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Accounting Equation

This document contains sample questions and solutions related to accounting equations. It introduces the concept of accounting equations and how they are used to track the effects of business transactions on assets, liabilities, capital, and profit/loss. Several examples are provided where students are asked to use accounting equations to show how the balance sheet would change given specific scenarios about starting capital, purchases, sales, expenses, etc. The accounting equation framework is then applied to problems involving calculations of total assets, capital/net worth, ending capital, and profit based on financial information provided.

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167 views3 pages

Accounting Equation

This document contains sample questions and solutions related to accounting equations. It introduces the concept of accounting equations and how they are used to track the effects of business transactions on assets, liabilities, capital, and profit/loss. Several examples are provided where students are asked to use accounting equations to show how the balance sheet would change given specific scenarios about starting capital, purchases, sales, expenses, etc. The accounting equation framework is then applied to problems involving calculations of total assets, capital/net worth, ending capital, and profit based on financial information provided.

Uploaded by

diya jain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

G.D.

GOENKA PUBLIC SCHOOL


EAST DELHI
(2021-22)
CLASS-XI
ACCOUNTANCY
CH-5:ACCOUNTING EQUATION

Q1.Preapare accounting equation from the following:


1.Commenced business with cash ₹1,00,000
2.Cash deposited into bank ₹ 60,000
3.Bought goods from X for ₹20,000 and paid ₹5,000 immediately.
4.Sold goods for ₹20,000 for cash which costs ₹15,000
5.Returned goods to X being defective ₹1,000.
6.Borrowed loan ₹30,000 from bank.
7.Paid wages ₹6,000 and wages still outstanding ₹1,000
(Ans. cash ₹49,000+bank₹90,000+stock₹4,000=creditors ₹14,000+bank loan
₹30,000+wages o/s ₹1,000+capital ₹98,000)
Q2.Monu had the following transactions:
1.Started business with cash 1,00,000
2.Deposited cash into bank 60,000
3.Bought a machine by raising a bank loan 50,000
4.Bought goods for cash ₹ 20,000 and on credit ₹40,000
5.Goods brought for cash was sold to Amit ₹25,000.
6.Amit returned goods worth ₹5,000 costing ₹4,000.
7.Amit settled his account by paying 19,500.
8.Paid instalment of bank loan ₹20,000 and paid interest by cheque ₹2,000
9.Charge 10% depreciation on machine.
Use accounting equation to show effect of above transactions.
(Ans.Cash ₹39,500+Bank₹38,000+Stock₹44,000+Machine₹45,000=Creditors
₹40,000+Bank Loan ₹30,000+Capital ₹96,500)

1
Q3.Use accounting equation to show effect of the following transactions on
assets,liabilities and capital:
1.Started business with cash ₹30,000 goods ₹40,000 and furniture ₹20,000.
2.Bought goods from Raman ₹20,000.
3.Sold goods bought from Raman to Sohan for ₹25,000
4.Paid rent ₹4,000 and rent still outstanding ₹1,000.
5.Sohan settled his account at a discount of ₹500.
6.Received commission ₹5,000 including ₹1,000 as advance.
(Ans.cash ₹55,500+stock ₹40,000+furniture ₹20,000=creditors ₹20,000+rent outstanding
₹1,000+advance commission ₹1,000+capital ₹93,500)
Q4.Prove that accounting equation is satisfied in all the following cases:
1.Commenced business with cash ₹50,000.
2.Paid rent ₹4,000 including ₹1,000 as advance .
3.Bought goods for cash ₹30,000 and on credit ₹20,000.
4.Sold the goods bought on credit for ₹25,000
5.Purchased furniture worth ₹10,000 for office uses and for ₹5,000 for personal use.
(Ans. cash ₹26,000+stock₹30,000+furniture ₹10,000+prepaid rent ₹1,000=creditors
₹20,000+capital ₹ 47,000)
Q5.Show that accounting equation is satisfied in the following cases:
1.Sumit commenced business with cash ₹40,000 and goods ₹25,000.
2.Sold 40% goods at a profit of 30% to Sohan.
3.Goods costing ₹1,000 was given as charity and goods worth ₹2,000 was taken away by
Sumit for domestic use.
4.Salary is paid as advance ₹3,000 to a worker ,Ram whose wife is ill.
5.Insurance Premium was paid ₹4,000 of which 1/4th relates to next year.
6.Rent paid ₹5,000 but it is still due ₹1,000.
(Ans.cash ₹28,000+stock₹12,000+debtors ₹13,000+prepaid expenses ₹4,000=o/s expenses
1,000+capital₹56,000)

2
BASED ON TOTAL ASSETS ,OPENING CAPITAL , CLOSING CAPITAL AND
PROFIT
Q1. If the capital of a firm is ₹40,000 and outside liability is ₹60,000.Find the total assets of
the firm. (Ans. ₹1,00,000)
Q2.Find the net worth (capital) of the business if the total asset is ₹1,30,000 and its liabilities
are ₹70,000. (Ans. ₹60,000)
Q3.Ram commenced business on 1st Jan., 2019 with a capital of ₹60,000.At the end of the
year , his assets were worth ₹1,10,000 and liabilities were ₹ 40,000.Find his capital at the
end of the year and profit earned. (Ans. Capital ₹70,000 and profit ₹10,000)
Q4.X started business on 1st April ,2019 with a capital of ₹ 1,20,000.He took bank loan
₹40,000.On 31st March ,2020 , his assets were ₹2,40,000 and creditors were ₹30,000. Loan
has not been paid so far. Determine his capital at the end of the year and profit earned.
(Ans. Capital ₹1,70,000,profit ₹50,000)

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