Question

Activity: 03 : Fill the following table. С Analysis of transaction by applying rules of Debit and Credit Account to be Credited Transaction (Modern Approach) Accounts Catego- Rules Account Aspects/ Involved ries Applied Applied to be Deb- ited Two shaikh es Effects 1. Rajesh Commenced business with Cash 80,000 2. Paid Telephone bill (Office) 5,000 3. Goods purchased for cash 8,000. 4. Sold goods to Manoj worth * 6,000 5. Purchased Machinery from Suresh on credit 15,000 6. Received Rent 2,500​

Answer 1

Under the Modern Approach, the accounts are not debited and credited. Hence, the Accounting Equation is used to debit or credit an account. Thus, it is also known as the Accounting Equation Approach.

The Basic Accounting Equation is: Assets = Liabilities + Capital (Owner’s Equity)

Furthermore, it can be expanded as Assets = Liabilities + Capital + Revenues – Expenses

Also, Profit = Revenues – Expenses

The Accounting Equation should remain balanced every time. Because we know that each transaction has a Dual aspect. Thus, each transaction will either affect the7 debit side and credit side. Also, a transaction may affect two accounts on the debit side or two accounts on the credit side.

Also, the profits will increase the Capital and losses will decrease it.