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1.

Which of the following equations is correct ?A. Assests + Capital = LiabilitiesB. Assets- Liabilities = CapitalC. Assets + Liabilities = CapitalD. None of these.

Answer» Correct Answer - B
Discussion
2.

The liabilities of a firm are 3,000, the capital of the proprietor is 7,000. The total assets are :A. ₹7,000.B. ₹10,000C. ₹4,000D. None of these.

Answer» Correct Answer - B
₹10,000
Discussion
3.

Which of the following is correct ?A. `{:(,"Assets",,"Liabilities",,"Capital"),((a),"₹ 785000",,"₹ 125000",,"₹ 660000"):}`B. `{:(,"Assets",,"Liabilities",,"Capital"),((b),"₹ 820000",,"₹ 280000",,"₹ 1100000"):}`C. `{:(,"Assets",,"Liabilities",,"Capital"),((c),"₹ 955000",,"₹ 115000",,"₹ 820000"):}`D. `{:(,"Assets",,"Liabilities",,"Capital"),((d),"₹ 542000",,"₹ 654000",,"₹ 112000"):}`

Answer» Correct Answer - A
Discussion
4.

Decrease in one liability may lead toA. Decrease in an asset.B. Increase in another liability.C. Either (a) or (b).D. None of these.

Answer» Correct Answer - C
Either (a) or (b).
Discussion
5.

Amount withdrawn by proprietor for personal use will ... Cash and Capital.A. Increase.B. Decrease.C. Not Change.D. None of these.

Answer» Correct Answer - B
Discussion
6.

An increase in one asset is accompanied byA. Decrease in another asset.B. increase in a liability.C. Increase in capital.D. All of these.

Answer» Correct Answer - D
Discussion
7.

Purchase of furniture on credit meansA. Decrease in asset and increase in liability.B. Increase in asset and increase in liability.C. Increase in asset and decrease in liabilityD. Decrease in asset and decrease in liability.

Answer» Correct Answer - B
Discussion
8.

Payment to a creditor meansA. Incrcase in asset and decrease in liability.B. Decrease in asset and decrease in liability.C. Decrease in asset and increase in lhability.D. Increase in asset and increase in liability

Answer» Correct Answer - B
Discussion
9.

Purchase of machina by cash meansA. Decrease in asset and decrease in liability.B. Increase in asset and decrease in asset.C. Increase in asset and decrease in liability.D. Decrease in asset and increase in capital.

Answer» Correct Answer - B
Discussion
10.

Decrease in one liability may lead toA. Decrease in an asset.B. Increase in another liability.C. Either (c) or (b).D. None of these.

Answer» Correct Answer - C
Discussion
11.

Do you think that a transcation can break the Acounting Equation?

Answer» No, a transactions can only change the Accounting Equations but cannot break it.
Discussion
12.

If the capital of a business is ₹70,000 and liabilietes are of ₹40,000 calculate the total assets.

Answer» Total Assets = Capital + Liabilities
₹70,00 + ₹40,00 = ₹1,10,00
Discussion
13.

Goods costing ₹10,000 have been sold for cash at 25% profit . How will the transaciton be shown in the Accounting Equation?

Answer» Increase cah by ₹12,500, Decrease stock ₹10,000, and Increase capital by ₹2,500.
Discussion
14.

A commenced his cloth business on 1st April , 2018 with a capital of ₹30,000. On 31st March 2019, his assets were worth ₹50,000 and liabilites of ₹10,000. find out his closing capital and profits eraned during the year.

Answer» Total Assets = Capital + Liabilities
₹50,000 = Capital + ₹10,000
Closing Capital = ₹ 50,000 = Capital = ₹50,000 - ₹10,000= ₹40,000
Profit = Closing Capital - Opening Capital.
= ₹40,000 - ₹30,000 = ₹10,000.
Discussion
15.

If the capital of a business is ₹70,000 and liabilietes are of ₹40,000 calculate the total assets.

Answer» Total Assets = Capital + Liabilities
₹70,00 + ₹40,00 = ₹1,10,00
Discussion
16.

The Capital of a business is ₹2,00,000 and outside liabilities are ₹1,50,000. Calculate the total assets of a business.

Answer» ₹3,50,000 ( Capital + Outside Liabilities =Total Assets -Capital).
Discussion
17.

From the following information, calculate the total assets of the business: Capital ₹4,00,000, Creditors ₹3,00,000, Revenue earned during the period ₹7,50,000 Expenses incurred during the period ₹2,00,000, Value of unsold stock ₹2,00,000.

Answer» Total Assets = Liabilites (Crediters) + Capital +Profit
= ₹3,00,00 + ₹4,00,000 + ₹5,50,000 (i.e., ₹ 7,50, 000 - ₹ 2,00,000)
`= ₹ 12,50,000 (including ₹2,00,000 Closing Stock).
Discussion
18.

Show the effect of the following transactions and also prepare a Blacance Sheet : (i) Started business with ₹60,000. (ii) Rent recevied ₹2,000. (iii) Accrued interest ₹500. (iv) Commission received in advance ₹ 1,000. (v) Amount withdrawn ₹5,000.

Answer» Correct Answer - Assets: Cash ₹58,000 + Accrued interest ₹ 500 = Liabilites : Commission Recevied in Adavnce ₹ 1,000 + Capital : ₹ 57,500.
Capital = Opening Capital ₹ 60,000 + Rent Received ₹ 2,000 + Accrued Interest ₹ 500 - Drawing ₹ 5,000 = ₹57,500.
Discussion
19.

The Capital of a business is ₹2,00,000 and outside liabilities are ₹1,50,000. Calculate the total assets of a business.

Answer» ₹3,50,000 ( Capital + Outside Liabilities =Total Assets -Capital).
Discussion
20.

How are the following items dealt in Accounting Equation ? (i) Interest due but not received ₹500. (ii) Rent received in a dvance ₹1,000 (iii) Isurance premium paid in advance ₹1,500. (iv) Salaries due to not paid ₹2,000.

Answer» (i) Interest due but not recived shall be added to assest on one side and to the capital on other side.
(ii) It will increase cash on the assets side and increase the liabilities.
(iii) It will decrease one assets ( cash) and increase another assets (Prepaid insurance).
(iv) Salary being an expense will be deducted from the capital and being unpaid will be added to liabilities.
Discussion
21.

Japal has purchased a car for ₹5,00,000 which he get financed form a Bank to the extent of ₹4,00,000.How will it be shown in the accouding equation?

Answer» ₹ 1,00,000 will be deducted form Asset (Cash/Bank) , Assest (Car) will be shown at ₹ 5,00,000 and Bank Loan (on the Liabilities side) Will be be shown at ₹ 4,00,000.
Discussion
22.

If the total assets of a business are ₹1,30,000 and capital is ₹80,000, calculate the outside liabilities.

Answer» ₹50,000(Outside Liabilities = Total Assets - Capital)
Discussion
23.

Show the effect of the following transactions and also prepare a Blacance Sheet : (i) Started business with ₹60,000. (ii) Rent recevied ₹2,000. (iii) Accrued interest ₹500. (iv) Commission received in advance ₹ 1,000. (v) Amount withdrawn ₹5,000.

Answer» Correct Answer - Assets: Cash ₹58,000 + Accrued interest ₹ 500 = Liabilites : Commission Recevied in Adavnce ₹ 1,000 + Capital : ₹ 57,500.
Capital = Opening Capital ₹ 60,000 + Rent Received ₹ 2,000 + Accrued Interest ₹ 500 - Drawing ₹ 5,000 = ₹57,500.
Discussion
24.

Amit has incurred an expense of ₹5,000 towards repairs. However, the amount is yet to be paid. How will it be shown in the accountaing equition ?

Answer» It is an outstanding expense. It will be shown in the accounting equation as deduction form capital and as an Outstanding Expense on the Liabilitie side .
Discussion
25.

Amit has incurred an expense of ₹5,000 towards repairs. However, the amount is yet to be paid. How will it be shown in the accountaing equition ?

Answer» It is an outstanding expense. It will be shown in the accounting equation as deduction form capital and as an Outstanding Expense on the Liabilitie side .
Discussion