Prove that accounting equation is satisfied in all the following cases:
a) Commenced business with cash Rs. 50, 000.
b) Paid rent Rs. 4, 000 including Rs. 1, 000 as advance.
c) Bought goods for cash Rs. 30, 000 and on credit Rs. 20, 000
d) Sold the goods bought on credit for Rs. 25, 000
e) Purchased furniture worth Rs. 10, 000 for office use and for Rs. 5, 000 for domestic use.
Accounting equation: Assets = Capital + Liabilities
The solution for accounting equation is provided below.
Also we would like to advice you that rather posting all questions on a single day, post one to two queries on daily basis in each subject as we need to tackle the need of other students as well.
The solution for accounting equation is provided below.
| S. No. | Transaction | Assets | = | Liabilities | + | Capital | |||||||||
| Cash | + | Furniture | + | Stock | + | Prepaid Rent | = | Outstanding Interest | + | Creditors | |||||
| (i) | Started business with cash | 50,000 | + | - | + | - | + | - | = | - | + | - | + | 50,000 | |
| (ii) | Paid Rent | (4,000) | + | - | + | - | + | 1,000 | |
= | + | - | + | (3,000) | |
| 46,000 | + | - | + | + | 1,000 | |
= | + | - | + | 47,000 | ||||
| (iii) | Purchased goods for cash and credit | (30,000) | + | - | + | 50,000 | + | - | |
= | - | + | 20,000 | + | |
| 16,000 | + | - | + | 50,000 | + | 1,000 | |
= | - | + | 20,000 | + | 47,000 | ||
| (iv) | Sold goods bought on credit | 25,000 | + | - | + | (25,000) | + | - | = | - | + | - | + | - | |
| 41,000 | + | - | + | 25,000 | + | 1,000 | = | - | + | - | + | 47,000 | |||
| (v) | Purchased furniture | (15,000) | + | 10,000 | + | - | + | - | = | - | + | - | + | (5,000) | |
| Total | 26,000 | + | 10,000 | + | 25,000 | + | 1,000 | = | - | + | 20,000 | + | 42,00 | ||
Also we would like to advice you that rather posting all questions on a single day, post one to two queries on daily basis in each subject as we need to tackle the need of other students as well.