Accounting equation remains intact under all circumstances. Justify the statement
with the help of an example.
Answers
Yes, it is exact and true and that an accounting equation remains intact in all circumstances. The example is justified below.
Explanation:
Yes, it is exact and true and that an accounting equation remains intact in all circumstances. The reason behind this statement is that an accounting equation is a form of dual aspects concept.
An accounting equation signifies, A= L+C, which stands for Assets, Liabilities, and Capital. It is necessary for both sides assets and liabilities to be equal and therefore, it is an undeniable fact that accounting equation stays intact.
The example that justifies this statement is as follows:
The accounting equation needs to be equal in both sides.
-A business established with the amount of 2,00,000, the accounting equation would be:
Bank (2,00,000) = Capital (2,00,000)
-Business purchased goods with the amount of 50,000, the accounting equation would be:
Bank (2,00,000 - 50,000 = 1,50,000) + Stock (50,000) = Capital (2,00,000)
Answer:
Explanation: Yes, it is exact and true and that an accounting equation remains intact in all circumstances. The reason behind this statement is that an accounting equation is a form of dual aspects concept. An accounting equation signifies, A= L+C, which stands for Assets, Liabilities, and Capital.