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Question
Accounting equation signifies ___________.
Options
Capital of a business is equal to assets
Liabilities of a business are equal to assets
Capital of a business is equal to liabilities
Assets of a business are equal to the total of capital and liabilities
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Solution
Accounting equation signifies Assets of a business are equal to the total of capital and liabilities.
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What will be the effect of the following on the accounting equation?
- Sunil started business with ₹ 1,40,000 cash and goods worth ₹ 60,000
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- Depreciation on furniture ₹ 800
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- Goods returned by Ravi ₹ 7,500 (costing ₹ 5,000)
Create an accounting equation on the basis of the following transactions:
- Rakesh started business with a capital of ₹ 1,50,000
- Deposited money with the bank ₹ 80,000
- Purchased goods from Mahesh and paid through debit card ₹ 25,000
- Sold goods (costing ₹ 10,000) to Mohan for ₹ 14,000 who pays through debit card
- Commission received by cheque and deposited the same in the bank ₹ 2,000
- Paid office rent through ECS ₹ 6,000
- Sold goods to Raman for ₹ 15,000 of which ₹ 5,000 was received at once
Create an accounting equation on the basis of the following transactions:
- Started business with cash ₹ 80,000 and goods ₹ 75,000
- Sold goods to Shanmugam on credit for ₹ 50,000
- Received cash from Shanmugam in full settlement ₹ 49,000
- Salary outstanding ₹ 3,000
- Goods costing ₹ 1,000 given as charity
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- Out of insurance premium paid, prepaid is ₹ 500
