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Accounting Equation Questions

The document discusses the Accounting Equation and its application to various business transactions. It provides examples of how starting capital, purchases, sales, withdrawals, and outstanding liabilities affect assets, liabilities, and capital. The solutions illustrate the calculations for each scenario to maintain the balance in the Accounting Equation.

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Shafna Shamnas
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14 views3 pages

Accounting Equation Questions

The document discusses the Accounting Equation and its application to various business transactions. It provides examples of how starting capital, purchases, sales, withdrawals, and outstanding liabilities affect assets, liabilities, and capital. The solutions illustrate the calculations for each scenario to maintain the balance in the Accounting Equation.

Uploaded by

Shafna Shamnas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter 2- Accounting Equation

Q.1 What will be effect of the following on the Accounting Equation?


(i) Started business with cash ₹ 45,000
(ii) Opened a Bank Account with a deposit of ₹ 4,500
(iii) Bought goods from M\s. Sun & Co. for ₹ 11,200

The solution for this question is as follows:

Therefore,

Liabilities = 11,200

Capital = 45,000

Assets = Liabilities + Capital

= 45,000 + 11,200 = 56,200


Q.2 Show the Accounting Equation for the following transactions:

(i) Gopinath started business with cash 25,000

(ii) Purchased goods from Shyam 10,000

(iii) Sold goods to Sohan costing ₹ 1,800 1,500

(iv) Gopinath withdrew from business 5,000

The solution for this question is as follows:


Here,

Liabilities = 10,000

Capital = 19,700

Assets = 10,000 + 19,700 = 29,700

Q.3 Show the effect of the following transactions on the Accounting Equation:
(i) Started business with cash ₹ 50,000.
(ii) Salaries paid ₹ 2,000.
(iii) Wages Outstanding ₹ 200.
(iv) Interest due but not paid ₹ 100.
(v) Rent paid in advance ₹ 150.

The solution for this question is as follows:

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