Question

X started business with a capital of $Rs.2,00,000$ and purchased goods worth $Rs.20,000$ on credit. These transactions may be expressed in the form of 'Accounting Equation' such as___________.

• A. $Rs.2,20,000=Rs.2,00,000+Rs.20,000$
• B. $Rs.2,20,000=Rs.2,00,000-Rs.20,000$
• C. $Rs.20,000=Rs.2,00,000-Rs.2,00,000$
• D. $Rs.2,20,000=0+Rs.2,20,000$

Answer 1

The correct option is A $Rs.2,20,000=Rs.2,00,000+Rs.20,000$

Here, Total Assets = (Cash) 200,000 + (goods)20,000 and Liabilities (creditor) = 20000 and Capital = 220,000

Therefore, accounting equation is
Assets = Capital + Liabilities

220,000 = 200, 000 + 20, 000