Question

16. Show the effect of following transactions on accounting equations :
(i) Samuel commenced business with cash 60,000 and furniture * 30,000.
(ii) Purchased goods on credit from Manisha 45,000.
(iii) Sold 2/3rd of above goods at a profit of 25% on sales. Half the payment received
immediately.
(iv) 1/3rd of the amount due to Manisha was paid after deducting 4% cash discount.
(v) Accepted a bill drawn by Manisha 20,000.
(vi) Depreciate furniture by 10%.

Answer 1

Answer:

1.

capital increase and furniture (assets) increasing

2.stocks and creditors both are increasing

3.goods is decreasing but cash(half payment) and credit (debtors) is increasing

4.creditors is decreasing and cash(assets) also decreasing

5.b/p (liabilties ) increasing and

6. cost of furniture(assets ) reduced by 10%

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