# Practical Questions

Accounting Equation

Rule: Assets= Capital + Liabilities

Practical Questions

1.    Started business with cash and bank balance Rs. 1,00,000 and Rs. 50,000  respectively.

2.    Goods costing Rs. 10,000 sold for Rs. 12,000 on credit.

3.    Goods purchased on credit Rs. 5,000.

4.    Received from debtor Rs. 11,800 in full settlement.

5.    Paid to creditor Rs. 4,700 in full settlement.

6.    Loan taken from Everest bank limited Rs. 20,000.

7.    Rent paid rs. 12,000 including pre-paid Rs. 2,000.

9.     Furniture costing rs. 1,500 sold for rs. 1,200 on credit.

10.    Machinery costing rs. 5,000 destroyed by fire and Insurance Company admitted claim rs. 3,000.

11.    Interest on loan paid rs. 1,800 and still payable rs. 200.

12.   Donation paid rs. 1,000.

13. Rent received rs. 2,000 and still receivable rs. 200.

Accounting Equation                          5 marks

 SN Transaction Asset Capital Liabilities 1 Started business with cash and bank balance 1,00,000 cash 50,000 bank balance 1,50,000 0 Starting Equation 1,50,000 = 1,50,000 + 0 2 Goods sold on credit with profit 12,000 debtor (10,000) goods 2000 (profit) 0 New Equation 1,52,000 = 1,52,000 + 0 3 Goods purchased on credit 5000 Goods 5000 (creditor) New Equation 1,57,000 = 1,52,000 + 1,57,000 4. Received from debtor in full settlement 11,800 cash (12,000) debtor -200 (discount allowed) 5,000 New equation 1,56,800 = 1,51,800 + 5,000 5. Paid to creditor in full settlement (4,700) cash 300 (discount received) 0 New Equation 1,52,100 = 1,52,100 + 0 6 Loan taken from everest bank limited 20,000 cash 0 20,000 New Equation 1,72,100 = 1,52,100 + 20,000 7 Rent paid including prepaid (10,000) cash (2,000) prepaid rent (12,000) expenses 0 New Equation 1,60,100 = 1,40,100 + 20,000 8 Commission received including advance 6,000 cash 5,000 (income) 1,000 New Equation 1,66,100 = 1,45,100 + 21,000 9 Furniture sold on loss 1200 cash (1500) furniture (300) loss 0 New Equation 1,65,800 = 1,44,800 + 21,000 10 Machinery destroyed by fire and insurance co. admitted claim partially 3,000 (insurance co.) (5,000) machinery (2,000) loss 0 New Equation 1,63,800 = 1,42,800 + 21,000 11 Interest on load paid and still payable (1800) cash (2000) interest 200 New Equation 1,62,000 = 1,40,800 21,200 12 Donation Paid (1000) cash (1000) expenses 0 New Equation 1,61,000 = 1,39,800 + 21,200 13 Rent received and still receivable 2,000 cash 200 receivable 2,200 (income) 0 Final Equation 1,63,200 = 1,42,000 + 21,200
Therefore, Assets= 1,63,200 , Capital=1,42,000 and Liabilities= 21,200.