Question

Prepare accounting equation from the following:
(a) Started business with cash ₹ 50,000 and goods ₹ 30,000.
(b) Purchased goods for cash ₹ 30,000 and on credit from Karan ₹ 20,000.
(c) Goods costing ₹ 40,000 were sold for ₹ 55,000 for cash.
(d) Withdrew cash for personal use ₹ 10,000.
(e) Rent outstanding ₹ 2,000.

Answer 1

ACCOUNTING EQUATION
S. No.	Transaction	Assets			=	Liabilities			+	Capital
		Cash	+	Stock	=	Creditors	+	Outstanding Rent
(i)	Started business with cash and goods	+50,000		+30,000						+80,000
		50,000	+	30,000	=				+	80,000
(ii)	Purchased goods for cash and on credit from Karan	–30,000		+50,000		+20,000
		20,000	+	80,000	=	20,000			+	80,000
(iii)	Goods costing Rs 40,000 sold for Rs 55,000	+55,000		–40,000						+15,000 (Profit)
		75,000	+	40,000	=	20,000			+	95,000
(iv)	Withdrew cash for personal use	–10,000								–10,000 (Drawings)
		65,000	+	40,000	=	20,000			+	85,000
(v)	Outstanding Rent							+2,000		–2,000 (Expense)
		65,000	+	40,000	=	20,000	+	2,000	+	83,000