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Standard XII

Accountancy

Realisation of Assets and Liabilities - Comprehensive

Both assets a...

Question

Both assets and owners' equity would be increased by _________.

Capital brought in

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Purchase of an asset on credit

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Payment of creditors

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Proprietors drawings

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Solution

The correct option is C Capital brought in
Accounting Equation:

Owners Equity+Liabilities=Fixed Assets+Current Assets

When Owner is bringing capital, it increases owners equity along with the cash or bank balance. Hence both assets and owners equity increases.

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Similar questions

Q. Which of the following, equations properly represents a derivation of the fundamental accounting equation?
(a) Assets + Liabilities = Owner Equity
(b) Asset = Owner Equity
(c) Cash = Assets
(d) Assets - Liabilities = Owner Equity

Assuming that the Debt-Equity Ratio is 2 : I, state, giving reasons, which of the following transactions would (I) Increase; (ii) Decrease; (ii.) Not alter the Debt-Equity Ratio :

(i) Issue of new shares (Preference/Equity) for Cash.

(ii) Issue of new shares (Preference/Equity) against purchase of fixed asset.

(iii) Buy-back of its own shares by a Company.

(iv) Issue of Debentures for Cash.

(v) Issue of Debentures against purchase of fixed asset.

(vi) Repayment of Long-term Borrowings.

(vii) Conversion of Debentures into Equity Shares/Preference Shares.

(viii) Sale of a fixed asset at par.

(ix) Sale of a fixed asset at profit.

(x) Sale of a fixed asset at loss.

(xi) Purchase of a fixed asset on a credit of 2 months.

(xii) Purchase of a fixed asset on long-term deferred payment basis.

(xiii) Issue of Bonus Shares.

Q. Both assets and owner's equity (i.e. capital) would be increased by ___________.

Q. Assuming That the Debt to Equity Ratio is 2 : 1, state giving reasons, which of the following transactions would (i) increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio:

(i) Issue of new shares for cash.
(ii) Conversion of debentures into equity shares
(iii) Sale of a fixed asset at profit.
(iv) Purchase of a fixed asset on long-term deferred payment basis.
(v) Payment to creditors.

The Debt-Equity Ratio of a Company is 1 : 2. Which of the following would increase, decrease or not change it ?

(i) Repayment of Long term Borrowings of Rs. 40,000.

(ii) Purchased a fixed Asset for Rs. 50,000 on long-term deferred payment basis.

(iii) Issued new equity shared of Rs. 75,000.

(iv) Payment of Dividend Payable.

(v) Goods purchased on Credit.

(vi) Payment to Trade Payables.

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Both assets and owners' equity would be increased by _________.

The correct option is C Capital brought inAccounting Equation:Owners Equity+Liabilities=Fixed Assets+Current AssetsWhen Owner is bringing capital, it increases owners equity along with the cash or bank balance. Hence both assets and owners equity increases.

The correct option is C Capital brought in
Accounting Equation:

Owners Equity+Liabilities=Fixed Assets+Current Assets

When Owner is bringing capital, it increases owners equity along with the cash or bank balance. Hence both assets and owners equity increases.