1 | 2 Oxford University Press Financial Accounting for Management

CHAPTER 1 Basic Understanding of Accounting

FAFM 2e
Solutions to Exercises Problems
Solution 1 Anants Firm
Transaction details Assets Liabilities Capital Income Expense
Started business with cash + 1,50,000 +1,50,000
Purchased goods for cash + 40,000 - 40,000
Credit sales to Aqua Soft
Solution
+ 18,000 + 18,000
Paid rent -1,200 +1,200
Cash received from Aqua
Soft Solution
+ 7,500 - 7,500
Deposited in to bank + 10,000 - 10,000
Salary paid - 2,500 +2,500
Machinery purchased for
cash
+ 50,000 - 50,000
Credit purchase from
Fortune Electro
+ 12,500 +12,500
Cash sales + 19,000 +19,000
End Balances 1,95,800 12,500 1,50,000 37,000 3,700
Verification:
Assets = Liabilities + Capital + Income Expenses
LHS = Assets = Rs 1,95,800
RHS = Liabilities + Capital + Income Expenses
= 12,500 + 1,50,000 + 37,000 3,700 = Rs 1,95,800
2 | 2 Oxford University Press Financial Accounting for Management




Solution 2 Poonams Firm
Transaction details Assets Liabilities Capital Income Expense
Purchased goods from
Impel Marketing
+ 2,000 +2,000
Sold goods to VSN
Global on credit
+ 3,000 + 3,000
Cash purchase +4,000 4,000
Cash sales + 6,000 +6,000
Paid cash to Impel
Marketing
- 2,000 - 2,000
Received cash from
VSN Global
+3,000 3,000
End Balances 9,000 Nil Nil 9,000 Nil
Verification:
Assets = Liabilities + Capital + Income Expenses
LHS = Assets = Rs 9,000
RHS = Liabilities + Capital + Income Expenses
= Nil + Nil + 9,000 Nil = Rs 9,000