THE BRAIN TRAIN ACADEMY

DELHI CANTT

ACCOUNTING EQUATION
Class 11 - Accountancy
Time Allowed: 1 hour Maximum Marks: 35

Section A
1. The company pays its creditors by cheque. What is the effect on assets and liabilities [1]

a) Increase Bank and Increase Capital b) Reduce Bank and Reduce Liability

c) Increase Bank and Reduce Capital d) Reduce Bank and Increase Capital
2. If a business transaction results in the increase of assets, there will also be a corresponding increase in the [1]
amount of

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a) liabilities b) both liabilities and capital

c) none of these d) capital

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3. Capital at the end Rs.45,500 and capital in the beginning Rs.50,000. Difference of opening and closing capital is [1]
___

a) Rs.4500 loss b) Rs. 4500 additional capital

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c) Rs.4500 revenue d) Rs. 4500 profit

4. Accounting equation may effect [1]
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a) Only one side by increasing / decreasing it b) None

by equal amount
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c) Both d) Both side of equation by equal amount

5. As the effect of a transaction, capital of the company increased by ₹ 2,000 and assets also increased by ₹ 2000. [1]
Identify the transaction.

a) Commission received worth ₹ 2,000 b) Goods costing ₹ 10,000 sold for ₹ 8,000

c) Both Goods costing ₹ 10,000 sold for ₹ d) Goods purchased on credit ₹ 2,000
8,000 and Commission received worth ₹
2,000
6. Main elements of accounting equation are: [1]

a) Bank balance, Investments and Bills b) Capital, Creditors and Bills Payable
Receivable

c) Assets, Liabilities and Capital d) Cash, Stock and Debtors

7. There will be ________ by same amount, when a land is purchased by paying the amount from bank account. [1]

a) Increase in asset, decrease in liabilities b) Decrease in asset, decrease in liabilities

c) Increase in asset, increase in liabilities d) Decrease in one asset, increase in another

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 asset
8. Goods costing Rs. 15,000 were sold for cash at a profit of 20%. By what amount stock account will decrease: [1]

a) Rs.20,500 b) Rs.15,000

c) Rs.25,000 d) Rs.1,500
9. When cash is withdrawn by proprietor, what is its impact on accounting equation? [1]

a) Increase in assets, increase in capital b) Decrease in assets, decrease in capital

c) Increase in assets, increase in liabilities d) Decrease in assets, decrease in liabilities

Section B
10. What are the important points to be kept in mind, while preparing the accounting equation? [2]
11. i. Sunil Mohit started business on 1st April, 2022 with Capital of ₹ 7,50,000 and a loan of ₹ 2,00,000 taken [2]
from Punjab National Bank. On 31st March, 2023 his assets were ₹ 15,00,000. Find out his Capital on 31st
March, 2023 and profits made or losses incurred during the year 2022-23.
ii. If in the above illustration, the proprietor had introduced additional capital of ₹ 1,25,000 and had withdrawn
₹ 40,000 for personal purposes, find out the profit.

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Section C
12. Present the following transactions in the Accounting Equation: [3]

₹
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1. Gopal started business with cash ₹ 25,000 and cheque of ₹ 25,000 to open a Bank Account

2. Purchased goods on credit 4,000

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3. Purchased goods for cash 1,000

4. Purchased furniture for cash 500

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5. Withdrew cash for personal use from Bank 700

6. Paid rent 200

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7. Received interest from Bank 100

8. Sold goods on credit (cost ₹ 500) 700

9. Paid to creditors 400

10. Paid Petty Expenses 200

13. Prove that the accounting equation is satisfied in all the following cases: [3]
i. Commenced business with cash ₹ 50,000
ii. Paid rent ₹ 4,000 including ₹ 1,000 as advance.
iii. Bought goods for cash ₹ 30,000 and on credit ₹ 20,000
iv. Sold the goods bought on credit for ₹ 25,000
v. Purchased furniture worth ₹ 10,000 for office use and for ₹ 5,000 for domestic use.
Section D
14. Analyse the effect of each transaction and prove that the accounting equation(A = L + C) always remains [4]
balanced.
i. Introduced Rs 4,00,000 as cash and Rs 25,000 by stock.

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 ii. Purchased plant for Rs 1,50,000 by paying Rs 7,500 in cash and balance at a later date.
iii. Deposited Rs 3,00,000 into the bank.
iv. Purchased office furniture for Rs 50,000 and made payment by cheque.
v. Purchased goods worth Rs 40,000 for cash and for Rs 17,500 on credit.
vi. Goods amounting to Rs 22,500 was sold for Rs 30,000 on cash basis.
vii. Goods costing to 1 40,000 was sold for 1 62,500 on credit basis.
viii. Cheque issued to the supplier of goods worth Rs 17,500.
ix. Cheque received from customer amounting to Rs 37,500.
x. Withdrawn by owner for personal use Rs 12,500.
15. Prove that the accounting equation is satisfied in all the following transactions of Sita Ram house by preparing [4]
the analysis table. Also record the transactions in Journal.
i. Business commenced with a capital of ₹ 6,00,000.
ii. ₹ 4,50,000 deposited in a bank account.
iii. ₹ 2,30,000 Plant and Machinery Purchased by paying ₹ 30,000 cash immediately.
iv. Purchased goods worth ₹ 40,000 for cash and ₹ 45,000 on account.

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v. Paid a cheque of ₹ 2, 00,000 to the supplier for Plant and Machinery.
vi. ₹ 70,000 cash sales (of goods costing ₹ 50,000).
vii. Withdrawn by the proprietor ₹ 35,000 cash for personal use.
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viii. Insurance paid by cheque of ₹ 2,500.
ix. Salary of ₹ 5,500 outstanding.
x. Furniture of ₹ 30,000 purchased in cash.
16. Analyse the effect of each transaction on assets and liabilities and show that the both sides of Accounting [4]
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Equation (A = L + C) remains equal:

i. Introduced ₹ 8,00,000 as cash and ₹ 50,000 by stock.
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ii. Purchased plant for ₹ 3,00,000 by paying ₹ 15,000 in cash and balance at a later date.
iii. Deposited ₹ 6,00,000 into the bank.
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iv. Purchased office furniture for ₹ 1,00,000 and made payment by cheque.
v. Purchased goods worth ₹ 80,000 for cash and for ₹ 35,000 in credit.
vi. Goods amounting to ₹ 45,000 was sold for ₹ 60,000 on cash basis.
vii. Goods costing to ₹ 80,000 was sold for ₹ 1,25,000 on credit.
viii. Cheque issued to the supplier of goods worth ₹ 35,000.
ix. Cheque received from customer amounting to ₹ 75,000.
x. Withdrawn by owner for personal use ₹ 25,000.
17. Vanishka had the follow ing transactions. Use accounting equation to show their effect on his assets, liabilities, [4]
and capital:
i. Invested Rs 30,000 in cash as capital.
ii. Purchased furniture for cash Rs 15,000.
iii. Purchased a building for Rs 30,000, giving Rs 10,000 in cash and the balance through a loan.
iv. Sold furniture costing Rs 2,000 for Rs 3,000.
v. Purchased an old car for Rs 5,600 cash.
vi. Received cash as rent Rs 7,200.
vii. Paid cash Rs 1,000 for loan and Rs 600 for interest.

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viii. Paid cash for household expenses Rs 600.
ix. Received cash for dividend on securities Rs 400.

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