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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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RELATED QUESTIONS
‘Cash withdrawn by the proprietor from the business for his personal use’ causes ____________.
The incorrect accounting equation is _____________.
Real account deals with ____________.
What is the accounting equation?
How are personal accounts classified?
Write a brief note on accounting equation approach of recording transactions.
Classify the accounts with suitable examples.
Complete the accounting equation.
Assets = Capital + Creditors
? = ₹ 1, 60,000 + ₹ 80,000
Prepare accounting equation for the following transactions.
- Murugan commenced business with cash ₹ 80,000
- Purchased goods for cash ₹ 30,000
- Paid salaries by cash ₹ 5,000
- Bought goods from Kumar for ₹ 5,000 and deposited the money in CDM.
- Introduced additional capital of ₹ 10,000
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
- Purchased furniture worth ₹ 20,000 by cash
- Depreciation on furniture ₹ 800
- Deposited into bank ₹ 40,000
- Paid electricity charges through net banking ₹ 500
- Sold goods to Ravi costing ₹ 10,000 for ₹ 15,000
- Goods returned by Ravi ₹ 7,500 (costing ₹ 5,000)
