CLASS:XI

SUBJECT:ACCOUNTANCY(055)
Ch - ACCOUNTING EQUATION

LEVEL 1
1. Basic accounting equation is-
(a) Assets= Capital +liabilities (b) Liabilities= Assets +Capital
(c) Capital=liabilities +assets (d) Asset=liabilities-capital
2. Purchase of furniture for cash is:-
(a) Increase in furniture and increase in cash
(b) Decrease in furniture and decrease in cash
(c) Increase in cash and decrease in furniture
(d) Increase in furniture and decrease in cash
3. Purchase of Goods for cash is:-
(a) Increase in stock and increase in cash
(b) Decrease in stock and decrease in
cash (c)Increase in cash and decrease in
stock
(d) Increase in stock and decrease in cash
4. Goods with drawn for personal use :-
(a) Increase in stock and increase in capital
(b) Decrease in stock and decrease in capital
(b) Increase in stock and increase in cash
(d) Increase in stock and decrease in cash
5. . Cash received from debtor is-
(a) Increase in stock and increase in capital
(b) Decrease in stock and decrease in capital
(c) Decrease in debtor and increase in cash
(d) Increase in stock and decrease in cash

LEVEL 2
1. Rent for the month of March not paid is-
(a) Increase in liabilities and increase in asset
(b) Decrease in cash and decrease in liabilities
(b) Increase in asset and increase in cash
(d) Increase in liabilities and decrease in capital
2. Goods Given as charity (Sales price 500) of Rs 450-
(a) Increase in debtor by 500 and increase in stock by 500
(b) Decrease in cash by500and decrease in stock by 450
(c) Decrease in stock by500 and decrease in capital by 500
(d) Decrease in stock by450 and decrease in capital by 450
3. Interest on capital provided is-
(a) Increase in capital and increase in cash
(b) Decrease in cash and decrease in capital
(c) Increase in capital and decrease in assets
(d) Increase in capital as well as decrease in capital
4. Insurance premium of Rs 12,000 paid for one year on 1st August
2022, unexpired insurance premium is on 31st March,2023 will be-
(a)Rs 4,000 (b)Rs 5,000 (c) Rs 6,000 (d) Rs 7,000
5. Goods returned to supplier costing Rs 1000 and selling Price Rs 1100-
(a) Increase in creditor by 1000 and increase in stock by 1000
(b) Decrease in cash by 1100 and decrease in stock by 1000
(c) Increase in creditor by 1100 and increase in stock by 1100
(d) Decrease in stock by 1000 and decrease in creditor by 1000
6. Sold goods for cash costing 20,000 and on credit Rs 30,000 at a loss of
10%. Sales price will be-
(a) 45000 (b)55000 (c) 60000 (d) Rs 40,000
7. Match items in List I with terms in List II using the codes given below the lists:

8. Match items in List I with terms in List II using the codes given below the lists:

9. Arrange the following in sequence in accounting equation:

(a) A, B, C (b) B, C, A (c) C, A, B (d) C,B,A

10. X started business on 1st Jan, 2019 with a capital of Rs 1,00,000 and
borrowed Rs 30,000 from his friend. He made a profit of Rs 30,000 during
the year and withdrew cash 10,000, Find out the closing capital of the
business.
11. Sold goods for cash costing 20000 and on credit Rs 30000 at a profit of
25%. Calculate the amount of Profit .
12. Owner’s capital in the beginning is 1,20,000,creditor at the end Rs 1,00,000
; Revenue during the period Rs 1,40,000 and expenses during the period are Rs
1,30,000.Compute Owner’s capital at the end.
13. a)Nitin commenced business on 1 April 2022 with a capital of Rs5,00,000 and
a loan of Rs1,00,000 borrowed from Axis Bank. On 31 march 2023,his assets
were Rs8,00,000.Calculate his closing capital and profit earned during the year.
b)If in the above case, proprietor has introduced fresh capital of Rs40,000 and
withdrawn Rs10,000 for personal use. Calculate his profits.
14. Give one example of each of the following transactions:
a) Increase in asset and a liability.
b) Decrease in asset and a liability.
c) Increase in asset and capital.
d) Decrease in asset and capital.

LEVEL 3
1. Sold goods costing Rs 75,000 at a profit of 33-1/3 % in cash :-
(a) Increase in cash by Rs 1,00,000 and decrease in stock by Rs 75,000
and increase in capital by Rs 25,000
(b) Increase in cash by Rs 75,000 and decrease in stock by Rs 75,000
(c) Increase in cash by Rs 1,00,000 and increase in stock by Rs 1,00,000
(d) Increase in stock by Rs 75,000 and decrease in cash by Rs 1,00,000
2. Goods costing of Rs 2,00,000 sold at a profit of 1/4 of cost and cash
discount allowed to customer 2%. Half of the payment received in cash:-
(a) Increase in cash by Rs 1,22,500 and decrease in stock by 2,00,000
and increase in debtor by Rs 1,25,000 and increase in capital by Rs
47,500.
(b) Increase in cash by Rs 1,25,500 and decrease in stock by Rs 2,00,000
and increase in debtor by Rs 1,25,000 and increase in capital by Rs 50,000.
(c) Increase in cash by Rs 1,25,000 and decrease in stock by Rs 2,00,000
and increase in debtor by Rs 1,25,000 and increase in capital by Rs 45,000.
(d) Increase in cash by Rs 1,20,000 and decrease in stock by Rs 2,00,000
and increase in debtor by Rs 1,25,000 and increase in capital by Rs 47,500.
3. A cheque of Rs 10000 received from Mukesh deposited into Bank,
Returned dishonored the effect on Accounting Equation will be:-
(a) Decrease in Bank by Rs10,000,Increased in Debtor by Rs10,000
(b) Decrease in Bank by Rs 10,000,Increased in Creditor by Rs10,000
(c) Decrease in Bank by Rs10,000,Increased in Capital by Rs10,000
(d) Decrease in Bank by Rs 10,000,Increased in Drawing by Rs 10,000
4. Assertion: Accounting Equation claims that total claim(Internal and External) are always equal to
total assets of the business.
Reason: It is based on dual aspect concept ,i.e ,every transaction has two aspects debit and credit.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
5. Determine the missing amount on the basis of accounting
equation: A)
B)
PRACTICAL QUESTIONS:

1. Prove that the accounting equation is satisfied in all the following transactions of Sudhir :—
1. Started business with Cash 50,000 and goods 20,000.
2. Bought goods for Cash 15,000 and on credit for 10,000.
3. Goods Costing 24,000 sold at a profit of 331%. Half the payment received in cash.
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4. Purchased furniture for office use 6,000 and for household use of Sudhir 4,000.
2. Prepare Accounting Equation from the following :
(a) Started business with Cash 2,00,000.
(b) Purchased goods for Cash 60,000 and on Credit 1,50,000.
(c) Sold goods for Cash costing 40,000 at a profit of 20% and on Credit costing 72,000 at
a profit of 25%.
(d) Paid for Rent 5,000.
3. What will be the effect of the following on the Accounting Equation?
(i) Harish started business with cash 1,80,000.
(ii) Purchased goods for cash 60,000 and on credit Rs.30,000.
(iii) Sold goods for cash 40,000; costing 24,000.
(iv) Rent paid 5,000; and rent outstanding 2,000.
(v) Sold goods on credit 50,000 (costing 38,000).
(vi) Salary paid in advance 3,000.
4. Prepare Accounting Equation from the following :—
1. Started business with cash 75,000 and goods 25,000.
2. Paid for Rent 2,000.
3. Bought goods for cash 30,000 and on credit for 44,000.
4. Goods costing 50,000 sold at a profit of 25%, out of which 27,500 received in Cash.
5. Purchased a Motor-cycle for personal use 20,000.
5. Prepare Accounting Equation from the following and also prepare a Balance Sheet:—
1. Raghu started business with Cash 1,50,000.
2. Bought goods for cash 80,000 and on credit for 40,000.
3. Goods costing 75,000 sold at a profit of 331%. Half the payment received in cash.
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4. Goods costing 10,000 sold for 12,000 on credit.
5. Paid for Rent 2,000 and for salaries 4,000.
6. Goods costing 20,000 sold for 18,500 for Cash.