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# <!-- /* Font Definitions */ @font-face {font-family:Mangal; panose-1:0 0 4 0 0 0 0 0 0 0;} @font-face {font-family:"Cambria Math"; panose-1:2 4 5 3 5 4 6 3 2 4;} @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {margin:0in; margin-bottom:.0001pt; font-size:12.0pt; font-family:"Times New Roman","serif";} .MsoPapDefault {margin-bottom:10.0pt; line-height:115&#37;;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in;} div.Section1 {page:Section1;} --> Use accounting equation to show the effect of the following transactions of M/s Royal Traders: Rs (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) Prepaid Insurance 1,000 (f) Received interest 700 (g) Sold goods for cash (costing Rs 5,000) 7,000 (h) Goods destroyed by fire 500

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## <!-- /* Font Definitions */ @font-face {font-family:Mangal; panose-1:0 0 4 0 0 0 0 0 0 0;} @font-face {font-family:"Cambria Math"; panose-1:2 4 5 3 5 4 6 3 2 4;} @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {margin:0in; margin-bottom:.0001pt; font-size:12.0pt; font-family:"Times New Roman","serif";} .MsoPapDefault {margin-bottom:10.0pt; line-height:115&#37;;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in;} div.Section1 {page:Section1;} --> S.No. Explanation Assets = Liabilities + Capital Cash + Stock + Prepaid Expenses Outstanding Expenses (a) Increase in cash 1,20,000 Increase in capital 1,20,000 1,20,000 = NIL + 1,20,000 (b) Increase in stock 10,000 Increase in cash (10,000) = 1,10,000 + 10,000 = NIL + 1,20,000 (c) Increase in cash 5,000 Increase in capital (Profit) 5,000 1,15,000 + 10,000 = NIL + 1,25,000 (d) Increase in outstanding expenses = 2,000 Decrease in capital (Expense) (2,000) 1,15,000 + 10,000 = 2,000 + 1,23,000 (e) Increase in prepaid expenses 1,000 Decrease in cash (1,000) 1,14,000 + 10,000 + 1,000 = 2,000 + 1,23,000 (f) Increase in cash 700 Increase in capital (Profit) 700 1,14,700 + 10,000 + 1,000 = 2,000 + 1,23,700 (g) Increase in cash 7,000 Decrease in stock (5,000) Increase in capital (Profit) 2,000 1,21,700 + 5,000 + 1,000 = 2,000 + 1,25,700 (h) Decrease in stock (500) Decrease in capital (Loss) = (500) 1,21,700 + 4,500 + 1,000 = 2,000 + 1,25,200

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