Question 6:
Prepare an Accounting Equation on the basis of the following transactions:
(i) Started business with cash
` 70,000.
(ii) Credit purchase of goods `
18,000.
(iii) Payment made to creditors in full settlement `17,500.
(iv) Purchase of machinery for cash `
20,000.
(v) Depreciation on machinery `
2,000.
Answer:
|
S. No. |
Transaction |
Assets |
= |
Liabilities |
+ |
Capital |
||||
|
Cash ( `) |
+ |
Stock ( `) |
+ |
Machinery ( `) |
|
( `) |
|
( `) |
||
|
(i) |
Started business with Cash ` 70,000 |
70,000 |
|
|
|
|
|
|
|
70,000 |
|
|
|
70,000 |
|
|
|
|
|
|
|
70,000 |
|
(ii) |
Credit purchase of goods ` 18,000 |
|
|
18,000 |
|
|
= |
18,000 |
|
|
|
|
|
70,000 |
+ |
18,000 |
|
|
= |
18,000 |
+ |
70,000 |
|
(iii) |
Payment made to creditor ` 17,500 in full settlement |
– 17,500 |
|
|
|
|
= |
– 18,000 |
+ |
500 (Discount Received) |
|
|
|
52,500 |
+ |
18,000 |
|
|
= |
|
|
70,500 |
|
(iv) |
Purchase of Machinery for Cash ` 20,000 |
– 20,000 |
|
|
|
20,000 |
|
|
|
|
|
|
|
32,500 |
+ |
18,000 |
+ |
20,000 |
= |
|
|
70,500 |
|
(v) |
Depreciation on Machinery ` 2,000 |
|
|
|
|
– 2,000 |
|
|
|
– 2,000 (Depreciation) |
|
|
|
32,500 |
+ |
18,000 |
+ |
18,000 |
= |
|
|
68,500 |
|
Assets |
= |
|
32,500 + 18,000 + 18,000 |
|
|
= |
` |
68,500 |
|
Liabilities |
= |
|
NIL |
|
Capital |
= |
` |
68,500 |
Question 7:
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.
Answer:
|
S. No. |
Transactions |
Assets |
= |
Liabilities |
+ |
Capital |
||
|
Cash ( `) |
+ |
Advances Expenses ( `) |
= |
Outstanding Expenses ( `) |
|
( `) |
||
|
(i) |
Started business with Cash |
50,000 |
|
|
= |
|
|
50,000 |
|
|
|
50,000 |
|
|
= |
|
|
50,000 |
|
(ii) |
Salaries paid |
– 2,000 |
|
|
= |
|
|
– 2,000 (expenses) |
|
|
|
48,000 |
|
|
= |
|
|
48,000 |
|
(iii) |
Wages Outstanding |
|
|
|
= |
200 |
+ |
– 200 (expenses) |
|
|
|
4,800 |
|
|
= |
200 |
|
47,800 |
|
(iv) |
Interest due but not paid |
|
|
|
= |
100 |
+ |
– 100 (expenses) |
|
|
|
48,000 |
|
|
= |
300 |
+ |
47,700 |
|
(v) |
Rent paid in advance |
– 150 |
+ |
150 |
= |
|
|
|
|
|
|
47,850 |
+ |
150 |
= |
300 |
+ |
47,700 |
|
Assets |
= |
|
47,850 + 150 |
|
|
= |
` |
48,000 |
|
Liabilities |
= |
` |
300 |
|
Capital |
= |
` |
47,700 |
Question 8:
What will be the effect of the following on the Accounting Equation?
(i) Harish started business with cash
` 18,000
(ii) Purchased goods for Cash `
5,000 and on credit `
2,000
(iii) Sold goods for cash ` 4,000 (costing `
2,400)
(iv) Rent paid `
1,000 and rent outstanding `
200
Answer:
|
S. No. |
Transactions |
Assets |
= |
Liabilities |
+ |
Capital |
||||
|
Cash ( `) |
+ |
Stock ( `) |
= |
Creditors ( `) |
+ |
Outstanding Rent ( `) |
|
( `) |
||
|
(i) |
Harish started business with cash |
18,000 |
|
|
= |
|
|
|
|
18,000 |
|
|
|
18,000 |
|
|
= |
|
|
|
|
18,000 |
|
(ii) |
Purchased goods for Cash ` 5,000 and on credit ` 2,000 |
– 5,000 |
+ |
7,000 |
= |
2,000 |
|
|
|
|
|
|
|
13,000 |
+ |
7,000 |
= |
2,000 |
|
|
+ |
18,000 |
|
(iii) |
Sold goods for cash ` 4,000 costing ` 2,400 |
4,000 |
|
– 2,400 |
= |
|
|
|
|
1,600 (Profit) |
|
|
|
17,000 |
+ |
4,600 |
= |
2,000 |
|
|
+ |
19,600 |
|
(iv) |
Rent paid ` 1,000 and Rent Outstanding ` 200 |
– 1,000 |
|
|
= |
|
|
200 |
|
– 1,200 |
|
|
|
16,000 |
+ |
4,600 |
= |
2,000 |
+ |
200 |
+ |
18,400 |
|
Assets |
= |
|
16,000 + 4,600 |
|
|
= |
` |
20,600 |
|
Liabilities |
= |
|
2,000 + 200 |
|
|
= |
` |
2,200 |
|
Capital |
= |
` |
18,400 |
Question 9:
Prepare Accounting Equation from
the following:
(a) Started business with cash ` 1,20,000.
(b) Purchased goods for cash ` 10,000.
(c) Rent Received ` 5,000.
(d) Salary outstanding `2,000.
(e) Sold goods for cash
(costing ` 5,000) ` 7,000.
(f) Goods destroyed by fire `500.
Answer:
|
S. No. |
Transactions |
Assets |
= |
Liabilities |
|
+ |
Capital |
||||
|
Cash ( `) |
+ |
Stock ( `) |
|
|
|
O/s Expenses ( `) |
|
|
( `) |
||
|
(a) |
Started business with cash |
1,20,000 |
+ |
|
|
|
= |
|
|
+ |
1,20,000 |
|
|
|
1,20,000 |
+ |
|
|
|
= |
|
|
+ |
1,20,000 |
|
(b) |
Purchased goods for cash |
-10,000 |
+10,000 |
|
|
= |
|
|
|
|
|
|
|
|
1,10,000 |
+ |
10,000 |
|
|
= |
|
|
+ |
1,20,000 |
|
(c) |
Rent Received |
+5,000 |
|
|
|
|
|
|
|
+5,000 |
|
|
|
|
1,15,000 |
+ |
10,000 |
|
|
= |
|
|
+ |
1,25,000 |
|
(d) |
Salary outstanding |
|
|
|
|
|
|
+2,000 |
|
|
-2,000 |
|
|
|
1,15,000 |
+ |
10,000 |
|
|
= |
2,000 |
|
+ |
1,23,000 |
|
(e) |
Sold goods for cash (costing `5,000) ` 7,000 |
+7,000 |
|
-5,000 |
|
|
|
|
|
|
+2,000 |
|
|
|
1,22,000 |
+ |
5,000 |
|
|
= |
2,000 |
|
+ |
1,25,000 |
|
(f) |
Goods destroyed by fire |
|
|
-500 |
|
|
= |
|
|
|
-500 |
|
|
|
1,22,000 |
+ |
4,500 |
|
|
= |
2,000 |
|
|
1,24,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
= |
|
1,22,000 + 4,500 + 18,000 |
|
|
= |
` |
1,27,000 |
|
Liabilities |
= |
` |
2,000 |
|
Capital |
= |
` |
1,24,500 |
Question 10:
Show the effect of the following transactions and also prepare a Balance
Sheet:
(i) Started business with cash `
60,000.
(ii) Rent received `
2,000.
(iii) Accrued interest ` 500.
(iv) Commission received in advance `
1,000.
(v) Amount withdrawn `
5,000.
Answer:
|
S. No. |
Transaction |
Assets |
= |
Liabilities |
+ |
Capital |
||
|
Cash ( `) |
+ |
Accrued Interest ( `) |
= |
Advance Commission ( `) |
|
( `) |
||
|
(i) |
Started business with Cash ` 60,000 |
60,000 |
|
|
= |
|
|
60,000 |
|
|
|
60,000 |
|
|
= |
|
|
60,000 |
|
(ii) |
Rent Received ` 2,000 |
2,000 |
|
|
= |
|
|
2,000 (Income) |
|
|
|
62,000 |
|
|
= |
|
|
62,000 |
|
(iii) |
Accrued Interest ` 500 |
|
|
500 |
= |
|
|
500 (Income) |
|
|
|
62,000 |
+ |
500 |
= |
|
|
62,500 |
|
(iv) |
Commission received in advance ` 1,000 |
1,000 |
|
|
= |
1,000 |
|
|
|
|
|
63,000 |
+ |
500 |
= |
1,000 |
+ |
62,500 |
|
(v) |
Amount withdrawn ` 5,000 |
– 5,000 |
|
|
= |
|
|
– 5,000 |
|
|
|
58,000 |
+ |
500 |
= |
1,000 |
+ |
57,500 |
|
Balance Sheet |
|||
|
Liabilities |
Amount ( `) |
Assets |
Amount ( `) |
|
Capital |
57,500 |
Cash |
58,000 |
|
Advance Commission |
1,000 |
Accrued Interest |
500 |
|
|
58,500 |
|
58,500 |
|
|
|
|
|
Ts Grewal Solution 2025-2026
Click below for more Questions
Chapter 5 – Accounting Equation
Question No. 1 To 5
Question No. 6 To 10
Question No. 11 To 15
Question No. 16 To 20
Question No. 21 To 25