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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Get complete step-by-step solutions for T.S. Grewal ISC Class 11 Accountancy - Chapter 6 - Accounting Equation. Study double-entry system details, practice timed problems, and verify answers directly.
Show the Accounting Equation on the basis of the following transactions:
(i) Gopinath started business with cash ₹ 25,000
(ii) Purchased goods from Shyam ₹ 10,000
(iii) Sold goods to Sohan costing ₹ 1,800 for ₹ 1,500
(iv) Gopinath withdrew from business ₹ 5,000
Note: Accounting Equation: Assets = Liabilities + Capital. A sale below cost is a loss, so Capital falls by ₹ 1,800 − ₹ 1,500 = ₹ 300.
| S.N. | Transaction | Assets | = Liabilities | + Capital | ||
|---|---|---|---|---|---|---|
| Cash | Stock | Debtors | Creditors | Capital | ||
| 1 | Gopinath started business with cash ₹ 25,000 Cash (asset) increases and Capital increases | (+) 25,000 | (+) 25,000 | |||
| New Equation | 25,000 | 0 | 0 | 0 | 25,000 | |
| 2 | Purchased goods from Shyam ₹ 10,000 Stock (asset) increases and Creditors (liability) increases | (+) 10,000 | (+) 10,000 | |||
| New Equation | 25,000 | 10,000 | 0 | 10,000 | 25,000 | |
| 3 | Sold goods to Sohan costing ₹ 1,800 for ₹ 1,500 Stock decreases by cost ₹ 1,800, Debtors increase by ₹ 1,500; the loss of ₹ 300 reduces Capital | (−) 1,800 | (+) 1,500 | (−) 300 | ||
| New Equation | 25,000 | 8,200 | 1,500 | 10,000 | 24,700 | |
| 4 | Gopinath withdrew from business ₹ 5,000 Cash decreases and Capital decreases | (−) 5,000 | (−) 5,000 | |||
| New Equation | 20,000 | 8,200 | 1,500 | 10,000 | 19,700 | |
Answer: Finally: Cash ₹ 20,000 + Stock ₹ 8,200 + Debtors ₹ 1,500 = ₹ 29,700 = Creditors ₹ 10,000 + Capital ₹ 19,700.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.