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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;} --> Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation: Rs (a) Started business with cash 1,20,000 (b) Rent received 10,000 (c) Invested in shares 50,000 (d) Received dividend 5,000 (e) Purchase goods on credit from Ragani 35,000 (f) Paid cash for house hold Expenses 7,000 (g) Sold goods for cash (costing Rs 10,000) 14,000 (h) (i) Cash paid to Ragani Deposited into bank 35,000 20,000

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Solution

## S.No. Explanation Assets = Liabilities + Capital Cash + Stock + Investment + Bank Creditors (a) Increase in cash 1,20,000 Increase in capital 1,20,000 ­­­­­­ 1,20,000 + = NIL + 1,20,000 (b) Increase in cash 10,000 Increase in capital (Income) = 10,000 1,30,000 = NIL + 1,30,000 (c) Decrease in investment 50,000 Decrease in cash (50,000) = 80,000 + 50,000 = NIL + 1,30,000 (d) Increase in cash 5,000 Increase in capital (Income) 5,000 85,000 + 50,000 = NIL + 1,35,000 (e) Increase in stock 35,000 Increase in creditor (Ragani) 35,000 85,000 + 35,000 + 50,000 = 35,000 + 1,35,000 (f) Decrease in capital (7,000) Decrease in cash (7,000) 78,000 + 35,000 + 50,000 = 35,000 + 1,28,000 (g) Increase in cash 14,000 Decrease in stock (10,000) Increase in capital (Profit) 4,000 92,000 + 25,000 + 50,000 = 35,000 + 1,32,000 (h) Decrease in creditors (Ragani) (35,000) Decrease in cash (35,000) 57,000 + 25,000 + 50,000 = NIL + 1,32,000 (i) Decrease in cash (20,000) Increase in bank 20,000 37,000 + 25,000 + 50,000 + 20,000 = NIL + 1,32,000

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