T.S. Grewal Double Entry Book Keeping Class 11 - 2025-2026 Solutions Chapter 5 - Accounting Equation

Question 1

What will be the effect on Accounting Equation in each of the following transactions?

1. Started business with cash ₹45,000.
2. Opened a Bank Account and deposited ₹4,500.
3. Bought goods from M/s. Sun & Co. on credit for ₹11,200.

Solution

Accounting Equation: Assets = Liabilities + Capital

Transactions	Assets (₹)			Liabilities (₹)	Capital (₹)
	Cash	Bank	Stock	Creditors	Capital
(i) Started business with cash ₹45,000	+45,000	–	–	–	+45,000
Balance	45,000	–	–	–	45,000
(ii) Deposited into Bank ₹4,500	−4,500	+4,500	–	–	–
Balance	40,500	4,500	–	–	45,000
(iii) Bought goods from M/s. Sun & Co. on credit ₹11,200	–	–	+11,200	+11,200	–
Balance	40,500	4,500	11,200	11,200	45,000
Total Assets = ₹56,200				Liabilities + Capital = ₹11,200 + ₹45,000 = ₹56,200

Assets (₹56,200) = Liabilities (₹11,200) + Capital (₹45,000) ✓