilities
    Net assets

    Equity


    Where Net assets and Equity should be the same value

    I dont think you would be marked wrong whether you state Assets= Equity + Liability OR Equity = Assets - Liabilities




    PS from a maths point of view (and from a mathematician brain) i can tell you that both equations are the same (you can read the "equal" as you please)
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
    Steve has posted on another thread to make sure you use the correct one. The books do still say it the old way but he recommends you do it the new way.
  • pirate
    pirate Registered Posts: 469 Dedicated contributor 🦉
    Thanks guys was just checking
  • Marga
    Marga Registered Posts: 981 Epic contributor 🐘
    jewels.p wrote: »
    Steve has posted on another thread to make sure you use the correct one. The books do still say it the old way but he recommends you do it the new way.

    Well he knows better than me so i will use the correct one then!

    thanks :)
  • pirate
    pirate Registered Posts: 469 Dedicated contributor 🦉
    jewels.p wrote: »
    Steve has posted on another thread to make sure you use the correct one. The books do still say it the old way but he recommends you do it the new way.

    Hey Jewels
    do you have a link the the other thread my search comes up with nothing hence the post

    many thanks

    Karen
  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
    Hi,

    Again, the revised accounting equation is as a result to IAS 1 (revised). The DFS paper will contain proformas, but it is much better to do question practise using the correct version.

    I know some students are 'chancing their luck' by continuing to refer to balance sheet and preparing under the old format but plan to answer correctly in the exam room! I do not advise such a tactic - it is much better to get into the habit of doing things correctly NOW because under exam pressure it can be easy to refer to the incorrect terminology/methodology and lose marks!

    Kind regards
    Steve
  • Marga
    Marga Registered Posts: 981 Epic contributor 🐘
    hi Steve....

    i have now received the AAT newsletter and there is a table with what was called before and what is now called

    i did prepare myself as well kind of like a table and everytime i go to bed it is like my prayer i check the list and try to remember the new names :)
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
    Thank Goodness Steve replied on this thread as I have no idea how to add a link to another post! :laugh:
  • Marga
    Marga Registered Posts: 981 Epic contributor 🐘
    jewels.p wrote: »
    Thank Goodness Steve replied on this thread as I have no idea how to add a link to another post! :laugh:

    http://forums.aat.org.uk/showthread.php?t=28950
    have you tried copy and paste? *insert tongue smile here*
  • jewels.p
    jewels.p Registered Posts: 1,774 Beyond epic contributor 🧙‍♂️
    Hey smarty pants can you break it down exactly how to do it as I cant get it to work and it doing my head in! :lol:
  • Marga
    Marga Registered Posts: 981 Epic contributor 🐘
    open the page you want people to go to
    go to the WEB URL address
    select the address http....

    come to the post and paste

    that should show the link :)
  • Rinske
    Rinske Registered Posts: 2,453 Beyond epic contributor 🧙‍♂️
    You forgot to mention she should copy the link before pasting!

    You go to the site, you select the url, you richt click with your mouse and click on copy or hit Ctrl C.
    You then start the post and paste, either via right click and select paste or Ctrl V.

    You can do it Jewels, give it a try, come on! We're here to support and applaud at you when you manage!

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