Question

The accounting equation asset = capital + liabilities, which of the following is true. Ram has started business with5,50,000 and has purchased goods worth 1,50,000 on credita) 7,00,000 = 5,50,000 + 1,50,000
b) 7,00,000 = 6,50,000 + 50,000c) 5,50,000 = 7,00,000 - 1,50,000
d) 5,50,000 = 5,00,000 + 50,000

Answer 1

a) 700000=550000+150000
is true
because Ram introduce capital in the form of cash 550000 so it leads to an increase in assets(cash) and increase in capital
purchased furniture will increase stock (assets) by 150000 and it is a credit purchase so there will be an increase in liability