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Unit 1 - PROBLEMS ON ACCOUNTING EQUATION

Financial Accounting - Unit 1 - B.Com - Bangalore University

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Lavin Bhawnani
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4 views

Unit 1 - PROBLEMS ON ACCOUNTING EQUATION

Financial Accounting - Unit 1 - B.Com - Bangalore University

Uploaded by

Lavin Bhawnani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PROBLEMS ON ACCOUNTING EQUATION

Formula

ASSET = CAPITAL + LIABILITY

1. Mr. Raman started the business with following transactions


a) Commenced business by bringing cash Rs.1,00,000.
b) Bought Goods from Ramesh of Rs.40,000.
c) Bought Goods from Suresh of Rs.20,000 and paid cash.
d) Paid shop rent Rs. 5000
e) Paid salaries Rs.5000
f) Sold Goods to Vimal For Rs 25,000
g) Received Commission Rs. 5000

Prepare accounting equations from the above transactions

Answer

In the books of Mr. Raman

SR.N
ASSET = CAPITAL + LIABILITY
TRANSACTION EFFECT
O

1,00,000 = 1,00,000 + 0
Commenced business by bringing cash Capital Increase
1 Rs.1,00,000. -------------------------------------
Cash Increase
New Equation 1,00,000 = 1,00,000 + 0

Bought Goods from Ramesh of Rs.40,000


40,000 = 0 + 40,000
Stock increases
2 -------------------------------------
Creditor increases
1,40,000 = 1,00,000 + 40,000
New Equation

Bought Goods from Suresh of Rs.20,000 and 20,000 = 0 + 0


paid cash.
Stock Increases -20,000 = 0 + 0
3
Cash Decreases -----------------------------------------

New Equation 1,40,000 = 1,00,000 + 40,000

Paid shop rent Rs. 5000


-5000 = -5000 + 0
Cash Decreases
4 ---------------------------------------
Capital Decreases
1,35,000 = 95,000 + 40,000
New Equation

5 Paid salaries Rs.5000 Cash Decreases -5000 = -5000 + 0


-----------------------------------
New Equation Capital Decreases
1,30,000 = 90,000 + 40,000

Sold Goods to Vimal For Rs 25,000 -25,000 = 0 + 0

Stock Decreases 25,000 = 0 + 0


6
Debtor Increases ----------------------------------

New Equation 1,30,000 = 90,000 + 40,000

Received Commission Rs. 5000


5000 = 5000 + 0
Cash Increases
7 ------------------------------
Capital Increases
1,35,000 = 95,000 + 40,000
New Equation

Effect of Transaction on Asset, Capital and Liability

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