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Question -

Prepare accounting equation on the basis of the following:

(a) Harsha started business with cash Rs 2,00,000
(b) Purchased goods from Naman for cash Rs 40,000
(c) Sold goods to Bhanu costing Rs 10,000/- Rs 12,000
(d) Bought furniture on credit Rs 7,000



Answer -

S.No.

Explanation

Assets

=

Liabilities

+

Capital

Cash

+

Stock

+

Debtors

+

Furniture

Creditors

 

 

(a)

Increase in cash

2,00,000

 

 

 

 

 

 

=

 

 

 

 

Increase in capital

 

 

 

 

 

 

 

 

 

 

2,00,000

 

 

2,00,000

 

 

 

 

 

 

=

NIL

+

2,00,000

(b)

Increase in stock

 

 

40,000

 

 

 

 

 

 

 

 

 

Decrease in cash

(40,000)

 

 

 

 

 

 

 

 

 

 

 

 

1,60,000

+

40,000

 

 

 

 

=

NIL

+

2,00,000

(c)

Increase in debtors

 

 

 

 

12,000

 

 

 

 

 

 

 

Decrease in stock

 

 

(10,000)

 

 

 

 

 

 

 

 

 

Profit

 

 

 

 

 

 

 

 

 

 

2,000

 

 

1,60,000

+

30,000

+

12,000

 

 

=

NIL

 

2,02,000

(d)

Increase in furniture

 

 

 

 

 

 

7,000

 

 

 

 

 

Increase in creditors

 

 

 

 

 

 

 

 

7,000

 

 

 

 

1,60,000

+

30,000

+

12,000

+

7,000

=

7,000

+

2,02,000

 

 

 

 

 

 

 

 

 

 

 

 

 

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