Question

Ulustration 5.
How are the following items dealt in Accounting Equation?
o) Interest due but not received 500
(1) Rent received in advance 1,000
o Insurance premium paid in advance 1.600
iv) Salaries due but not paid 2,000​

Answer 1

Answer:

Solution :

(i) Interest due but not recived shall be added to assest on one side and to the capital on other side. <br> .

(ii) It will increase cash on the assets side and increase the liabilities. <br>.

(iii) It will decrease one assets ( cash) and increase another assets (Prepaid insurance). <br>

(iv) Salary being an expense will be deducted from the capital and being unpaid will be added to liabilities.