Contents · Part 9

+ , (ii) Credit purchases + , + , Equation + , + , = + , + , (iii) Cash purchase of furniture – , + , Equation + , + , + , = + , + , (iv) Paid creditors by cash – , – , Equation + , + , + , = + , + , (v) Purchased goods for cash – , + , Equation + , + , + , = + , + , (v) Paid rent by cash – – Equation + , + , + , = + , + , Illustration Selvi is a dealer in furniture. Show the accounting equation for the following transactions. (i) Started business with cash ` , , (ii) Deposited cash into bank ` , (iii) Borrowed loan from bank ` , (iv) Bought goods and paid by cheque ` , (v) Cash withdrawn for personal use ` , (vi) Cash withdrawn from bank for office use ` , Accountancy - Solution In the books of Selvi Accounting Equation Transaction Assets Capital ` Bank loan ` Cash ` Stock ` Bank ` (i) Started business with cash + , , = + , , Equation + , , + , , (ii) Deposited cash with bank – , + , Equation + , + , = + , , (iii) Borrowed loan from bank + , + , Equation + , + , = + , , + , (iv) Bought goods and paid by cheque + , – , Equation + , + , + , = + , , + , (v) Cash withdrawn for personal use – , – , Equation + , + , + , = + , + , (vi) Cash withdrawn from bank for office use + , – , Equation + , + , + , = + , + , Illustration Show the effect of following business transactions on the accounting equation. (i) Anbu started business with cash ` , ; goods ` , and machine ` , (ii) Purchased goods from Ramani on credit ` , (iii) Payment made to Ramani in full settlement ` , (iv) Sold goods to Rajan on credit costing ` , for ` , (v) Received from Rajan ` , in full settlement of his account (vi) Wages outstanding ` Solution Accounting Equation Transaction Assets Capital Liabilities Cash Stock Machine Debtors (i) Started business with cash, stock & machine + , + , + , + , Equation