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Question
What is an Account?
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Solution
Every transaction has two aspects and each aspect affects a minimum of one account.
An account is the basic unit of identification in accounting.
A ledger account is a summary of relevant transactions at one place relating to a particular head.
The account is the systematic presentation of all material information regarding a particular person or item in one place, under one head.
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RELATED QUESTIONS
A firm has assets of ₹ 1,00,000 and the external liabilities of ₹ 60,000. Its capital would be ___________.
Real account deals with ____________.
Prepaid rent is a ____________.
What is the accounting equation?
How are personal accounts classified?
Classify the accounts with suitable examples.
Complete the accounting equation.
Assets = Capital + Liabilities
₹ 1,00,000 = ₹ 80,000 + ?
Complete the accounting equation.
Assets = Capital + Liabilities
₹ 2,00,000 = ? + ₹ 40,000
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)
