the picture would emerge somewhat as follows:

the picture would emerge somewhat as follows: Books of Rohit Balance Sheet as at .......... Liabilities Cash in hand In the above balance sheet, the total assets are equal to the liabilities of the business. Since, the business has not yet started its activities and has not earned any profits; the amount invested in business is still Rs. , , .

In case any profits are earned, it will increase the invested amount in business. On the other hand, if business suffers any losses, it will decrease the invested amount in business. We will now analyse the transactions listed in example and its effect on different elements and you will observe that the accounting equation always Opened a bank account in State Bank of India with an amount of Rs. , , .

Analysis of transaction: This transaction increases the cash at bank (assets) and decreases cash (asset) by Rs. , , . . Bought furniture for Rs.

, and cheque was issued on the same day. Analysis of transaction: This transaction increases furniture (assets) and decreases bank (assets) by Rs. , . .

Bought plant and machinery for the business for Rs. , , and an advance of Rs. , in cash is paid to M/s Ramjee Lal. Analysis of transaction: This transaction increases plant and machinery