Jayant forms a sole proprietorship called Accounting Software Co. (ASC). On December 1, 2017, Jayant invests personal funds of Rs 10,000 to start ASC. The effect of this transaction on ASC's accounting equation is:

Increase in Assets with Rs 10,000

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Increase in Capital with Rs 10,000

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Increase in Assets & Liabilities with Rs 10,000 each

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A & B Both

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Solution

The correct option is D
A & B Both

Equation element(s) impacted as a result of transaction : “Assets” & “Capital”. The investment is capital introduced by Jayant in his business. You can interpret the amounts in the accounting equation to mean that ASC has assets of Rs 10,000 in the form of cash and the source of this is it's owner Jayanth

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Raghav & Co. have two bank accounts. Account No. I and Account No. II. From the following particulars relating to Account No. I, find out the balance on that account of December 31, 2017 according to the cash book of the firm.

(i)	Cheques paid into bank prior to December 31, 2017, but not credited for Rs 10,000.
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(iii)	Cheques issued prior to December 31, 2017 but not presented until after that date for Rs 7,429.
(iv)	Bank charges debited by bank not entered in the cash book for Rs 200.
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(vi)	Overdraft as per Passbook Rs 18,990.

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Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2017:

Receipt and Payment Account for the year ending December 31, 2017
Receipts	Amount Rs	Payments	Amount Rs
Balance b/d	7,890	Salary	11,000
Subscriptions	52,000	Electric charges	5,500
Life member ship fee	2,200	Billiard Table	17,500
Entrance fee	3,200	Office expenses	4,100
Tournament fund	26,000	Printing and Stationery	2,300
Locker Rent	1,250	Tournament expenses	18,500
Sale of old sports goods (Costing Rs 2,200)	2,500	Repair of ground	2,000
Sale of Old Newspaper	750	Furniture purchased	7,700
Legacy	37,500	Sports equipments	12,000
		Cash in Hand	12,690
		Cash at Bank	10,000
		Fixed Deposit (on 1.10.17 for 10% p.a)	30,000

	1,33,290		1,33,290

Other Information:

Subscription outstanding was on December 31, 2016 Rs 1,200 and Rs 3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017 Rs 250. Salary outstanding on December 31, 2017 Rs 1,000.

On January 1, 2017, club has Building Rs 36,000, furniture Rs 12,000, Sports equipments Rs 17,500. Depreciation charged on these items @ 10% (including Purchase).

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