Question No 1 Chapter No 5 – T.S. Grewal 11 Class

Question No.1 - Chapter No.5- T.S. Grewal +1 Book 2019

Question No 1 Chapter No 5

  1. What will be effect of the following on the Accounting Equation?
    1. Started Business with cash 45,000
    2. Opened a bank account with a deposit of   4,500
    3. Bought goods from M/s Sun & Co. for 11,200

Solution of Question No 1 Chapter No 5: –

S. No.  Particulars Assets Liabilities Capital
Cash  +Bank +Stock +Creditors
1 Started Business with cash 45,000 45000 +45000
    45000 +45000
2 Opened a bank account with a deposit of  4,500 -4500 +4500
    40500 +4500 +45000
3 Bought goods from M/s Sun & Co. for 11,200 +11200 +11,200
  Total  40500 +4500 +11200 +11,200 +45000

Answer: –

Assets:  Cash 40,500 + Bank 4,500 + Stock 11,200 = 56,200/-

Liabilities : Creditors 11,200 , Capital 45,000.

Liabilities  +Capital

11,200 + 45,000 = 56,200/-

Explanation of All Transactions with images: –

This is not a part of the solution, So you don’t have to write it in the exam. So why we explained if it is not needed. Because This explanation will help you to understand all transactions with logic so don’t need to remember all the transactions but just understand and remember the logic use behind it.

Transaction No. 1 

Transaction No. 1 Question No.1 Chapter No.5 T.S. Grewal 1 Book 2019 1 - Question No 1 Chapter No 5 - T.S. Grewal 11 Class

Transaction No. 1 Question No.1 – Chapter No.5- T.S. Grewal +1 Book 2019

As we discuss in the previous topic, A owner and the business both have a separate identity in the eye of law. So, the business will be treated as an Artificial Person and anything invested by the owner into the business will be treated as capital.
So, In this transaction, as shown in the above image owner investing her cash into the business, this will be treated as capital of the business. The business receiving an asset i.e. cash.

Transaction No. 2 

Transaction No. 2 Question No.1 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 1 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 2 Question No.1 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image Business depositing its cash in the bank account, So, a new asset is created i.e. Bank and subtracted an amount from cash because cash going from the Business.

Transaction No. 3 

Transaction No. 3 Question No.1 Chapter No.5 T.S. Grewal 1 Book 2019 - Question No 1 Chapter No 5 - T.S. Grewal 11 Class
Transaction No. 3 Question No.1 – Chapter No.5- T.S. Grewal +1 Book 2019

In this transaction, as shown in the above image business brought goods from M/s Sun & co. So,the business received goods, a new asset is created i.e. Stock, but it is not clear about payment so, it will be treated as a credit transaction and M/s Sun & co. will be treated as our creditor(Liabilities) because the business will pay the due amount of it in near future. 

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