Question

Prove that Accounting Equation is satisfied in all the following transaction
Start business with cast Rs.1,00,000
Purchased goods on credit Rs.4,000
Purchased goods of cast Rs.1,000
Withdrew cash for private use Rs.850

Answer 1

1) increase in capital and increase in asset(cash) = Rs.1,00,000

2) increase in asset(stock) and increase in liabilities(creditor)= Rs.4,000

3) decrease in asset(cash) and increase in asset(stock)= Rs.1,009

4) decrease in asset(cash) and decrease in capital(drawings)= Rs.850

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