Question

Question 5.
Prepare Accounting Equation from the following:
(i) Started business with cash ₹ 1,00,000 and Goods ₹ 20,000.
(ii) Sold goods worth ₹ 10,000 for cash ₹ 12,000.
(iii) Purchased furniture on credit for ₹ 30,000

Answer 1

The answer is stated below:

Explanation:

Accounting equation:

      Assets                                                   =  Liabilities + Shareholders' equity

      Cash     +      Stock         + Furniture    =  Creditors        +     Capital

1.

     RS100,000 +  Rs20,000                           =                           +  Rs120,000

2.

       Rs12,000 +     Nil                                    =                           +   Rs2,000

                            Rs10,000

3.

                                                  + Rs30,000  =     + Rs30,000    

Working Note:

Assets = Rs112,000 + Rs10,000 + Rs30,000

= Rs 152,000

Liabilities = Rs 30,000

Capital = Rs 122,000

which is equal to $152,000      

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