Question 4.
What will be the effect of the following on the Accounting Equation?
(i) Harish started business with cash ₹ 18,000
(ii) Purchased goods for Cash ₹ 5,000 and on credit ₹ 2,000
(iii) Sold goods for cash ₹ 4,000 (costing ₹ 2,400)
(iv) Rent paid ₹ 1,000 and Rent Outstanding ₹ 200
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Assets will be Rs 20,600, liabilities will be Rs 2,200 and capital will be Rs 18,400.
Explanation:
- All of this can be calculated as such:
- Assets = 16,000 + 4,600 = 20,600 & Liabilities = 2000 + 200 = Rs 2200 so, from this we conclude the capital will be 18,400
- To understand this question in detail you have to draw a table and calculate the given values.
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