Accounting Equationn

Accounting Equation
Accounting Equation
Transactions Assets = Capital + Liabilities
1. Started business + Cash/Machine/ Fur. + Capital
2. Purchased goods and + Goods/ Assets
assets (on cash) – Cash
3. Purchased goods/ assets
from A (on credit) + Goods/ Assets + Creditors (P)
4. Purchased goods on cash + Goods
& on credit – Cash + Creditors
5. Sold goods/ assets + Cash
(on cash) – Goods
6. Sold goods/ assets to B + Debtors (R)
(credit) – Goods
7. Sold goods/ assets on cash + Cash
& on credit + Debtors (R)
– Goods
8. Sold goods/ assets on profit + Cash (SP) + Profit
– Goods (CP)
9. Sold goods/ assets on loss + Cash (SP) – Loss
– Goods (CP)
Assets = Cash/ Goods/ Furniture/ Machine/ Equipment/ Debtors/
Prepaid/ Accrued income
Liabilities = Creditors/ Loan/ Advance received/ outstanding expenses,

etc.
Capital + Profit (Gain)(Received)

– Loss (Expenses paid)
1. Following transactions are given:
a. Started business with cash Rs. 200,000
b. Purchased goods for Rs. 20,000
c. Purchased computer worth Rs. 30,000
d. Purchased machinery from Ram Rs. 50,000
e. Sold goods for Rs. 10,000
Required: Accounting equation.
Accounting Equation
a. Started business + 200,000 cash + 200,000 capital
Beginning equation 200,000 = 200,000
b. Purchased goods + 20,000 goods
- 20,000 cash
New equation 200,000 = 200,000
c. Purchased computer + 30,000 computer
- 30,000 cash
New equation 200,000 = 200,000
d. Purchased machine from
Ram (credit) + 50,000 machine + 50,000 creditors
New equation 250,000 = 200,000 + 50,000
e. Sold goods for Rs. 10,000 + 10,000 cash
- 10,000 goods
Ending equation 250,000 = 200,000 + 50,000
2. Following transactions are given to you:
a) Commenced a business with Rs. 500,000
b) Furniture costing Rs. 20,000 was purchased
c) Goods costing Rs. 10,000 was purchased from Suman on credit
d) Goods sold for Rs. 5,000 on cash
e) Furniture was sold for Rs. 10,000 to Ram on credit
Required: Accounting equation
Accounting Equation
a. Started business + 500,000 cash + 500,000 capital
b. Furniture purchased + 20,000 furniture
- 20,000 cash
New equation 500,000 = 500,000
c. Goods purchased + 10,000 goods + 10,000 creditors
New equation 510,000 = 500,000 + 10,000
d. Goods sold + 5,000 cash
- 5,000 goods
New equation 510,000 = 500,000 + 10,000
e. Furniture sold on credit + 10,000 debtors
- 10,000 furniture
Ending equation 510,000 = 500,000 + 10,000
a) Started business with cash Rs. 100,000 & furniture Rs. 50,000
b) Goods purchased from Kamal Rs. 30,000 and paid Rs. 20,000 only
c) Goods sold costing Rs. 5,000 for Rs. 6,000
d) Old furniture costing Rs. 20,000 was sold for Rs. 15,000
e) Purchased refrigerator costing Rs. 40,000
Accounting Equation
Capital
Transactions Assets = + Liabilities
(+profit - loss)
a) Started business + 100,000 cash
+ 50,000 furniture + 150,000 capital
b) Goods purchased + 30,000 goods
- 20,000 cash +10,000 creditors
New equation 160,000 = 150,000 + 10,000
c) Goods sold at profit + 6,000 cash
- 5,000 goods + 1,000 profit
New equation 161,000 = 151,000 + 10,000
d) Furniture sold at loss + 15,000 cash
- 20,000 furniture - 5,000 loss
New equation 156,000 = 146,000 + 10,000
e) Purchased freeze + 40,000 freeze
- 40,000 cash
Ending equation 156,000 = 146,000 + 10,000
b. Purchased goods for Rs. 50,000
c. Purchased computer worth Rs. 100,000
d. Purchased machinery from Ram Rs. 80,000
e. Sold goods for Rs. 20,000
5. Following transactions are given to you:
a) Commenced a business with Rs. 100,000
b) Furniture costing Rs. 10,000 was purchased
c) Goods costing Rs. 5,000 was purchased from Suman on credit
d) Goods sold for Rs. 2,000 on cash
e) Furniture was sold for Rs. 8,000 to Ram on credit
a) Started business with cash Rs. 200,000 & furniture Rs. 60,000
b) Goods purchased from Kamal Rs. 50,000 and paid Rs. 30,000 only
c) Goods sold costing Rs. 10,000 for Rs. 12,000
d) Old furniture costing Rs. 8,000 was sold for Rs. 7,000
e) Purchased computer costing Rs. 10,000
a) Started business with Rs. 200,000
b) Goods purchased for Rs. 20,000
c) Sold goods costing Rs. 10,000 for Rs. 15,000 on credit.
d) Wages paid Rs. 5,000
e) Commission received Rs. 2,000.
f) Rent paid Rs. 10,000.
g) Electricity expenses paid Rs. 1,000.
Accounting Equation
Capital
Transaction Assets = + Liabilities
(-exps)(+income)
a) Started business +200,000 cash +200,000 capital
b) Goods purchased +20,000 goods
- 20,000 cash
New equation 200,000 = 200,000
c) Sold goods at profit +15,000 debtors +5,000 profit
-10,000 goods
New equation 205,000 = 205,000
d) Wages paid -5,000 cash -5,000 expenses
New equation 200,000 = 200,000
e) Commission received +2,000 cash +2,000 income
New equation 202,000 = 202,000
f) Rent paid -10,000 cash -10,000 expenses
New equation 192,000 192,000
g) Electricity expenses paid -1,000 cash -1,000 expenses
Final equation 191,000 191,000
8. Prepare accounting equation from following details: (Model question)
a) Started business with cash Rs. 200,000 & furniture Rs. 500,000.
b) Purchased goods: Rs. 80,000 on cash & Rs. 70,000 on credit.
c) Paid house rent Rs. 90,000
d) Sold goods costing Rs. 20,000 on cash Rs. 25,000.
Accounting Equation
Capital
Transaction Assets = + Liabilities
(-exps)(+income)
a) Started business +200,000 cash +700,000 capital
+500,000 furniture
b) Purcchased goods +150,000 goods +70,000 creditors
-80,000 cash
New equation 770,000 = 700,000 + 70,000
c) Paid rent -90,000 cash -90,000 expenses
New equation 680,000 = 610,000 + 70,000
d) Sold goods +25,000 cash +5,000 profit
-20,000 goods
Final equation 685,000 = 615,000 + 70,000
Accounting Equation
10. Expenses paid -Cash -Expenses
11. Income received +Cash +Income
12. Deposited into bank +Bank
-Cash
13. Cash withdrawn from bank +Cash
(office use) -Bank
14. Cash withdrawn from bank for -Bank
personal use -Drawings
15. Drawing of goods/assets -Goods/Assets -Drawings
b) Goods purchased for Rs. 30,000
c) Sold goods costing Rs. 20,000 for Rs. 25,000 on credit.
d) Wages paid Rs. 10,000
e) Commission received Rs. 5,000.
f) Rent paid Rs. 8,000.
g) Electricity expenses paid Rs. 2,000.
10. Prepare accounting equation from following details: (Model question)
a) Started business with cash Rs. 100,000 & furniture Rs. 40,000.
b) Purchased goods: Rs. 20,000 on cash & Rs. 10,000 on credit.
c) Paid house rent Rs. 5,000
d) Sold goods costing Rs. 4,000 on cash Rs. 5,000.
b. Cash deposited into bank Rs. 50,000
c. Electricity bill paid Rs. 3,000
d. Cash withdrawn from bank for office use Rs. 10,000
e. Goods purchased on cash Rs. 15,000 and on credit Rs. 25,000
f. Drawing a goods of Rs. 2,000
g. Interest received Rs. 1,000
12. The following transactions of Mr. Joshi are provided you:
i. Mr. Joshi commenced business by investing cash Rs. 50,000 and bank
balance Rs. 100,000
ii. He purchased furniture for Rs. 20,000 by paying cash by cheque.
iii. He purchased goods for Rs. 50,000 by making partial payment of Rs.
40,000 in cash
iv. He paid staff salary Rs. 5,000
v. He paid office rent Rs. 10,000 by cheque
vi. He sold goods costing Rs. 24,000 for Rs. 34,000
Required: Accounting equation by incorporating above transactions
Accounting Equation
S.N. Transaction Assets = Capital + Liabilities
i. Commence business 50,000 (cash) 150,000 0
= +
100,000 (bank)
Beginning equation 150,000 = 150,000 + 0
ii. Purchase furniture 20,000 (furniture) 0 0
= +
(20,000)(bank)
New equation 150,000 = 150,000 + 0
iii. Purchased goods by partial payment 50,000 goods 0 10,000 (creditor)
= +
(40,000)(cash)
New equation 160,000 = 150,000 + 10,000
iv. Paid staff salary (5,000)(cash) = (5,000)(salary) + 0
New equation 155,000 = 145,000 + 10,000
v. Paid office rent by cheque (10,000)(bank) = (10,000)(rent) + 0
New equation 145,000 = 135,000 + 10,000
vi. Sold goods on profit 34,000 (cash) 10,000 (profit) 0
= +
(24,000)(goods)
FInal equation 155,000 = 145,000 + 10,000
i. Started business with Rs. 500,000
ii. Sold goods costing Rs. 2,000 to Tulasi for Rs. 2,500
iii. Purchase goods for cash Rs. 2,000 and credit Rs. 3,000
iv. Salaries paid Rs. 5,000
Required: Account Equations
Accounting Equation
i. Business started 500,000 = 500,000 + 0
ii. Sold to Tulasi 2,500
.(2,000) 500
New equation 500,500 = 500,500 + 0
iii. Goods purchased on cash and credit 5,000
.(2,000) 3,000
New equation 503,500 = 500,500 + 3,000
iv. Salaries paid .(5,000) .(5,000)
New equation 498,500 = 495,500 + 3,000
ii. Purchased furniture for Rs. 50,000
iii. Purchased goods worth Rs. 20,000 including Rs. 5,000 in cash
iv. Sold goods worth Rs. 5,000 to Roman for Rs. 6,000
Required: Accounting Equations
Accounting Equation
i. Business started with cash 300,000 = 300,000 +
Beginning equation 300,000 = 300,000 +
ii. Furniture purchased for cash 50,000
.(50,000)
New equation 300,000 = 300,000 +
iii. Goods purchased and partial 20,000
payment made .(5,000) 15,000
New equation 315,000 = 300,000 + 15,000
iv. Goods sold at profit 6,000 1,000
.(5,000)
Ending equation 316,000 = 301,000 + 15,000
15. The following transactions of Mr. Shrestha are provided you:
i. Mr. Shrestha commenced business by investing cash Rs. 100,000 and
bank balance Rs. 200,000
ii. He purchased furniture for Rs. 40,000 by paying cash by cheque.
iii. He purchased goods for Rs. 60,000 by making partial payment of Rs.
50,000 in cash
iv. He paid staff salary Rs. 10,000
v. He paid office rent Rs. 20,000 by cheque
vi. He sold goods costing Rs. 25,000 for Rs. 30,000
Required: Accounting equation by incorporating above transactions
i. Started business with Rs. 1,000,000
ii. Sold goods costing Rs. 100,000 to Tulasi for Rs. 110,000
iii. Purchase goods for cash Rs. 200,000 and credit Rs. 100,000
iv. Salaries paid Rs. 50,000
Required: Account Equations
ii. Purchased furniture for Rs. 100,000
iii. Purchased goods worth Rs. 30,000 including Rs. 10,000 in cash
iv. Sold goods worth Rs. 15,000 to Roman for Rs. 10,000
Required: Accounting Equations
Accounting Equation
16. Prepaid expenses + prepaid
(Advance paid) - cash
17. Pre-received income + cash + advance
(Advance received or unearned income) received
18. Outstanding expenses - expenses + outstanding
(unpaid, due) expenses
19. Accrued income + accrued + income
(Income earned but not received income
or Income receivable)
a) Started business with cash Rs. 500,000
b) Prepaid rent for 3 months Rs. 30,000
c) Salaries outstanding Rs. 5,000
d) Commission received in advance Rs. 10,000
Required: Accounting Equation
Accounting Equation
a. Started business +500,000 cash +500,000 capital
b. Prepaid rent +30,000 prepaid
-30,000 cash
New equation 500,000 = 500,000
c. Salaries due -5,000 expenses +5,000 due
New equation 500,000 = 495,000 + 5,000
d. Commission received in advance +10,000 cash +10,000 adv. receivable
Final equation 510,000 = 495,000 + 15,000
a) House rent paid in advance @ Rs. 10,000 for 3 months
b) Commission earned but not received Rs. 5,000
c) Outstanding wages Rs. 3,000
d) Tuition fees of Rs. 5,000 received in advance
Accounting Equation
a. Prepaid rent +30,000 prepaid
-30,000 cash
Beginning equation 0
b. Accrued commission +5,000 (receivable) +5,000 income
New equation 5,000 5,000
c. Outstanding wages -3,000 expenses +3,000 due
New equation 5,000 2,000 3,000
d. Unearned income +5,000 cash +5,000 unearned
Final Equation 10,000 = 2,000 + 8,000
a) Started business with cash Rs. 200,000
b) Prepaid rent for 3 months Rs. 20,000
c) Salaries outstanding Rs. 4,000
d) Commission received in advance Rs. 6,000
Required: Accounting Equation
a) House rent paid in advance @ Rs. 5,000 for 3 months
b) Commission earned but not received Rs. 6,000
c) Outstanding wages Rs. 10,000
d) Tuition fees of Rs. 7,000 received in advance
22.You are given the following transactions of Mr. Sharma.
i. Commenced business by investing cash Rs. 150,000
ii. He purchased goods for Rs. 25,000 from Mr. Hari by making partial
payment of Rs. 20,000 in cash.
iii. Sold goods for Rs. 20,000 by making profit of Rs. 5,000
iv. Paid Rs. 4,500 to Mr. Hari for final settlement of the books of account
v. Paid office rent Rs. 10,000
Required: Accounting equation by incorporating above transactions.
Accounting Equation
i. Commenced business 150,000 (cash) = 150,000 + 0
ii. Purchase goods by partial payment 25,000 (goods) = 0 + 5,000(creditors)
(20,000)(cash)
New equation 155,000 = 150,000 + 5,000
iii. Sold goods on profit 20,000 (cash) = 5,000(profit) + 0
(15,000)(goods)
New equation 160,000 = 155,000 + 5,000
iv. Paid to Hari for full settlement of account (4,500)(cash) = 500(discount) + .(5,000)
New equation 155,500 = 155,500 + 0
v. Paid office rent (10,000)(cash) = (10,000)(rent) + 0
Final equation 145,000 = 145,500 + 0
23.Following transactions are given:
a. Introduced a business with bank balance of Rs. 300,000
b. Goods purchased on credit Rs. 50,000
c. Goods sold for cash Rs. 40,000
d. Commission received in advance Rs. 10,000
e. Goods Rs. 1,200 and cash Rs. 800 withdrawn by owners
f. Prepaid insurance Rs. 1,000
g. Interest due but not paid Rs. 1,000
h. Rent paid in advance Rs. 1,500
Accounting Equation
a. Started busines +300,000 bank = +300,000 capital
Beginning equation 300,000 300,000
b. Goods purchased on credit +50,000 goods +50,000 creditors
New equation 350,000 = 300,000 + 50,000
c. Goods sold +40,000 cash
-40,000 goods
New equation 350,000 = 300,000 50,000
d. Commission received in advance +10,000 cash +10,000 adv. received
New equation 360,000 = 300,000 + 60,000
e. Goods & cash withdrawn for -1,200 goods -2,000 drawings
private use -800 cash
New equation 358,000 = 298,000 + 60,000
f. Prepaid insurance +1,000 prepaid
-1,000 cash
New equation 358,000 = 298,000 + 60,000
g. Rent due but not paid -1,000 expenses +1,000 due
(Rent outstanding)
New equation 358,000 = 297,000 + 61,000
h. Rent paid in advance +1,500 prepaid
-1,500 cash
Ending equation 358,000 = 297,000 + 61,000
24.You are given the following transactions of Mr. Sharma.
i. Commenced business by investing cash Rs. 250,000
ii. He purchased goods for Rs. 50,000 from Mr. Hari by making partial
payment of Rs. 40,000 in cash.
iii. Sold goods for Rs. 40,000 by making profit of Rs. 10,000
iv. Paid Rs. 8,500 to Mr. Hari for final settlement of the books of account
v. Paid office rent Rs. 20,000
Required: Accounting equation by incorporating above transactions.
a. Introduced a business with bank balance of Rs. 150,000
b. Goods purchased on credit Rs. 25,000
c. Goods sold for cash Rs. 20,000
d. Commission received in advance Rs. 5,000
e. Goods Rs. 600 and cash Rs. 400 withdrawn by owners
f. Prepaid insurance Rs. 500
g. Interest due but not paid Rs. 500
h. Rent paid in advance Rs. 750
26.Following transaction are given:
a. Rent paid Rs. 10,000 including advance for next month Rs. 4,000
b. Salary paid Rs. 5,000, still outstanding Rs. 2,000
c. Commission received Rs. 15,000 including advance Rs. 5,000 for next
month
Accounting Equation
Transaction Assets = Capital + Liabilities
a. Rent paid -10,000 cash
+4,000 prepaid -6,000 expenses
Beginning equation -6,000 = -6,000
b. Salary paid -5,000 cash -7,000 expenses +2,000 due
New equation -11,000 = -13,000 + 2,000
c. Commission received +15,000 cash +10,000 income +5,000 adv. received
Final equation 4,000 -3,000 .+7,000
27. Following transaction are given:
a. Rent paid Rs. 20,000 including advance for next month Rs. 4,000
b. Salary paid Rs. 6,000, still outstanding Rs. 1,000
c. Commission received Rs. 10,000 including advance Rs. 4,000 for next
month
d. Purchased furniture on credit Rs. 25,000
e. Purchased goods of Rs. 10,000 including credit Rs. 6,000
Accounting Equation
20) Receipt of Loan (Loan taken) +Cash +Loan
21) Repayment of Loan -Cash -Loan
22) Goods lost by fire -Goods -Loss by fire
23) Goods lost by fire & claim admitted +Insurance Co.
by insurance company in full -Goods
24) Goods lost by fire & claim admitted +Insurance Co. -Loss by fire
by insurance partially -Goods
25) Interest on capital ±
26) Interest on drawing ±
27) Depreciation on assets -Assets -Depreciation
a) Loan taken from Nabil Bank Rs. 200,000
b) Loan repaid Rs. 50,000
c) Goods lost by fire Rs. 20,000
d) Interest on capital Rs. 5,000
Accounting Equation
a) Loan taken +200,000 cash +200,000 loan
Beginning equation 200,000 200,000
b) Loan repaid -50,000 cash -50,000 loan
New equation 150,000 150,000
c) Goods lost by fire -20,000 goods -20,000 loss by fire
New equation 130,000 = -20,000 + 150,000
d) Interest on capital .+5,000
-5,000
Ending equation 130,000 = -20,000 + 150,000
b) Goods purchased on cash Rs. 20,000, on credit Rs. 10,000
c) Goods sold on cash Rs. 10,000, on credit Rs. 5,000
d) Goods lost by fire Rs. 10,000 & claim admitted by insurance company
in full
e) Goods and cash of Rs. 2,000 and Rs. 8,000 were withdrawn for
domestic use
f) Interest on drawings @ 10%.
Accounting Equation
a) Started business +100,000 cash .+100,000
b) Goods purchased +30,000 goods
-20,000 cash +10,000 creditors
New equation 110,000 = 100,000 + 10,000
c) Goods sold +10,000 cash
+5,000 debtors
-15,000 goods
New equation 110,000 = 100,000 + 10,000
d) Goods lost by fire +10,000 Ins. Co.
-10,000 goods
New equation 110,000 = 100,000 + 10,000
e) Drawings -8,000 cash
-2,000 goods -10,000 drawings
New equation 100,000 = 90,000 + 10,000
f) Interest on drawings .+1,000
-1,000
Lost equation 100,000 = 90,000 + 10,000
a) Loan taken from Nabil Bank Rs. 300,000
b) Loan repaid Rs. 100,000
c) Goods lost by fire Rs. 50,000
d) Interest on capital Rs. 10,000
b) Goods purchased on cash Rs. 100,000, on credit Rs. 50,000
c) Goods sold on cash Rs. 30,000, on credit Rs. 10,000
d) Goods lost by fire Rs. 20,000 & claim admitted by insurance company
in full
e) Goods and cash of Rs. 10,000 and Rs. 15,000 were withdrawn for
domestic use
f) Interest on drawings @ 5%.

Accounting Equationn

Uploaded by

Copyright:

Available Formats

Accounting Equationn

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Accounting Equationn

Uploaded by

Copyright:

Available Formats

Accounting Equation

Liabilities = Creditors/ Loan/ Advance received/ outstanding expenses,

Capital + Profit (Gain)(Received)

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.