# Question No 3 Chapter No 5 – T.S. Grewal 11 Class

Question No 3 Chapter No 5

3. Show the Accounting Equation for the following transactions:

(i) Started business with cash Rs 50,000.

(ii) Salaries paid Rs 2,000.

(iii) Wages outstanding Rs 200.

(iv) Interest due but not paid Rs 100.

(v) Rent paid in advance Rs 150.

### Solution of Question No 3 Chapter No 5: –

 S. No. Particulars Assets Liabilities Capital Cash +Adv. Rent +Wages O/s +Interest O/s (i) Started business with cash Rs 50,000. +50,000 – – +50,000 50,000 – – +50,000 (ii) Salaries paid Rs 2,000. -2,000 – – -2,000 48,000 – – +48,000 (iii) Wages outstanding Rs 200. – – +200 -200 48,000 – 200 +47,800 (iv) Interest due but not paid Rs 100. – – – +100 -100 48,000 – 200 +47,700 (v) Rent paid in advance Rs 150. -150 +150 – – – Total 47,850 +150 +200 +100 +47,700

Assets:  Cash 47,850 + Advance Rent 150 = 48,000/-

Liabilities : Wages Outstanding 200 + Interest outstnding 100 = 300/-

Capital 47,700.

Liabilities  +Capital

10,000 + 19,700 = 48,000/-

### 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

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 i.e. cash.

#### Transaction No. 2

In this transaction, as shown in the above image

it will effected the two accounts i.e. cash and capital
Capital a/c:- because business get services from its employees and paid them for it. So this is expenses for the business. “ All expenses and losses are deducted from the amount of capital.

#### Transaction No. 3

In this transaction, as shown in the above image:

it will effected the two accounts i.e. O/S wages and capital
O/S Expenses A/c: – Business did not paid any cash yet but has to pay in, that’s why it become liability for business.
Capital a/c:- Business get services from its worker. So this is expenses for the business. “ All expenses and losses are deducted from the amount of capital.

#### Transaction No. 4

In this transaction, as shown in the above image:

It will effected the two accounts i.e. O/S Interest and capital
O/S Interest A/c: – Business did not paid any cash yet but has to pay in future, that’s why it become liability for business
Capital a/c:- Business get services from its worker. So this is expenses for the business. “ All expenses and losses are deducted from the amount of capital.

#### Transaction No. 5

In this transaction, as shown in the above image:

It will effected the two accounts i.e. Advance Rent and Cash
Advance Rent a/c : – Business paid rent in advance so till date this expense in not due, so till it become due business will treat it as an asset of the business.
Cash a/c:- Business paying cash so it will deducted.