Q1. What will be effect of the following on the Accounting Equation?
- Started business with cash Rs. 45,000
- Opened a bank account with a deposit of Rs. 4,500
- Purchase goods from M/s. Sun & Co. for Rs. 11,200
Ans –
Assets = Liabilities + capital
(Cash+bank+stock) = (creditors) + capital
40,500+45, 00+11,200 = 11,200 + 45,000
56,200 = 56,200
Q2. Show the Accounting Equation for the following Transaction:
- Gopinath started business with cash 25,000
- Purchased goods from Shyam 10,000
- Sold goods to Sohan costing Rs. 1,800 1,500
- Gopinath Withdrew from Business 5,000
Ans –
Assets = Liabilities + capital
(Cash+bank+Debtors) = (creditors) + capital
20,000+8,200+1,500 = 10,000 + 19,700
29,700 = 29,700
Q3. Prepare an Accounting Equation and Balance Sheet on the following basis:
- Gurman started business with cash Rs. 20,000.
- He purchased furniture for Rs. 2,000.
- He paid rent of Rs. 200.
- He purchased goods on credit Rs. 3,000
- He sold goods (cost price Rs. 2,000) for Rs. 5,000 on cash.
Ans –
Assets = Liabilities + capital
(Cash+furniture+stock) = (creditors) + capital
22,800+2,000+1,000 = 3,000 + 22,800
25,800 = 25,800
Q4. Prepare Accounting Equation from the following:
- Started business with cash Rs. 1, 00,000 and Goods Rs. 20, 000.
- Sold goods worth Rs. 10,000 for cash Rs. 12,000.
- Purchased furniture on credit for Rs. 30,000.
Ans –
Assets = Liabilities + capital
(Cash+Stock+Furniture) = (creditors) + capital
1, 12,000+10,000+30,000 = 30,000 + 1, 22,000
1, 52,000 = 1, 52,000
Q5. Develop an Accounting Equation from the following transactions:
- Mohan commenced business with cash 50,000
- Purchased goods for cash 30,000
- Purchased goods on credit 20,000
- Sold goods (costing Rs. 10,000) for 12,000
- Bought furniture on credit 2,000
- Paid cash to a creditor 15,000
- Salary paid 1,000
Ans –
Assets = Liabilities + capital
(Cash+Stock+Furniture) = (creditors) + capital
16,000+40,000+2,000 = 7,000 + 51,000
58,000 = 58,000
Q6. Prepare an Accounting Equation on the basis of the following transaction:
- Started business with cash Rs. 70,000.
- Credit purchase of goods Rs. 18,000.
- Payment made to creditors in full settlement Rs. 17,500.
- Purchase of machinery for cash Rs. 20,000.
- Depreciation on machinery Rs. 2,000.
Ans –
Assets = Liabilities + capital
(Cash+Stock+Machinery) = + capital
32,500+18,000+18,000 = 68,500
68,500 = 68,500
Q7. Show the effect of the following transactions on the Accounting Equation:
- Started business with cash Rs. 50,000.
- Salaries paid Rs. 2,000.
- Wages outstanding Rs. 200.
- Interest due but not paid Rs. 100.
- Rent paid in advance Rs. 150.
Ans –
Assets = Liabilities + capital
(Cash+Advances expenses) = (Outstanding Expenses) + Capital
(47,850+150) = 300 + 47,700
48,000 = 48,000
Q8. What will be the effect of the following on the Accounting Equation?
- Harish started business with cash Rs. 18,000.
- Purchased goods for cash Rs. 5,000 and on credit Rs. 2,000.
- Sold goods for cash Rs. 4,000 (costing Rs. 2,400)
- Rent paid Rs. 1,000 and rent outstanding Rs. 200.
Ans –
Assets = Liabilities + capital
(Cash+Stock) = (Creditors+Outstanding Rent) + capital
(16,000+4,600) = (2,000+200) + 18,400
20,600 = 20,600
Q9. Use accounting equation to show the effect of the following transactions of M/s Royal Traders:
- Started business with cash Rs. 1, 20,000.
- Purchased goods for cash Rs. 10,000.
- Rent received Rs. 5,000.
- Salary outstanding Rs. 2,000.
- Sold goods for cash (costing Rs. 5,000) Rs. 7,000.
- Goods destroyed by fire Rs. 500.
Ans –
Assets = Liabilities + capital
(Cash+Stock) = Outstanding Salary + capital
(1, 22,000+4,500) = 2,000 + 1, 24,500
1, 26,500 = 1, 26,500
Q-10 . Show the effect of the following transaction and also prepare a Balance sheet:
- Started business with cash rs. 60,000.
- Rent received rs. 2,000
- Accrued interest rs. 500.
- Commission Received in advance rs. 1,000.
- Amount withdrawn rs. 5,000.
Ans –
Assets = Liabilities + capital
(Cash+Accrued interest) = Advance Commission + capital
(58,000+500) = 1,000 + 57,500
58,500 = 58,500
Balance Sheet
| Liabilities | Amount | Assets | Amount |
| Capital | 57,500 | Cash | 58,000 |
| Advance commission | 1,000 | Accrued interest | 500 |
| 58,500 | 58,500 |
Q11. Prove that the accounting equation is satisfied in all the following transactions of Suresh. Also prepare a Balance Sheet.
- Commenced business with cash Rs. 60,000.
- Paid rent in advance Rs. 500
- Purchased goods for cash Rs. 30,000 and credit Rs. 20,000.
- Sold goods for cash Rs. 30,000 costing Rs. 20,000.
- Paid salary Rs. 500 and salary outstanding being Rs. 100.
- Bought motorcycle for personal use Rs. 5,000.
Ans –
Assets = Liabilities + capital
(Cash+Advance rent +Stock) = (Creditor +Outstanding Salary) + capital
(54,000+500+30,000) = (20,000+100) + 64,400
84,500 = 84,500
Balance Sheet
Q12.Raghunath had the following transaction in an accounting year:
- Commenced business with cash rs. 50,000.
- Paid into bank rs.10, 000.
- Purchased goods for cash rs.20, 000 and credit rs. 30,000.
- Sold goods for cash rs.30, 000 costing rs. 40,000.
- Rent paid rs. 500.
- Rent outstanding rs. 100.
- Bought furniture rs. 5,000 on credit.
- Bought refrigerator for personal use rs. 5,000.
- Purchased motorcycle for cash rs. 20,000.
Create an Accounting Equation to show the effect of the above and also show his Balance sheet.
Ans –
Assets = Liabilities + capital
(Cash+Bank+Stock+Furniture+ = (Creditor+Outstanding + capital
Motorcycle) = Rent)
(34,500+10,000+20,000+ = (35,000+100) + 54,400
5,000+20,000)
89,500 = 89,500
Q13. Prepare an accounting Equation from the following:
- Started business with cash rs. 50,000 and goods rs. 30,000.
- Purchased goods for cash rs.30, 000 and on credit from karan rs.20, 000.
- Goods costing rs.40, 000 were sold for rs.55, 000.
- Withdrew cash for personal use rs. 10,000.
- Rent outstanding rs. 2,000.
Ans –
Assets = Liabilities + capital
(Cash +Stock) = (Creditor +Outstanding Rent) + capital
(65,000+40,000) = (20,000+2,000) + 83,000
1, 05,000 = 1, 05,000
Q14. Show an Accounting Equation for the following transaction:
- D.Mahapatra commenced business with cash rs. 50,000 and rs. 1, 00,000 by cheque; goods rs. 60,000; machinery rs.1, 00,000 and furniture rs. 50,000.
- 1/3rd of the above goods sold at a profit of 10% on cost and half of the payment is received in cash.
- Depreciation on machinery provided @ 10%.
- Cash withdraw for personal use rs. 10,000.
- Interest on drawing charged @ 5%.
- Sold goods for Cash Rs.10,000 at par.
Ans.
Assets = Liabilities + capital
(Cash +Bank+Stock+Machinery+ = Creditor + capital
Furniture+Debtors+Bill receivable)
(61,000+1, 00,000+30,000+90,000 = 3, 42,000
+50,000+11,000)
3, 42,000 = 3, 42,000
Q15. Show an Accounting Equation on the basis of the following transaction:
- Sunil started business with cash 1,50,000
- Opened a Bank Account by depositing rs. 25,000 out of cash
- He sold his personal car for rs. 50,000 and depositing the amount in firm’s Bank Account.
- He purchased a building and furniture for 1,00,000
- He purchased goods from Ram on credit 50,000
- He paid cartage 500
- He sold to Shyam on credit goods costing rs. 6,000 for 9,000
- Received rent from tenants 1,000
- Received security deposit from tenants 1,500
- Purchased stationery for cash 100
- Invested in shares (personal) 50,000
- Received interest in cash 200
- Introduced fresh capital 25,000
- Goods destroyed by fire 500
Ans –
Assets = Liabilities + capital
(Cash +Bank+Building& Furniture = (Creditor + Security Deposit) + capital
+Stock+Debtors)
(52,100+25,000+1, 00,000 = (50,000+1,500) + 1, 78,100
+43,500+9,000)
2, 29,600 = 51,500 + 1, 78,100
2, 29,600 = 2, 29,600
Calculation of total assets opening and closing capital profit and loss and external equities
Q16. If the capital of a business is rs. 3, 00,000 and liabilities are rs. 50,000, loss rs. 70,000 calculate the total assets of the business.
Ans –
Total Assets will be RS. 2, 80,000
Q17. If total assets of a business are rs. 1, 30,000 and net worth is rs. 80,000 calculate the creditors.
Ans.
Total Assets will be RS. 50,000
Q18. A commenced his cloth business on 1st April, 2025 with a capital of rs. 30,000. On 31st March 2026, his assets were worth rs. 50, 000 and liabilities of rs. 10,000. Find out his closing capital and profit earned during the year.
Ans.
Net Profit Will Be RS. 10,000
Q19. Calculate the total assets if:
- Capital is rs. 40,000.
- Creditors are rs. 25,000.
- Revenue during the period is rs. 50,000.
- Expenses during the period are rs. 40,000.
Ans –
Total Assets Will Be RS. 75,000
Q-20 a) Gurman had a capital of 75,000 on 1st April, 2024. He had also goods amounting to * 15,000 which he had purchased on credit and the payment had not been made. Find the value of the total assets of the business.
(b) He incurred loss of ₹ 1,700. He withdrew₹800 for his personal use. Find his capital and assets of the business.
Ans.
(a)Accounting equation
Assets=capital +liabilities
75000+15000
90,000
(b)
Loss =1700
Drawing= 800
Closing capital=op. capital+ additional capital+ profit-loss-drawing
75000-1700-800
72500
Assets= capital +liabilities
72500+15000
87500
Q-21 Pranav started business on 1st April, 2025 with capital of ₹5,50, 000. On 31st March, 2026, his total assets were₹10,75,000 and liabilities were ₹2,92,500. Calculate the amount by which his capital has increased as on 31st March, 2026.
Ans.
Capital=total assets-liabilities
1075000-292500
782500
Additional capital=closing capital-op. capital
7,82,500-550,000
2,32,500
Q22. (A) Mohan started a business on 1st April, 2025 with a capital of rs. 10,000 and borrowed rs. 3000 from a friend. He earned a profit of rs. 5,000 during the year ended 31st March, 2026 and withdrew cash rs. 4,000 for personal use. What is his capital on 31st March, 2026?
(B) Mahesh Started a business with a capital of rs. 15,000 on 1st April, 2025. During the year, he made a profit of rs. 3,000. He owes rs 2,500 to suppliers of goods. What is the total of assets in his business on 31st March, 2026?
Ans –
Total Assets on 31st March 2026 = 20,500
Q23. On 31st March, 2026, the total assets and external liabilities were rs. 2, 00,000 and rs. 6,000 respectively. During the year, the proprietor had introduced capital of rs. 20,000 and withdrawn rs. 12,000 for personal use. He made a profit of rs. 20,000 during the year. Calculate the capital as on 1st April, 2025.
Ans –
Capital as on March 31st, 2026 = 1, 94,000
Capital As On April 1st 2025 = 1, 66,000
Q24. Mohan started a business on 1st April, 2025 with a capital of rs. 25,000 and a loan of rs. 12,500 borrowed from Shyam. During 2025-26, he had introduced additional capital of 12,500 and had withdrawn rs. 75, 000 for personal use. On 31st March, 2026, his assets were 75,000. Find out his capital as on 31st March, 2026 and profit made or loss incurred during the year 2025-26
Ans –
Profit during the Year 2025-26 = 32,500
Q26. Calculate the Amount Of external Equities as on 31st March, 2026 in the following cases:
- On 31st March, 2026 total assets and capital were rs. 15, 00,000 and rs. 10, 50,000 respectively.
- On 1st April, 2025, Mukesh Started business with a capital of 3, 00,000 and a loan of Rs. 3, 00,000 borrowed from a friend. During the year, he earned a profit of Rs. 1, 50,000. On 31st March, 2026, the total assets were Rs. 15,00,000
- On 1st April, 2026, Ramesh started business with a capital of rs. 3, 00,000 and a loan of Rs. 3, 00,000 borrowed from a fixed. During the year, he earned a profit of Rs. 1, 50,000, introduced an additional capital of Rs. 1, 80,000 and had withdrawn rs. 90,000 for his personal use. On 31st March, 2026 total assets were rs. 15,00,000.
Ans –
- Liabilities = Assets – Capital
= 15, 00,000 – 10, 50,000
= 4, 50,000
- Closing Capital = Opening Capital + Additional Capital + Profit – Drawings
= 3, 00,000 + 0 + 1, 50,000 – 0
= 4, 50,000
Liabilities = Assets – Capital
= 15, 00,000 – 4, 50,000
= 10, 50,000
- Closing Capital = Opening Capital + Additional Capital + Profit – Drawings
= 3, 00,000, + 1, 80,000 + 1, 50,000 – 90,000
= 5, 40,000
Liabilities = Assets – Capital
= 15, 00,000 – 5, 40,000
= 9, 60,000
