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#### Question 5:

Develop an Accounting Equation from the following transactions:

 ` (i) Mohan commenced business with cash 50,000 (ii) Purchased goods for cash 30,000 (iii) Purchased goods on credit 20,000 (iv) Sold goods (costing  ` 10,000) for 12,000 (v) Bought furniture on credit 2,000 (vi) (vii) Paid cash to a creditor  Salary paid 15,000 1,000

 S. No. Transaction Assets = Liabilities + Capital Cash ( `) + Stock ( `) + Furniture ( `) = Creditors ( `) ( `) (i) Mohan commenced business with cash 50,000 = 50,000 50,000 = 50,000 (ii) Purchased goods for cash – 30,000 + 30,000 = 20,000 + 30,000 = 50,000 (iii) Purchased goods on credit 20,000 = 20,000 20,000 + 50,000 = 20,000 + 50,000 (iv) Sold goods costing  ` 10,000 for  ` 12,000 12,000 + – 10,000 = 2,000 (profit) 32,000 + 40,000 = 20,000 + 52,000 (v) Bought furniture on credit 2,000 = 2,000 32,000 + 40,000 + 2,000 = 22,000 + 52,000 (vi) Paid cash to a creditor – 15,000 = – 15,000 17,000 + 40,000 + 2,000 = 7,000 + 52,000 (vii) Salary Paid – 1,000 = – 1,000 (expenses) 16,000 + 40,000 + 2,000 = 7,000 + 51,000

 Assets = 16,000 + 40,000 + 2,000 = ` 58,000 Liabilities = ` 7,000 Capital = ` 51,000

#### Question 6:

Prepare an Accounting Equation on the basis of the following transactions:
` 70,000.
(ii) Credit purchase of goods  ` 18,000.
(iii) Payment made to creditors in full settlement  `17,500.
(iv) Purchase of machinery for cash  ` 20,000.
(v) Depreciation on machinery  ` 2,000.

 S. No. Transaction Assets = Liabilities + Capital Cash ( `) + Stock ( `) + Machinery ( `) ( `) ( `) (i) Started business with Cash  ` 70,000 70,000 70,000 70,000 70,000 (ii) Credit purchase of goods  ` 18,000 18,000 = 18,000 70,000 + 18,000 = 18,000 + 70,000 (iii) Payment made to creditor  ` 17,500 in full settlement – 17,500 = – 18,000 + 500 (Discount Received) 52,500 + 18,000 = 70,500 (iv) Purchase of Machinery for Cash  ` 20,000 – 20,000 20,000 32,500 + 18,000 + 20,000 = 70,500 (v) Depreciation on Machinery  ` 2,000 – 2,000 – 2,000 (Depreciation) 32,500 + 18,000 + 18,000 = 68,500

 Assets = 32,500 + 18,000 + 18,000 = ` 68,500 Liabilities = NIL Capital = ` 68,500

#### Question 7:

Show the effect of the following transactions on the Accounting Equation:
` 50,000.
(ii) Salaries paid
` 2,000.
(iii) Wages Outstanding  ` 200.
(iv) Interest due but not paid  ` 100.
(v) Rent paid in advance  ` 150.

 S. No. Transactions Assets = Liabilities + Capital Cash ( `) + Advances Expenses ( `) = Outstanding Expenses ( `) ( `) (i) Started business with Cash 50,000 = 50,000 50,000 = 50,000 (ii) Salaries paid – 2,000 = – 2,000 (expenses) 48,000 = 48,000 (iii) Wages Outstanding = 200 + – 200 (expenses) 4,800 = 200 47,800 (iv) Interest due but not paid = 100 + – 100 (expenses) 48,000 = 300 + 47,700 (v) Rent paid in advance – 150 + 150 = 47,850 + 150 = 300 + 47,700

 Assets = 47,850 + 150 = ` 48,000 Liabilities = ` 300 Capital = ` 47,700

#### Question 8:

What will be the effect of the following on the Accounting Equation?
(i) Harish started business with cash
` 18,000
(ii) Purchased goods for Cash
` 5,000 and on credit  ` 2,000
(iii) Sold goods for cash
` 4,000 (costing  ` 2,400)
(iv) Rent paid
` 1,000 and rent outstanding  ` 200

 S. No. Transactions Assets = Liabilities + Capital Cash ( `) + Stock ( `) = Creditors ( `) + Outstanding Rent ( `) ( `) (i) Harish started business with cash 18,000 = 18,000 18,000 = 18,000 (ii) Purchased goods for Cash  ` 5,000 and on credit  ` 2,000 – 5,000 + 7,000 = 2,000 13,000 + 7,000 = 2,000 + 18,000 (iii) Sold goods for cash  ` 4,000 costing  ` 2,400 4,000 – 2,400 = 1,600 (Profit) 17,000 + 4,600 = 2,000 + 19,600 (iv) Rent paid  ` 1,000 and Rent Outstanding  ` 200 – 1,000 = 200 – 1,200 16,000 + 4,600 = 2,000 + 200 + 18,400

 Assets = 16,000 + 4,600 = ` 20,600 Liabilities = 2,000 + 200 = ` 2,200 Capital = ` 18,400

Class : 11th  Ts grewal solution 2022-2023

Chapter 5: Accounting equation

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#### Question no. 1 to 4

Question no. 5 to 8

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Question no. 17 to 20

Question no. 21 to 24

Question no. 25 And 26