Decrease in one liability may lead to:
- ADecrease in an asset.
- BIncrease in another liability.
- ✓Either (a) or (b).
- DNone of these.
Answer: C.
View full solution →Question types
Accounting Equation question types
73 questions across 5 question groups — pick any mix to generate a Account paper with step-by-step answer keys.
73
Questions
5
Question groups
5
Question types
01
M.C.Q (1 Marks)
11 Q→021 Marks Question
37 Q→033 Marks Question
7 Q→044 Marks Question
4 Q→056 Marks Question
14 Q→Sample Questions
Accounting Equation questions
One sample from each question group in this chapter. Select any group above to see the full set with answer keys.
Which of the following is correct?
- ✓S.noAssetsLiabilitiesCapital(a)₹ 7,85,000₹ 1,25,000₹ 6,60,000
- B(b)₹ 8,20,000₹ 2,80,000₹ 11,00,000
- C(c)₹ 9,55,000₹ 1,15,000₹ 8,20,000
- D(d)₹ 5,42,000₹ 6,54,000₹ 1,12,000
Answer: A.
View full solution →The liabilities of a firm are 3,000; the capital of the proprietor is 7,000. The total assets are:
- A₹ 7,000
- ✓₹ 10,000
- C₹ 4,000
- DNone of these.
Answer: B.
View full solution →Purchase of furniture on credit means:
- ADecrease in asset and increase in liability.
- ✓Increase in asset and increase in liability.
- CIncrease in asset and decrease in liability.
- DDecrease in asset and decrease in liability.
Answer: B.
View full solution →$'X'$ commenced business on $1st$ April, $2013$ with a capital of ₹ $6,00,000$. On $31^{st}$ March, $2014$ his assets were worth ₹ $8,00,000$ and liabilities ₹ $50,000$. Find out his closing capital:
- ✓$₹ 7,50,000.$
- B$₹ 2,00,000.$
- C$₹ 5,50,000.$
- DNone of these.
Answer: A.
View full solution →Indicate how Accounting Equation is affected if payment is made to a creditor?
Give an example of decrease in an asset and decrease in a liability.
If capital of a business is ₹ 1,40,000 and liabilities are of ₹ 80,000, calculate the total assets of the business.
Which transaction decreases one asset and increases another asset?
Jaspal has purchased a car for 5,00,000 which he got financed from a Bank to the extent of 4,00,000. How will it be shown in the accounting equation?
Explain in short the meaning of an Accounting Equation.
Ram started business on $1st$ April, $2018$ with a Capital of ₹ $25,000$ and a loan of ₹ $12,500$. On $31^{st}$ March, $2019$, his assets were ₹ $50,000$. Find his capital as on $31^{st}$ March, $2019$ and the profit earned during the year.
View full solution →Prepare Accounting Equation from the following:
- Started business with cash ₹ 1,00,000 and Goods ₹
20,000. - Sold goods worth ₹ 10,000 for cash ₹ 12,000.
- Purchased furniture on credit for ₹ 30,000.
Prepare an Accounting Equation from the following:
- Started business with cash ₹ 1,00,000.
- Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000.
- Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000 both at a profit of 20%
Determine the missing amounts on the basis of the Accounting Equation:
|
S.no
|
Assets
|
=
|
Liabilities
|
+
|
Capital
|
|
(i)
|
₹ 20,000
|
=
|
₹ 15,000
|
+
|
?
|
|
(ii)
|
?
|
=
|
₹ 5,000
|
+
|
₹ 10,000
|
|
(iii)
|
₹ 10,000
|
=
|
?
|
+
|
₹ 8,000
|
Show the Accounting Equation for the following transactions:
| S.no | ₹ | |
| (i) | Gopinath started business with cash | 25,000 |
| (ii) | Purchased goods from Shyam | 10,000 |
| (iii) | Sold goods to Sohan costing ₹ 1,800 | 1,500 |
| (iv) | Gopinath withdrew from business | 5,000 |
- Mohan started a business on $1^{\text {st }}$ April, $2018$ with a capital of $₹ 10,000$ and borrowed $₹\ 3,000$ from a friend. He earned a profit of $₹\ 5,000$ during the year ended $31^{\text {st }}$ March, 2019 and withdrew cash $₹\ 4,000$ for personal use. What is his capital on $31^{\text {st }}$ March, $2019?$
- Mahesh started a business with a capital of $₹\ 15,000$ on $1^{\text {st }}$ April, $2018.$ During the year, he made a profit of $₹$ 3,000. He owes $₹\ 2,500$ to suppliers of goods. What is the total of assets in his business on $31^{\text {st }}$ March, $2019?$
What will be the effect of the following on the Accounting Equation?
- Harish started business with cash ₹ 18,000
- Purchased goods for Cash ₹ 5,000 and on credit ₹ 2,000
- Sold goods for cash ₹ 4,000 (costing ₹ 2,400)
- Rent paid ₹ 1,000 and rent outstanding ₹ 200
Prepare Accounting Equation from the following:
- Started business with cash ₹ 1,00,000.
- Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000.
- Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000 both at a profit of 20%.
- Paid salaries ₹ 8,000.
Prepare an Accounting Equation from the following:
- Started business with cash ₹ 50,000 and goods ₹ 30,000.
- Purchased goods for cash ₹ 30,000 and on credit from Karan ₹ 20,000.
- Goods costing ₹ 40,000 were sold for ₹ 55,000.
- Withdrew cash for personal use ₹ 10,000.
- Rent outstanding ₹ 2,000.
Show the effect of the following transactions and also prepare a Balance Sheet:
- Started business with cash ₹ 60,000.
- Rent received ₹ 2,000.
- Accrued interest ₹ 500.
- Commission received in advance ₹ 1,000.
- Amount withdrawn ₹ 5,000.
Prepare an Accounting Equation on the basis of the following transaction:
- Started business with cash ₹ 70,000.
- Credit purchase of goods ₹ 18,000.
- Payment made to creditors in full settlement ₹ 17,500.
- Purchase of machinery for cash ₹ 20,000.
- Depreciation on machinery ₹ 2,000.
Complete the following Accounting Equation by filling the missing amounts:
Prepare an Accounting Equation and Balance Sheet on the following basis:
- Ajeet started business with cash ₹ 20,000.
- He purchased furniture for ₹ 2,000.
- He paid rent of ₹ 200.
- He purchase goods on credit ₹ 3,000.
- He sold goods (cost price ₹ 2,000) for ₹ 5,000 on cash.
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