This page contains solutions to Bank Column Cash Book numerical questions and solutions for the chapter 4 Recording of Transactions – II. Download DK Goel Solutions Class 11 Accountancy Accounting Equations pdf, latest solutions for Accountancy latest book, Short Answer Question: Question 1. The owner's capital is the part of the accounting equation that represents the liquid cash that the company has earned, which it has on hand for daily operations as well as capital investments. Show the Accounting Equation on the basis of the following transactions and present a Balance sheet on the last new equation balance: Solution: Question 14. ii. assets, liabilities, and capital (or "equity"). (being cash withdrawn from bank ) 2) Withdrew cash For Personal use from office...same explanation as above...but since it is withdrawn for Personal use..we will call it as "d Drawings a/c".. which is an expense..and hence should be debited (check rules above).. Delete Prepare an Accounting Equation from the following: (i) Started business with cash ₹ 1,00,000. For a sole proprietorship accounting sample, suppose you have $15,000 in your business bank account. Let’s check the accounting equation: Assets $30,000 (Cash $16,000 + Equipment $5,500 + Truck $8,500) = Liabilities $0 + Equity $30,000. (a) Invested Rs. It is not an expense of the business. This entry will reduce the bank balance, hence, it should be shown in the bank column on the credit (payment) side of the cash book. ₹ ₹ (ii) Purchased goods for cash 30,000 and on credit from Karan 20,000. ... A new car was purchased for ₹ 6,00,000 for office use. On December 2, 2019 J. Ott withdraws $100 of cash from the business for his personal use. Metro purchased supplies on account from Office Lux for $500. Ans: Ques 14: Prepare an Accounting Equation from the following: (i) Started business with cash Rs 50,000 and goods Rs 30,000. Purchased supplies on account. Accounting is based on the principle of two-sided. office use. Q.15 Prepare an Accounting Equation from the following: (i) Started business with cash ₹ 50,000 and goods ₹ 30,000. Accounting equation describes that the total value of assets of a business is always equal to its liabilities plus owner’s equity. Bought buildings from Moses at 10 million, paid 2 million cash, 4 million by cheque and promised to pay the balance later. 20,000, the value of liability will be? 1,50,000 and the building worth Rs. 3, 50,000. Raghunath had the following transaction in an accounting year: i. Commenced business with cash Rs.50,000. The solution for this question is as follows: Balance sheet is prepared as follows. 2. 3. 4. The land was worth Rs. (ii) Purchased goods for cash ₹ 20,000 and on credit ₹ 30,000. 4. Q.15 Prepare an Accounting Equation from the following: (i) Started business with cash 50,000 and goods 30,000. (v) Interest on drawings charged @ 5%. Debit - Drawings a/c Drawings a/c represents the owner. Ques 2(b): Prove that the Accounting Equation is satisfied in all the following transactions of Rajaram. Invested ₹ 4,00,000 cash and office equipment with ₹ 1,50,000 in a business called Bobbie Consulting. You had an unexpected home repair so last month you withdrew cash for personal use, totaling $2,300, to pay for it. If you’re looking for solutions to other theoretical questions or other book related numerical questions solutions, you can find them at Create an Accounting Equation to show the effect of the above and also show his Balance Sheet. The Journal Entry will be.. Purchased goods from Rohit ₹ 50,000 c. Sold goods on credit to Manish (Costing ₹ 17,500) ₹ 20,000 d. Purchased furniture for office use ₹ 10,000 e. Cash paid to Rohit in full settlement ₹ 48,500 f. chapter accounting books and records the purpose of preparation of trading, profit and loss account and balance sheet to ascertain the profit or loss made Prepare the Vouchers to be recorded in the books of M/s Computer Aids: Affects only one account – Bank account. Accounting Equation Components Assets. Furniture +$1 000 Capital + $1 000 The owner withdrew cash of $500 for personal use Capital -$500 Drawings +$500 Cash - $500 Worked Example Note: 1. Started business with Cash ₹ 1,20,000. Q1 : Prepare accounting equation on the basis of the following: (a) Harsha started business with cash Rs 2,00,000 (b) Purchased goods from Naman for cash Rs 40,000 Transaction analysis: The new corporation purchased new asset (supplies) for $500 but will pay for them later. This mostly happens in small businesses where the owner manages the day to day operations. 1,50,000 in a business called Bobbie Consulting. (iii) Sold goods for cash costing ₹ 10,000 and on credit costing ₹ 15,000 both at a profit of 20%. Skip to primary navigation; ... Cash withdrawn for personal use ₹ 10,000. Other names used for accounting equation are balance sheet equation and fundamental or basic accounting equation. 8,00,000. Withdrawal of cash from bank If Withdrawal is for business use and not personal use > Cash a/c dr To bank a/c Cash comes in so debited Bank is the giver so credited This is also known as contra entry. Affects only one account - cash account. Accounting Equation Q1 . (vi) Accounting voucher for selling shirts for cash (vii) Accounting voucher for money withdrawn from bank for office use (viii) Accounting voucher for money withdrawn by cheque for personal use. Each transaction has at least 2 effects on the accounting equation. It provides the information relating to the amounts withdrawn by the owner or proprietor for personal use. Mohit has the following transactions, prepare the accounting equation: a. Cash purchases 2,500 Indo rupiah. If the assets of a business are Rs. An asset is a resource that is owned or controlled by the company to be used for future benefits. Credit Cash is withdrawn from the business and taken by the owner. Cheque received is equivalent to cash. No. (vii) Amount Withdrawn from the Bank for Personal Use: Amount withdrawn from the bank for personal use is regarded as drawings of the proprietor and therefore, this will not become contra entry. We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping. 4,00,000 cash and office equipment with Rs. Assets = Liabilities + Capital. Click here to learn more. Drawings Accounting Bookkeeping Entries Explained. Solution: Question 8. ₹ ₹ (iii) Goods costing 40,000 were sold for 55,000. When a business owner withdraws cash for personal use, these funds come out this capital account. Business started with cash ₹ 1,75,000 b. 2. 100,000 and equity is Rs. (ii) Purchased goods for cash Rs 30,000 and on credit from Karan Rs 20,000. Give two basic purposes of the accounting equation.Solution 1: The two basic purposes of the accounting equation are. Credit or decrease the cash account, and debit or increase the drawing account. Debit The withdrawal of cash by the owner for personal use is placed on a temporary drawings account and reduces the owners equity. The purchase price was price was paid with Rs. 2. ₹ (v) Rent outstanding 2,000. 3. No. Purchased goods for ₹ 50,000 for cash. Drawings of stock is also an accounting transaction and has to be brought into the books of accounts through a journal entry. Joseph started his business with his personal savings of 10 million shillings cash at hand and 20 million cash at bank. The Accounting Equation (i) The accounting equation is always equal from both sides debit and credit. The funds owned by the company are called assets.