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    ch5

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    Aditya Khanna

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    ch5

    Uploaded by

    Aditya Khanna
    3 views7 pages

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    3 views7 pages

    ch5

    Uploaded by

    Aditya Khanna

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    © All Rights Reserved
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    NOTES

    ACCOUNTING EQUATION

    Based on dual Aspect concept


    ie... every transaction has 2 aspects Debit

    Credit

    Accounting Eq → { Assets = Capital + Liabilities } * balance sheet Eqn

    # Effects of transaction on Eq

    1. Transactions Affecting 2 items.

    Affecting opposite sides Affecting same sides

    (-) Assets Liability Asset & Asset


    { loan taken , credit purchase) { Cash purchase }

    (-) Liability, Asset (-) Liablity & other Liablity


    { Payment to creditor} { payment to creditor by bill }

    (-) Asset , Capital


    { introduct on of capital }

    (-) Asset , capital


    {drawings}
    NOTES
    ACCOUNTING EQUATION

    2. Transactions Affecting More than 2 items

    Ex → Sales of 10,000 made in cash of goods C.P (-) 8000


    Effects → Cash + Stock capital
    +10000 - 8000 = (+)2000 (profit)

    Few transactions.
    1. Ram started business with 1,00,000 as capital
    2. Purchase furniture for 5000 in cash
    3. Purchase goods worth 2000 in cash.
    4. Purchase goods 5000 on credit.
    5. Sold goods costing 3000 on credit for 5000

    5000 - 3000 = 2000 profit

    6. Paid 5000 as rent & 8000 as salary.


    7. Ram withdraw 3000 for personal use (drawings)

    PRICE DETERMINATION (ECONOMICS)


    NOTES
    ACCOUNTING
    ACCOUNTINGEQUATION
    EQUATION

    ASSETS CAPITAL + LIABILITIES

    furnitur
    Cash Stock Debtors = Capital Creditors Total
    e

    1,00,000 - - 1,00,000 - 1,00,000

    (-)5,000 + 5,000 - - - - 0

    95000 + 5,000 - - 1,00,000 - 1,00,000

    (-)2,000 + 2000 - - - - 0

    93,000 + 5,000 + 2,000 - 1,00,000 - 1,00,000

    5,000 - - - - - 5,000

    93,000 + 5,000 + 7,000 - 1,00,000 + 5,000 1,05,000

    (-)3,000 + 5,000 - - - - 2,000

    93,000 + 5,000 + 4,000 + 5,000 1,02,000 + 5,000 1,07,000

    (-)13,000 - - - (-)13,000 - 0

    80,000 + 5,000 + 4,000 + 5,000 89,000 + 5,000 94,000

    (-)3,000 - - - (-)3,000 - 0

    77,000 + 5,000 +4,000 + 5,000 86,000 + 5,000 91000

    This will be for matching B/ sheet

    CONNECT TO GAURAV SIR DIRECTLY ON WHATSAPP

    7690041256
    NOTES
    ACCOUNTING EQUATION
    #Special Adjustments

    1. outstanding Expenses (-) from capital

    + new lia. → Outstanding exp.

    2. prepaid expenses (-) from cash

    + new asset → prepaid exp.

    3. Accured income + capital

    + asset (-) accured income . (new)

    4. unearned income + cash

    + lia. (new ) → unearned income

    Calculation of Closing Capital


    (i.e Capital at the end of accounting year)

    opening capital + profit (-)loss + drawings + additional capital


    Assets = Capital + Liabilities

    RECTIFICATION OF ERRORS (ACCOUNTS)


    NE SHOT
    THE GAURAV JAIN

    BEGINNER ADVANCED
    ACCOUNTING EQUATION CLASS 11
    WHATSAPP CHANNEL FOR NOTES AND IMPORTANT QUESTIONS

    7690041256
    YE LE BAALAK ... MAUJ KAR

    THE GAURAV JAIN 7690041256

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