Question

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

Answer 1

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.