1

Accounting Equations

Assets = Liabilities + Capital

Solution 1

Accounting Equation

Particulars Assets Liabilities + Capital

Cash Stock/ Furniture Bank Creditors Capital
Goods Balance (Mr. X)
1. Started business with cash 80,000 ------ ------ ------ ------ 80,000
2. Purchased goods on cash (20,000) 20,000 ------ ------ ------ ------
3. Purchased goods on credit (X) ------ 15,000 ------ ------ 15,000 ------
4. Purchased furniture (Cash) (5,000) ------ 5,000 ------ ------ ------
5. Paid Rent (500) ------ ------ ------ ------ (500)
6. Paid Salaries (2,000) ------ ------ ------ ------ (2,000)
7. Deposited in bank (20,000) ------ ------ 20,000 ------ ------
8. Paid X by cheque ------ ------ ------ (10,000) (10,000) ------
9. Withdrawn money for private use (2,000) ------ ------ ------ ------ (2,000)
10. Paid telephone bills by cheque ------ ------ ------ (1,000) ------ (1,000)
Net Equation 30,500 35,000 5,000 9,000 5,000 74,500

Balance Sheet

Liabilities Amount (Rs.) Assets Amount (Rs.)

Capital 74,500 Furniture 5,000
Creditors (Mr. X) 5,000 Stock of Goods 35,000
Bank Balance 9,000
Cash 30,500
Total 79,500 Total 79,500

Solution 2

Accounting Equation

Particulars Assets Liabilities + Capital

Cash Stock/ Machinery Creditors Capital
Goods (Goods)
1. Started business with cash 70,000 ------ ------ ------ 70,000
2. Purchased goods on credit ------ 18,000 ------ 18,000 ------
3. Purchased Machinery (20,000) ------ 20,000 ------ ------
4. Payment made to creditors in full (17,500) ------ ------ (18,000) 500
Settlement
5. Depreciation on machinery ------ ------ (2,000) ------ (2,000)
Net Equation 32,500 18,000 18,000 Nil 68,500

Balance Sheet

Liabilities Amount (Rs.) Assets Amount (Rs.)

Capital 68,500 Machinery 18,000
Stock of Goods 18,000
Cash 32,500
Total 68,500 Total 68,500

Solution 3

Accounting Equation

HIMANSHU DALANIA 9268216826

2

Particulars Assets Liabilities + Capital

Cash Stock/ Advance Outstanding Creditors Capital
Goods Rent Salary (Goods)
1. Commenced business with cash 60,000 ------ ------ ------ ------ 60,000
2. Paid rent in advance (500) ------ 500 ------ ------ ------
3. Purchased goods for cash and credit (30,000) 50,000 ------ ------ 20,000 ------
4. Sold goods for cash 30,000 (20,000) ------ ------ ------ 10,000
5. Paid Salary and Outstanding salary (500) ------ ------ 100 ------ (600)
6. Bought motor cycle for personal use (5,000) ------ ------ ------ ------ (5,000)
Net Equation 54,000 30,000 500 100 20,000 64,400

Balance Sheet

Liabilities Amount (Rs.) Assets Amount (Rs.)

Capital 64,400 Stock of Goods 30,000
Creditors for Goods 20,000 Advance Rent 500
Outstanding Salaries 100 Cash 54,000
Total 84,500 Total 84,500

Solution 4

Accounting Equation

Particulars Assets Liabilities + Capital

Cash Stock/ Furniture Building Outstanding Creditors Creditors Capital
Goods Rent (Goods) (Furniture)
1. Commenced 50,000 ------ ------ ------ ------ ------ ------ 50,000
business with cash
2. Purchased goods (20,000) 50,000 ------ ------ ------ 30,000 ------ ------
for cash and credit
3. Sold goods for cash 40,000 (30,000) ------ ------ ------ ------ ------ 10,000
4. Rent paid and (500) ------ ------ ------ 100 ------ ------ (600)
Outstanding Rent
5. Bought furniture ------ ------ 5,000 ------ ------ ------ 5,000 ------
on credit
6. Bought (5,000) ------ ------ ------ ------ ------ ------ (5,000)
Refrigerator for
personal use
7. Purchase Building (20,000) ------ ------ 20,000 ------ ------ ------ ------
for cash
Net Equation 44,500 20,000 5,000 20,000 100 30,000 5,000 54,400

Balance Sheet

Liabilities Amount (Rs.) Assets Amount (Rs.)

Capital 54,400 Building 20,000
Creditors for Goods 30,000 Furniture 5,000
Creditors for Furniture 5,000 Stock of Goods 20,000
Outstanding Rent 100 Cash 44,500
Total 89,500 Total 89,500

HIMANSHU DALANIA 9268216826