Question

Explain accounting treatment based on equation. (1) Commmenced buisness treatment based on equation . (2) Purchased goods of rs.2000 from Rahul. (3) Sold goods to Sonia rs.3000 on credit.​

Answer 1

Answer:

For commenced business with cash show the respective amount in the cash and capital

For purchase of goods ,show Rs. 2000 as Stock and add Rs. 2000 in the liability side.

For sales, subtract Rs. 3000 from Stock and add Rs. 3000 in Debtors in the asset side of accounting equation.