TEST

ACCOUNTING EQUATION
TIME : 1 hr MM : 35

Question 1. Received dividend of ₹ 1,200 by cheque. Explain accounting

treatment based on equation for this transaction. (2)

Question 2. Calculate the amount of cash, if total assets (except cash) = ₹

60,000; total liabilities = ₹ 50,000 and capital = ₹ 40,000. (2)

Question 3. Borrowed loan from Dena Bank. For this transaction, show how the
accounting equation A = C + L is satisfied. (2)

Question 4. At the end of the year, the profit earned is transferred to

_________. (1)

Question 5. Mohit has the following transactions, prepare Accounting Equation:

(8)

(₹)
(a) Business started with cash 1,75,000
(b) Purchased goods from Rohit 50,000
(c) Sold goods on credit to Manish (costing ₹ 20,000
17,500)
(d) Purchased furniture for office use 10,000
(e) Cash paid to Rohit in full settlement 48,500
(f) Cash received from Manish 20,000
(g) Rent paid 1,000
(h) Cash withdrew for personal use 3,000

Question 6. How are accrued interest, commission received in advance and

outstanding salaries treated with respect to accounting equation? (3)
Question 7. Develop an Accounting Equation from the following transactions (7)

(i) Mohan commenced business with cash 50,000

(ii) Purchased goods for cash 30,000

(iii) Purchased goods on credit 20,000

(iv) Sold goods (costing ₹ 10,000) for 12,000

(v) Bought furniture on credit 2,000

(vi) Paid cash to a creditor 15,000

(vii) Salary paid 1,000

Question 8. Bobby opened a consulting firm and completed these transactions

during November, 2017

(a) Invested ₹ 4,00,000 cash and office equipment with ₹ 1,50,000 in a

business called Bobbie Consulting.
(b) Purchased land and a small office building. The land was worth ₹
1,50,000 and the building worth ₹ 3,50,000. Cash paid ₹ 3,00,000.
(c) Purchased office supplies on credit for ₹ 12,000
(d) Bobbie transferred title of motor car to the business. The motor car was
worth ₹ 90,000.
(e) Purchased for ₹ 30,000 additional office equipment on credit.
(f) Paid ₹ 7,500 salary to the office manager.
(g) Provided services to a client and collected ₹ 30,000
(h) Paid ₹ 4,000 for the month’s utilities.
(i) Paid supplier created in transaction c.
(j) Purchase new office equipment by paying ₹ 93,000 cash
(k) Completed services of a client for ₹ 26,000. This amount is to be paid within
30 days.
(l) Received ₹ 19,000 payment from the client created in transaction k.
(m) Bobby withdrew ₹ 20,000 from the business.

Analyse the above stated transactions and show the effect in accounting
equation. (10)