Answer :1.

Accounting Equation

. .. . Assets = Liability +Capital

Transactions Bank + Stock + F.D = Creditor + Capital

I. Introduced 5 5,00,000 + 0+ 0= 0+ 5,00,000

lakh through a
cheque in a
business
II. Purchase
goods on
credit 0+ 40,000 + 0= 40,000 + 0

5,00,000 + 40,000 + 0= 40,000+ 5,00,000

III. Paid 10,000 as

salary (10,000) + 0+ 0= 0+ (10,000)

4,90,000+ 40,000+ 0= 40,000+ 4,90,000

IV. Invest 2,00,000

in fixed
deposite
account (2,00,000)+ 0+ 2,00,000= 0+ 0

2,90,000+ 40,000 2,00,000= 40,000+ 4,90,000

V. Paid 25,000 0=
fee of kids (25,000) + 0+ 0+ (25,000)

265,000+ 40,000+ 2,00,000= 40,000+ 4,65,000

Answer 2 -- Financial accounting is the field of accounting mainly focused on Summary,

analysis and reporting of Financial Transactions related to the business which involves the
preparation of financial statements available for public use. Several terms are used in
accounting, below are some examples;

1)Accounts Payable- Accounts payable is the money a business owes to its suppliers,
vendors, or creditors for goods or services bought on credit. A short-term debt that must be paid
back quickly to avoid default, accounts payable shows up as a liability on an organization's
balance sheet. An example of accounts payable includes when a restaurant receives a meat
order on credit from an outside supplier.

2)Accounts Receivable- Accounts receivable is the money owed to a business, typically by its
customers, for goods or services delivered. An example of accounts receivable is when a meat
supplier delivers meat order on credit to a restaurant. While the restaurant records that
transaction to accounts payable, the meat supplier records it to accounts receivable and a
current asset in its balance sheet.

3) Dividends- Dividends include company earnings, or profit, which a business pays to its
shareholders as a reward for their investment in its equity. Companies may distribute dividends
as cash or additional shares of stock. Shareholders may receive regularly scheduled or special
one-time dividends. Exchange-traded funds and mutual funds also pay dividends.

4) Assets- Assets are resources with economic value which companies expect to provide future
benefits. These can reduce expenses, generate cash flow, or improve sales for businesses.
Companies report assets on their balance sheets. Types of assets include fixed, current, liquid,
and prepaid expenses. Assets may include long-term resources like buildings and equipment.
Current assets include all assets a company expects to use or sell within one year. Liquid
assets can easily convert to cash in a short time-frame. Prepaid expenses include advance
payments for goods or services a company will use in the future.

5) Balance Sheet- Balance sheets are financial statements providing snapshots of

organizations' liabilities, assets, and shareholders' equity at specific moments in time. Balance
sheets represent one type of financial statement used to evaluate companies' financial health
and worth. Accountants use the accounting equation to create balance sheets; 'Assets =
Liabilities + Equity!'

Answer:3 (a)
(i)Total purchases= closing stock- Opening stock +cost of goods sold

70-40+580= 610

(ii) Credit purchases= creditor closing balance cash paid- opening creditor balance

= 100+45- 60= 85

(iii) Payment to creditor

= Cost of goods sold + increase in inventor- increase in accounts payable

 =580+ 30-40= 570

3(b):

(i) Net book value is the amount at which an organization records an asset in its accounting
records.

Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its

life.

NBV= 400-80= 320

Gain from sale=Cash proceeds(X)- (cost- accumulated depreciation)

50= X- (400-80)

50= X- 320

X= 370

Cash proceeds = 370