Educationsolutionco accountancy class xi chapter 5

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ACCOUNTANCY CLASS XI CHAPTER-5 ACCOUNTING EQUATION Q.1. Do you think that a transaction can break the Accounting Equation ? Ans. No, a transaction can change the Accounting Equation but cannot break it. Q.2. Goods costing ₹ 10,000 have been sold for cash at 25% profit. How will you show the transaction in the Accounting Equation ? Ans. Increase cash by ₹ 12,500; Decrease stock by ₹ 10,000; and Increase capital by ₹ 2,500. Q.3. The capital of a business is ₹ 2,00,000 and outside liabilities are ₹ 1,50 ,000. Calculate the total assets of the business. Ans. 3,50,000 (Capital + Outside Liabilities = Assets). Q.4. If total assets of a business are ₹ 1,30,000 and capital is ₹ 80,000, calculate the outside liabilities. Ans. 50,000 (Liabilities = Total Assets Capital). Q.5. If total assets of the business are ₹ 4,50,000 and outside liabilities are ₹ 2,00,000, calculate owner’s equity. Ans. Assets = Owner’s Equity + Liabilities ₹ 4,50,000 = Owner’s Equity + ₹ 2,00,000 Owner’s Equity = ₹ 2,50,00 0. Q.6. Briefly explain the Accounting Equation. Ans. The accounting equation is a mathematical equation which shows that the assets and liabilities of a firm are equal, i.e., Assets = Liabilities + Capital. It is based on Dual Aspect Concept of Accounting. Q.7. What is owner’s equity ? Ans. Owner’s equity means balance standing to the credit of Capital Account of the proprietor. Q.8. Give an example of decrease in an asset and decrease in a liability. Ans. Cash paid to a creditor. Q.9. Give an example of a transaction where an asset will increase and also the liability. Ans. Goods purchased on credit. Q.10. Give an example of a transaction where an asset and owner’s capital will increase.
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29 Address: Plot No 420, Behind Shopprix Mall, Vaishali Sector 5, Ghaziabad 201010 M: 9999907099, 9818932244 O: 0120-4130999 Website: , Ans. Capital introduced by the proprietor. Q.11. Give an example of a transaction due to which owner’s capital and an asset will decrease. Ans. Goods taken by the proprietor for personal use. Q.12. Which transaction decreases one asset and increase another asset ? Ans. Amount received from a debtor. Q.13. Give an example of a transaction which increases one liability and decreases another. Ans. Acceptance of Bill Payable. Q.14. Give an example of a transaction which has effect on two items on the assets side. Ans. Sales of goods on credit. Q.15. Indicate how Accounting Equation is affected if machinery is purchased for cash ? Ans. It will result in cash being reduced and Machinery Account being increased. Q.16. Indicate how Accounting Equation is affected if cash is received against services rendered ? Ans. Cash increases and so does the capital. Q.17. Indicate how Accounting Equation is affected if payment is made to a creditor ? Ans. Cash decreases and so does the liability (creditor).
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30 Address: Plot No 420, Behind Shopprix Mall, Vaishali Sector 5, Ghaziabad 201010 M: 9999907099, 9818932244 O: 0120-4130999 Website: , ACCOUNTANCY CLASS XI CHAPTER-6 ACCOUNTING PROCEDURES-RULES OF DEBIT AND CREDIT Q.1. Define Account.
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