Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation: (a) Started business with cash Rs. 1,20,000 (b) Rent received Rs. 10,000

admin December 25, 2021
Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation:

(a)Started business with cash₹ 1,20,000
(b)Rent received₹ 10,000
(c)Invested in shares₹ 50,000
(d)Received dividend₹ 5,000
(e)Purchase goods on credit from Ragani₹ 35,000
(f)Paid cash for household Expenses ₹ 7,000
(g)Sold goods for cash (costing ₹ 10,000)₹ 14,000
(h)Cash paid to Ragani₹ 35,000
(i)Deposited into bank₹ 20,000






S.NoExplanationAssetAssetAssetAssetLiabilitiesCapital
  Cash+Stock+Investment+Bank Creditors  
(a)Increase in cash1,20,000          
 Increase in capital          1,20,000
  1,20,000+=NIL+1,20,000
(b)Increase in cash10,000    
 Increase in capital (Income) =  10,000
  1,30,000=NIL+1,30,000
(c)Decrease in investment 50,000    
 Decrease in cash(50,000)=   
  80,000+50,000=NIL+1,30,000
(d)Increase in cash5,000    
 Increase in capital (Income)    5,000
  85,000+50,000=NIL+1,35,000
(e)Increase in stock 35,000    
 Increase in creditor (Ragani)  35,000  
  85,000+35,00050,000=35,000+1,35,000
(f)Decrease in capital    (7,000)
 Decrease in cash(7,000)    
  78,000+35,000+50,000 =35,000+1,28,000
(g)Increase in cash14,000     
 Decrease in stock (10,000)     
 Increase in capital (Profit)     4,000
  92,000+25,000+50,000 =35,000+1,32,000
(h)Decrease in creditors (Ragani)   (35,000)  
 Decrease in cash(35,000)     
  57,000+25000+50,000 =NIL+1,32,000
(i)Decrease in cash(20,000)     
 Increase in bank  20,000    
  37,000+25,000+50,000+20,000=NIL+1,32,000
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