if we sold goods to sohan costing 1800 for 1500 than how we can write it in a accounting equation
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Reduce stock with 1,800 and capital with 300 (loss on sale). Add 1,500 to sohan (debtor).
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Explanation:
Accounting equation is the basic equation that propels all the accounting activities. It means that every financial transaction has a debit and credit effect without which there can be no financial transaction.
Accounting equation = Assets + Liabilities + owners capital.
In this case, the transaction has three effects namely stock, debtors and capital.
Stock worth Rs 1800 is going out of the organization hence it will be reduced from assets.
The debtors has to be increases since the Rs 1500 sales has been done however on credit.
The selling price of the goods it less that the cost price hence it is a loss, which has to be deducted from the owners capital. Find the image attachment
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