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Accounting Equation Test

The document is a test on depreciation consisting of multiple-choice questions and practical problems related to accounting concepts such as assets, liabilities, owner's equity, and transactions. It includes calculations for liabilities, capital, and the creation of an accounting equation and balance sheet based on given transactions. The test is structured to assess understanding of financial principles and accounting practices.

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Sriram Swaminathan
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5 views2 pages

Accounting Equation Test

The document is a test on depreciation consisting of multiple-choice questions and practical problems related to accounting concepts such as assets, liabilities, owner's equity, and transactions. It includes calculations for liabilities, capital, and the creation of an accounting equation and balance sheet based on given transactions. The test is structured to assess understanding of financial principles and accounting practices.

Uploaded by

Sriram Swaminathan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1 HOUR TEST - DEPRECIATION 25 MARKS

1. If a business has assets of ₹1,00,000 and owner's equity of ₹60,000, the


liabilities will be:
1
a) ₹1,60,000 b) ₹40,000 c) ₹60,000 d) ₹40,000

2. Which of the following transactions will increase both assets and liabilities? 1
a) Cash received from debtors b) Payment made to creditors c) Purchase of
machinery on credit d) Sale of goods for cash

3. If total assets increase by ₹25,000 and liabilities decrease by ₹5,000, then capital
will: 1
a) Increase by ₹20,000 b) Decrease by ₹20,000 c) Increase by ₹30,000 d) Decrease
by ₹30,000

4. Which of the following decreases owner's equity? 1


a) Revenue earned b) Expenses paid c) Introduction of fresh capital d) Sale of an
asset at a profit

5. Outstanding Salary' is a: 1
a) Asset b) Liability c) Expense d) Revenue

6. 'Prepaid Rent' is a: 1
a) Asset b) Liability c) Expense d) Revenue

7. If a business purchases goods for cash, which of the following accounts will be
affected? 1
a) Cash and Capital b) Goods and Debtors c) Cash and Goods
d) Debtors and Creditors

8. Calculate the Liabilities if: 2


(i) Capital is ₹ 1,70,000.
(ii) Assets are ₹ 2,25,000.
(iii) Revenue during the period is ₹ 90,000.
(iv) Expenses during the period are ₹ 1,25,000.

9. Rishi started a business on 1st April, 2024 with a capital of ₹ 50,000 and borrowed
₹ 10,000 from Bank. He earned a profit of ₹ 15,000 during the year ended 31 st
March, 2025 and withdrew cash ₹ 7,000 for personal use. What is his capital on 31 st
March, 2025? 3
10. Mohan started a business on 1st April, 2024 with a capital of ₹ 25,000 and a loan
of ₹ 12,500 borrowed from Shyam. During 2024-25 he had introduced additional
capital of ₹ 12,500 and had withdrawn ₹ 7,500 for personal use. On 31st March,
2025 his assets were ₹ 75,000. Find out his capital as on 31st March, 2025 and profit
made or loss incurred during the year 2024-25. 3
11 Create an Accounting Equation of Kartik from the following transactions & prepare
Balance Sheet. 10
(i) Commenced business with Cash ₹ 50,000; ₹ 2,50,000 in Bank; Goods ₹
1,00,000; Machinery ₹ 5,00,000 and Furniture ₹ 50,000.
(ii) Purchased goods for cash ₹ 20,000 and credit ₹ 30,000.
(iii) Sold goods for cash ₹ 50,000 costing ₹ 35,000.
(iv) Paid to creditors by cheque ₹ 10,000.
(v) Depreciation on Machinery & Furniture @ 10% per annum.
(vi) Rent Outstanding ₹ 5,000.
(vii) Goods taken for personal use ₹ 5,000.
(vii) Accrued interest ₹ 2,000.

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