Chapter 5 -
Accounting Equation
Question 5:
Develop an Accounting Equation from the following transactions:
|
|
|
` |
|
(i) |
Mohan commenced business with cash |
50,000 |
|
(ii) |
Purchased goods for cash |
30,000 |
|
(iii) |
Purchased
goods on credit |
20,000 |
|
(iv) |
Sold goods (costing ` 10,000) for |
12,000 |
|
(v) |
Bought furniture on credit |
2,000 |
|
(vi) |
Paid
cash to a creditor |
15,000 |
Answer:
|
S. No. |
Transaction |
Assets |
= |
Liabilities |
+ |
Capital |
||||
|
Cash ( `) |
+ |
Stock ( `) |
+ |
Furniture ( `) |
= |
Creditors ( `) |
|
( `) |
||
|
(i) |
Mohan commenced business with cash |
50,000 |
|
|
|
|
= |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
|
= |
|
|
50,000 |
|
(ii) |
Purchased goods for cash |
– 30,000 |
+ |
30,000 |
|
|
= |
|
|
|
|
|
|
20,000 |
+ |
30,000 |
|
|
= |
|
|
50,000 |
|
(iii) |
Purchased goods on credit |
|
|
20,000 |
|
|
= |
20,000 |
|
|
|
|
|
20,000 |
+ |
50,000 |
|
|
= |
20,000 |
+ |
50,000 |
|
(iv) |
Sold goods costing ` 10,000 for ` 12,000 |
12,000 |
+ |
– 10,000 |
|
|
= |
|
|
2,000 (profit) |
|
|
|
32,000 |
+ |
40,000 |
|
|
= |
20,000 |
+ |
52,000 |
|
(v) |
Bought furniture on credit |
|
|
|
|
2,000 |
= |
2,000 |
|
|
|
|
|
32,000 |
+ |
40,000 |
+ |
2,000 |
= |
22,000 |
+ |
52,000 |
|
(vi) |
Paid cash to a creditor |
– 15,000 |
|
|
|
|
= |
– 15,000 |
|
|
|
|
|
17,000 |
+ |
40,000 |
+ |
2,000 |
= |
7,000 |
+ |
52,000 |
|
(vii) |
Salary Paid |
– 1,000 |
|
|
|
|
= |
|
|
– 1,000 (expenses) |
|
|
|
16,000 |
+ |
40,000 |
+ |
2,000 |
= |
7,000 |
+ |
51,000 |
|
Assets |
= |
|
16,000 + 40,000 + 2,000 |
|
|
= |
` |
58,000 |
|
Liabilities |
= |
` |
7,000 |
|
Capital |
= |
` |
51,000 |
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 |
Ts Grewal Solution 2022-2023
Click below for more Questions
Chapter 5 – Accounting Equation
Question No. 1 To 4
Question No. 5 To 8
Question No. 9 To 12
Question No. 13 To 16
Question No. 17 To 20
Question No. 21 To 24
Question No. 25 To 26