Page 53 - DCOM101_FINANCIAL_ACCOUNTING_I

Unit 5: Accounting Equation and Accounting Cycle

5.6 Review Questions Notes

1. Prepare accounting equation from the following Transactions:

`
Hemant started business with cash 3,00,000
Purchased goods for cash 80,000
Sold goods[costing `30,000] for cash 45,000

Purchased goods from Monika 70,000
Salary paid 7,000
Commission received 5,000
Paid Cash to Monika in full settlement 69,000
Goods sold to Rahul {Costing `20,000} for cash 25,000

2. “Accounting equation remains intact under all circumstances” Justify the statement with
the help of example.
3. Prepare accounting equation on the basis of the following:
(i) Anup started business with cash `250,000

(ii) Purchased goods for cash `35000

(iii) Purchased office furniture for cash `12000
(iv) Paid rent `7000
(v) Sold goods (costing `30000) for `50000 for cash

4. Show the accounting equation on the basis of the following transactions
(i) Manu started business
Cash 600000
Goods 100000

(ii) Purchased office machine for cash 90000
(iii) Sold goods (costing ` 60000) for credit to Asha
(iv) Purchased building for cash 130000
(v) Cash received from Ashu 80000
(vi) Purchased goods on credit to M/S Ashok Trader for cash 70000

(vii) Salaries paid 6000
(viii) Insurance prepaid 10000
(ix) Cash paid to M/s Ashok traders in full settlement 68000
5. “Accounting is described as origin for the creation of information and the continuous
utility of information.” Discuss.
6. Why does accounting equation remains in balance?
7. “Accounting is the process of recording, classifying and summarizing of accounting
transactions.” Discuss.

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