Topics
Introduction to Book-Keeping and Accountancy
- Accounting
- Book-Keeping
- Accountancy
- Book-Keeping vs. Accountancy
- Basis (Methods) of Accounting System
- Qualitative Characteristics of Accounting Information
- Basic Terms in Accounting
- Transaction
- Capital and Drawings
- Debtors, Creditors and Bad Debts
- Expenditure and Its Types
- Discount and Its Types
- Solvent Person vs. Insolvent Person
- Accounting Year
- Trading Concerns vs. Not for Profit Concerns
- Concept of Goodwill
- Fundamentals of Business Earnings
- Concepts of Assets, Liabilities and Net Worth
- Accounting Principles
- Accounting Concepts
- Core Accounting Concepts
- Accounting Standards
Meaning and Fundamentals of Double Entry Book-Keeping
Journal
- Accounting Documents
- Goods and Service Tax(GST)
- Types of Accounting Documents
- Voucher
- Tax Invoice (Under GST)
- Credit Memo
- Receipt
- Cheque
- Types of Cheques
- Books of Accounts
- Books of Accounts > Journal
- Journal Entries
- Journal Entries > Goods Account
- Journal Entries > Recording Discount in Journal
- Journal Entries > Other Important Journal Entries
Ledger
Subsidiary Books
- Concept of Subsidiary Books
- Cash Book
- Cash Book > Simple Cash Book (Single Column Cash Book)
- Cash Book > Two Column Cash Book (With Cash and Bank Columns)
- Cash Book > Petty Cash Book
- Simple Petty Cash Book
- Analytical Petty Cash Book
- Purchase Book
- Purchase Return Book
- Sales Book
- Sales Return Book
- Journal Proper
Bank Reconciliation Statement
- Accounting Documents Used in Banking
- Accounting Documents Used in Banking
- Pay-in-Slip
- Withdrawal Slip
- Bank Pass Book
- Bank Statement
- Bank Advice
- Concept of Virtual Banking
- Bank Reconciliation Statement(BRS)
- Cash Book vs Pass Book : Causes of Differences
- Time Difference(Regarding BRS)
- Errors and Omission Made by Bank or Businessman
- Formats of BRS
- Preparation of BRS
- Cash Book and Pass Book Comparison for Common Period
- Cash Book and Pass Book Balances for Different Periods
- Bank Balance as per Cash Book (Favourable / Debit Balance)
- Bank Balance as per Pass Book (Favourable / Credit Balance)
- Overdraft as per Cash Book (Unfavourable / Credit Balance)
- Overdraft as per Pass Book (Unfavourable/Debit balance)
- Reconciliation of Debtors and Creditors
Depreciation
Rectification of Errors
Final Accounts of a Proprietary Concern
Single Entry System
- Concept of Single Entry System
- Single Entry System vs. Double Entry System
- Parts of Single Entry System
- Statements of Affairs
- Statement of Profit or Loss
- Statement of Profit or Loss > Net Worth Method
- Practical Problems on Single Entry System
- Definition: Accounting Equation
- Formula: Accounting Equation
- Origin of the Accounting Equation
- Examples
Maharashtra State Board: Class 11
Definition : Accounting Equation
The Accounting Equation shows that everything a business owns (Assets) is funded by either money borrowed from outsiders (Liabilities) or money invested by the owner (Capital).
Maharashtra State Board: Class 11
Formula : Accounting Equation
Assets = Capital + Liabilities
Maharashtra State Board: Class 11
Origin of the Accounting Equation
- The accounting equation Assets = Liabilities + Capital comes directly from the double-entry book-keeping system.
- In 1494, Luca Pacioli, an Italian mathematician, first described double-entry in his book Summa de Arithmetica.
- He explained that a business’s assets are always financed either by outsiders (Liabilities) or the owner (Capital).
- This simple relationship became the foundation of balance sheets and is still used in every business today.
- Because every debit has a matching credit, total assets will always equal liabilities plus capital.
Maharashtra State Board: Class 11
Examples
| Transactions of a business owner | Assets (₹) | Liabilities (₹) | Capital (₹) | Effect/Explanation |
|---|---|---|---|---|
| 1. Owner started business with ₹50,000 in cash | 50,000 | 0 | 50,000 | Assets ↑ (Cash), Capital ↑ |
| 2. Took a bank loan of ₹20,000 | 70,000 | 20,000 | 50,000 | Assets ↑ (Cash), Liabilities ↑ (Bank Loan) |
| 3. Bought goods worth ₹10,000 on credit | 80,000 | 30,000 | 50,000 | Assets ↑ (Goods/Stock), Liabilities ↑ (Creditors) |
| 4. Paid ₹5,000 to creditors | 75,000 | 25,000 | 50,000 | Assets ↓ (Cash), Liabilities ↓ (Creditors) |
| 6. Owner withdrew ₹3,000 cash for personal use | 72,000 | 25,000 | 47,000 | Assets ↓ (Cash), Capital ↓ |
Related QuestionsVIEW ALL [19]
Complete the following Accounting equation table.
| Transaction | Assets (₹) | = | Liabilities (₹) | + | Capital (₹) |
| 1. Started business with Cash ₹ 50,000 | ? | = | ? | + | 50,000 |
| 2. Purchased goods of ₹ 10,000 | ? | = | ? | + | ? |
| 3. Goods stolen ₹ 1,000 | ? | = | ? | + | ? |
| 4. Sold goods for cash ₹ 5,000 | ? | = | ? | + | ? |
| 5. Loan taken from Bank ₹ 7,000 | ? | = | ? | + | ? |
Complete the following Accounting equation table.
| Transaction | Assets (₹) | = | Liabilities (₹) | + | Capital (₹) |
| 1. Started business with Cash ₹ 50,000 | ? | = | ? | + | 50,000 |
| 2. Purchased goods of ₹ 10,000 | ? | = | ? | + | ? |
| 3. Goods stolen ₹ 1,000 | ? | = | ? | + | ? |
| 4. Sold goods for cash ₹ 5,000 | ? | = | ? | + | ? |
| 5. Loan taken from Bank ₹ 7,000 | ? | = | ? | + | ? |
Complete the following Accounting equation table.
| Transaction | Assets (₹) | = | Liabilities (₹) | + | Capital (₹) |
| 1. Started business with Cash ₹ 50,000 | ? | = | ? | + | 50,000 |
| 2. Purchased goods of ₹ 10,000 | ? | = | ? | + | ? |
| 3. Goods stolen ₹ 1,000 | ? | = | ? | + | ? |
| 4. Sold goods for cash ₹ 5,000 | ? | = | ? | + | ? |
| 5. Loan taken from Bank ₹ 7,000 | ? | = | ? | + | ? |
Complete the following Accounting equation table.
| Transaction | Assets (₹) | = | Liabilities (₹) | + | Capital (₹) |
| 1. Started business with Cash ₹ 50,000 | ? | = | ? | + | 50,000 |
| 2. Purchased goods of ₹ 10,000 | ? | = | ? | + | ? |
| 3. Goods stolen ₹ 1,000 | ? | = | ? | + | ? |
| 4. Sold goods for cash ₹ 5,000 | ? | = | ? | + | ? |
| 5. Loan taken from Bank ₹ 7,000 | ? | = | ? | + | ? |
Complete the following Accounting equation table.
| Transaction | Assets (₹) | = | Liabilities (₹) | + | Capital (₹) | |
| 1. | Started business with Cash ₹ 50,000 | ? | = | ? | + | 50,000 |
| 2. | Purchased goods of ₹ 10,000 | ? | = | ? | + | ? |
| 3. | Goods stolen ₹ 1,000 | ? | = | ? | + | ? |
| 4. | Sold goods for cash ₹ 5,000 | ? | = | ? | + | ? |
| 5. | Loan taken from Bank ₹ 7,000 | ? | = | ? | + | ? |
Complete the following Accounting equation table.
| Transaction | Assets (₹) | = | Liabilities (₹) | + | Capital (₹) |
| 1. Started business with Cash ₹ 50,000 | ? | = | ? | + | 50,000 |
| 2. Purchased goods of ₹ 10,000 | ? | = | ? | + | ? |
| 3. Goods stolen ₹ 1,000 | ? | = | ? | + | ? |
| 4. Sold goods for cash ₹ 5,000 | ? | = | ? | + | ? |
| 5. Loan taken from Bank ₹ 7,000 | ? | = | ? | + | ? |
Complete the following Accounting equation table.
| Transaction | Assets (₹) | = | Liabilities (₹) | + | Capital (₹) | |
| 1. | Started business with Cash ₹50,000 | ? | = | ? | + | 50,000 |
| 2. | Purchased goods of ₹10,000 | ? | = | ? | + | ? |
| 3. | Goods stolen ₹1,000 | ? | = | ? | + | ? |
| 4. | Sold goods for cash ₹5,000 | ? | = | ? | + | ? |
| 5. | Loan taken from Bank ₹7,000 | ? | = | ? | + | ? |
