Tuesday, 8 April 2014

Accounting Equation Question With Solution

Inrtoduction
The 'basic accounting equation' is the foundation for the double-entry bookkeeping system. For each transaction, the total debits equal the total credits.
Equity: - Equity is the all the money comes to the business.
Capital: - Capital is the person contribution money in the business.
Total Assets = Total Equity
Total Equity = External Equity + Internal Equity
Total Assets = Capital + Liability

Liability = Share, Debenture, Bank Lone, Unsecured Loan, Creditor.
Note:-
     1.    Cash purchase, Cash sale and all transaction where the word paid is mentioned are too treated as Cash transaction.
     2.   When Name of the person like, Mr. X, Shyam, Hari etc or the Name of the firm mentioned in the transaction it is treated as credit transaction.
    3.    When both the cash, and Person Name are mentioned in the transaction. It will be treated as cash transaction.
Example:-
1.    Ram comments (starts) business with cash Rs. 100000.   Cash Transaction
2.    Mr. X sold goods to Mr. Y Rs. 40000.             Credit Transaction
3.    Brought goods from Mr. X Rs. 20000.      Credit Transaction
4.    Paid rent Rs. 4000.                    Cash Transaction   
5.    Paid salary Rs. 5000.           Cash Transaction    

Methods of Calculating Accounting Equation
     1.    Assertion the Variable.
     2.    To find out the increased or Decreased in the particular Variable.
     3.    Show the effect on both side of the equation.

    A.   Started business with cash Rs. 100000.
·         Assets & Capital
·         Increase in Assets & Increase in Capital
·         +100000 = + 100000 + 0
   B.   Borrowed Rs. 10000 from Raj Company.
·         Assets & Liability
·         Increase in Assets & Increase in Liability
·         +10000 = 0 +10000
   C.   Purchase furniture for cash Rs. 10000.
·         Assets
·         Increase in Fixed Assets & Decrease in Current Assets
·         +10000 – 10000 = 0 + 0
   D.   Purchase goods from Mr. Moon on credit for Rs. 30000.
·         Assets & Liability
·         Increase in Assets & Increase in Liability
·         +30000 = 0 + 30000
   E.   Sold goods cost for Rs. 10000 for cash Rs. 12000.
·         Assets & Capital
·         Decrease in Assets, Increase in Assets & Increase in Capital
·         -10000 + 12000 = +12000 + 0
   F.    Sold goods costing Rs. 20000 to Star Limited on Credit for Rs. 25000.
·         Assets & Capital
·         Increase in Fixed Assets, Decrease in Current Assets & Increase in Capital
·         + 25000 – 20000 = +5000 + 0 
   G.   Return goods costing Rs. 5000 to suppliers of goods.
·         Assets & Liability
·         Decrease in Assets & Decrease in Liability
·         -5000 = o -5000
   H.   Received cash from customer Rs. 20000.
·         Assets
·         Increase in Assets & Decrease in Assets
·         -20000 + 20000 = 0 + 0
   I.      Paid cash to suppliers of goods Rs. 15000.
·         Assets & Liability
·         Decrease in Assets & Decrease in Liability
·         -15000 = 0 - 15000
   J.    Furniture costing Rs. 10000 in Valued at Rs. 9000.
·         Assets & Capital
·         Decrease in Assets & Decrease in Capital
·         10000-9000 = -1000 + 0
·         -1000 = -1000 + 0
   K.   Rent due but not paid Rs. 2000.
·         Liabilities & Capital
·         Decrease in Capital & Increase in Liability
·         0 = -2000 + 20000 
   L.    Repaid loan of Rs. 10000 along with the interest of Rs. 100.
·         Assets, Capital, & Liability
·         Decrease in Assets, Decrease in Capital, & Decrease in Liability
·         -10100 = -100 – 10000
   M.   Paid rent in Advance Rs. 2000.
·         Assets
·         Decrease in Assets & Increase in Assets
·         -2000 + 2000 = 0 + 0
·         0 = 0 + 0
   N.   Brought goods from Mr. Rajesh Rs. 20000.
·         Assets & Liabilities
·         Increase in Assets & Increase in Liability
·         +20000 = 0 + 20000
   O.   Purchased household goods for Rs. 15000 giving Rs. 5000 in cash and balance through a loan.
·         Assets, Capital, & Liabilities
·         Decrease in Assets, Decrease in Capital, & Increase in Liabilities
·         -5000 = -15000 + 10000
   P.   Goods destroyed by fire (cost Rs. 500, sales Rs. 600)
·         Assets & Capital
·         Decrease in Assets & Decrease in Capital
·         -500 = -500 + 0
   Q.   Paid cash Rs. 500 loan & Rs. 300 for interest.
·         Assets, Capital, & Liability
·         Decrease in Assets, Decrease in Capital, & Decrease in Liability
·         -800 = -300 – 500
   R.   Withdraw goods for personal use (cost Rs.500, sales Rs. 600)
·         Assets & Capital
·         Decrease in Assets & Decrease in Capital
·         -500 = -500 + 0
   S.   Withdraw goods costing Rs. 3000 for personal use.
·         Assets & Capital
·         Decrease in Assets & Decrease in Capital
·         -3000 = -3000 + 0
   T.   Paid salary Rs. 500 & outstanding salary Rs. 100.
·         Assets, Capital, & Liabilities
·         Decrease in Assets, Decrease in Capital, & Increase in Liabilities
·         -500 = -600 + 100
   U.   Charge Depreciation of Rs. 300 on furniture & Rs. 200 on machinery.
·         Assets & capital
·         Decrease in Assets & Decrease in Capital
·         -500 = -500 + 0


Show the accounting equation on the basis of the forming transaction and prepare balance sheet on the basis of last transaction.
   1.    Mr. Maharaja comments business with cash Rs. 100000.
   2.    Purchased goods for cash Rs. 70000.
   3.    Purchased goods on credit Rs. 80000.
   4.    Purchased furniture Rs. 3000.
   5.    Paid rent Rs.2000.
   6.    Sold goods for cash costing Rs. 45000 at Rs. 60000.
   7.    Paid to creditors Rs. 20000.
   8.    Withdraw cash for private use Rs. 10000.
   9.    Paid salary Rs. 5000.
  10. Sold goods on credit costing Rs. 60000 at Rs. 80000.

Show the accounting equation on the basis of the forming transaction and prepare balance sheet on the basis of last transaction.
   1.    Mr. Ram comments business with cash Rs. 30000.
   2.    Paid rent in Advance Rs. 1200.
   3.    Purchased typewriter for Rs. 4200.
   4.    Bought furniture from M/s Mohan furniture on credit for Rs. 1800.
   5.    Purchased goods from Sohan for cash Rs. 21000.
   6.    Sold goods to Shyam for cash Rs. 24000 (costing Rs. 18000)
   7.    Brought goods from Ramesh for Rs. 18000.
   8.    Sold goods to shyam costing Rs. 18000 for Rs. 30000.
   9.    Purchased household goods for Rs. 9000 giving Rs. 3000 in cash and the balance through a loan.
   10. Goods destroyed by fire (cost Rs. 300, sales price Rs. 360)
   11. Paid half of the amount owned to Mohan furniture.
   12. Paid cash Rs. 300 for loan & Rs. 180 for interest.
   13. Withdraw goods for personal use (cost Rs. 300, sales price Rs. 360)
   14. Received Rs. 29700 from shyam in full settlement.
   15. Paid Rs. 17820 to Ramesh in full settlement.
   16. Paid salary Rs. 300 & salary outstanding Rs. 60.
   17. Charged depreciation of Rs. 180 on furniture and Rs. 60 on typewriter.




103 comments:

  1. If you Want Any query please E-mail me your question related to Accounting Equation..........

    ReplyDelete
    Replies
    1. Use accounting equation to show the effect of following transactions on assets, liabilities and
      capital:
      a)Started business with cash Rs 70,000
      b)Purchased goods on credit Rs 18,000
      c)Purchased machinery Rs 20,000
      d)Payment made to creditors in full settlement Rs 17,500.
      e)Depreciation on machinery Rs 2,000

      please explain this sum.

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    2. what is the treatment of outstanding rent in accounting eqquation

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    3. 1. Find out debtors and creditors or debit and credit from the following transactions stating your reasons in each case:
      Rupees
      a) Sold goods to X 150
      b) Bought goods for cash 300
      c) Paid house rent 75
      d) Paid general expenses 35
      e) Purchased Building 6000

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    4. 1. Find out debtors and creditors or debit and credit from the following transactions stating your reasons in each case:
      Rupees
      a) Sold goods to X 150
      b) Bought goods for cash 300
      c) Paid house rent 75
      d) Paid general expenses 35
      e) Purchased Building 6000

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    5. Sir the transaction is "paid interest on loan of rs 20000 and installment of rs 200000

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    6. Sold goods worth Rs.20,000 for Rs. 30,000

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    7. What would be the accounting equation for prepaid insurance ??

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    8. Received cash from rajesh this entry amount is 500 ..so where I should enter the amount

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    9. Purchase goods costing 100000 from ram.paid 60% immediately by cheque to avail 5% discount...
      Explain with solution plz

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    10. Rent outstanding rs.12000

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    11. Paid to creditors in full settlement

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    12. Commensed business with cash 200000 and bank loan 200000

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    13. (i) Business commenced with a capital of Rs. 6,00,000.
      (ii) Rs. 4,50,000 deposited in a bank account.
      (iii) Rs. 2,30,000 Plant and Machinery Purchased by paying Rs. 30,000 cash
      immediately.
      (iv) Purchased goods worth Rs. 40,000 for cash and Rs. 45,000 on account.
      (v) Paid a cheque of Rs. 2, 00,000 to the supplier for Plant and Machinery.
      (vi) Rs. 70,000 cash sales (of goods costing Rs. 50,000).
      (vii) Withdrawn by the proprietor Rs. 35,000 cash for personal use.
      (viii) Insurance paid by cheque of Rs. 2,500.
      (ix) Salary of Rs. 5,500 outstanding.
      (x) Furniture of Rs. 30,000 purchased in cash.
      post them to ledger format emmediately

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    14. Mssg me plz i have a question

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    15. Purchased goods from kumal for Rs 1,00,000 and payment made by cheque

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    ReplyDelete
  3. why paid in advance can occur increasing and decreasing in assets? can you explain? Thank you :)

    ReplyDelete
  4. i appreciate your work

    ReplyDelete
  5. kindly heple thise equsation

    ReplyDelete
  6. e completed work for a clint and sent a bill for $7000 to be paid with in 30 days
    2collected cash $5000 on the amount owed by the client intranction e
    3paid 12000 cash to settle the liabilites created in tranction e

    ReplyDelete
  7. e completed work for a clint and sent a bill for $7000 to be paid with in 30 days
    2collected cash $5000 on the amount owed by the client intranction e
    3paid 12000 cash to settle the liabilites created in tranction e

    ReplyDelete
  8. kindly heple thise equsation

    ReplyDelete
  9. what is the entry of purchase furniture for office use

    ReplyDelete
  10. What will be the debit and credit in the statement :
    Purchased a building for Rs.15,000 giving Rs.5,000 in cash and the balance being treated as loan

    ReplyDelete
  11. Withdraw for personl use goods costing 5000

    ReplyDelete
  12. Can any body plz tell me the entry for: additional capital brought by mr.x 10000/-.. plzz

    ReplyDelete
  13. Can any one tell me whats the journal entry of purchase goods for cash rs 50000 and on credit rs 40000

    ReplyDelete
    Replies
    1. purchased a/c..dr90000
      to cash50000
      to name of party40000

      Delete
  14. I can answar to your questions but you given me the money

    ReplyDelete
  15. This comment has been removed by the author.

    ReplyDelete
  16. Sold goods to amit(costing rs 6000) at a profit of 25% on sale
    Plaz tell the treatement of this transaction in acccounting equation

    ReplyDelete
  17. What is the journal entry for started business with cash rs 50000, furniture rs. 40000 and a bank loan of rs. 10000?

    ReplyDelete
  18. use accounting equation to show the effect of the following transaction goods costing RS 6000 sold to Amit at loss of 10% ,out of which RS 2000 received in cash. solution class 11th

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  20. Paid salary Rs 2000 and advance salary Rs 3000.
    Accounting equation

    ReplyDelete
  21. Amit has incurred an expenses of rupees 5000 towards repair however the amount is yet to be paid. How you will show the accounting equation

    ReplyDelete
  22. Goods costing Rs. 24000 sold at a profit of 33 1/3%. Half the payment received in cash.

    ReplyDelete
    Replies
    1. How you will show the accounting equation?

      Delete
  23. What effect of accounting equation
    Paid rent Rs. 5000.

    ReplyDelete
  24. Paid salary Rs 4000 and wages Rs 2000 show me answer

    ReplyDelete
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  31. Bought ¢10,000.00 of furniture and fitting from Janet supplies LTD on credit

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  32. Mr.kaleen start a business with capital investment with rupees 1200000
    1 purchased shop building in cash =200000
    2 purchased goods on cash =20000
    3 purchased furniture worth rupees 150000 paid 50000 cash and balanced on account
    4 sold merchandise on cash =5000
    5 sold murchandies on credit =5000
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  34. Purchase goods for rupees 140000 paying 25% of the amount in cash

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  35. Amit has incurred an expense of Rs 5,000 towards repairs. However, the. amount is yet to be paid. How will it be shown in the accounting equation? what will be the answer

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  36. What about Outstanding rent Rs 2500

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  37. Good Purchase from shyam of rs 60000 and made partial payment 40000
    What is the solution of this qst? (accounting equation)

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