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Dear Teachers,

These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.

Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.

Mujeeb Rahiman C

HSST Commerce

GHSS Pattikkad

Malappuram Dt.

✉️ mujeebchemmala@gmail.com

9995983075 �

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Chapter - 3

Recording of Transactions - I

Accounting Equation

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Amount

Liabilities

Amount

Assets

Creditors

15,000

Bank Loan

10,000

1,00,000

Balance Sheet

Cash

20,000

Debtors

10,000

Stock

12,000

Building

24,000

Machinery

19,000

Furniture

15,000

Capital

75,000

1,00,000

25,000

75,000

Accounting Equation

₹ 75,000

₹ 1,00,000

=

₹ 25,000

+

Assets =

Creditor’s equity

+

Owner’s equity

Assets = Equities

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Amount

Liabilities

Amount

Assets

Creditors

15,000

Bank Loan

10,000

1,00,000

Balance Sheet

Cash

20,000

Debtors

10,000

Stock

12,000

Building

24,000

Machinery

19,000

Furniture

15,000

Capital

75,000

1,00,000

25,000

75,000

Accounting Equation

The equation states that the assets of a business are always equal to the claims of owners (owners’ equity) and the claims of outsiders (creditors equity).

Accounting Equation is also called Balance Sheet Equation

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Accounting equation signifies that the assets of a business are always equal to the total of its liabilities and capital

Assets =

Liabilities

+

Capital

Assets =

Creditor’s equity

+

Owner’s equity

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A = C + L

C = A - L

L = A – C

A – C – L = 0

Amount

Liabilities

Amount

Assets

Creditors

15,000

Bank Loan

10,000

1,00,000

Balance Sheet

Cash

20,000

Debtors

10,000

Stock

12,000

Building

24,000

Machinery

19,000

Furniture

15,000

Capital

75,000

1,00,000

25,000

75,000

1,00,000

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Assets =

Creditor’s equity

+

Assets = Equities

Owner’s equity

Assets =

Liabilities

+

Capital

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Accounting Equation

Illustration - 1

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Show the effect of following transactions on the accounting equation

1) Rohit started business with a capital of Rs. 5,00,000

2) Opened a bank account in State Bank of India with an amount of Rs. 4,80,000

3) Bought furniture for Rs. 60,000 and cheque was issued on the same day

4) Bought Machinery for Rs. 1,25,000 and an advance of Rs. 10,000 in cash is

paid to ABC Ltd.

5) Goods purchased from Royal Traders for Rs. 55,000

6) Goods costing Rs. 25,000 sold for cash Rs. 35,000.

Assets

=

Liabilities

+

Capital

Cash

Capital

Bank

Furniture

Machinery

Creditors

Stock

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Assets

=

Liabilities

+

Capital

Cash

Transactions

No.

=

Capital

1

500000

=

1) Rohit started business with a capital of Rs. 5,00,000

Bank

Furniture

Machinery

Creditors

Stock

+

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Assets

=

Liabilities

+

Capital

Cash

Bank

Furniture

Machinery

Creditors

Transactions

No.

Stock

=

+

Capital

1

500000

=

2

-480000

2) Opened a bank account in State Bank of India with an amount of Rs. 4,80,000

+480000

20000

500000

=

480000

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Assets

=

Liabilities

+

Capital

Cash

Bank

Furniture

Machinery

Creditors

Transactions

No.

Stock

=

+

Capital

1

500000

=

2

-480000

+480000

20000

500000

=

480000

3

+60000

-60000

3) Bought furniture for Rs. 60,000 and cheque was issued on the same day

60000

500000

=

420000

20000

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Assets

=

Liabilities

+

Capital

Cash

Bank

Furniture

Machinery

Creditors

Transactions

No.

Stock

=

+

Capital

1

500000

=

2

-480000

+480000

20000

500000

=

480000

3

+60000

-60000

60000

500000

=

420000

20000

4) Bought Machinery for Rs. 1,25,000 and an advance of Rs. 10,000 in cash is

paid to ABC Ltd.

4

+125000

-10000

60000

500000

=

420000

10000

+115000

125000

115000

+

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Assets

=

Liabilities

+

Capital

Cash

Bank

Furniture

Machinery

Creditors

Transactions

No.

Stock

=

+

Capital

1

500000

=

2

-480000

+480000

20000

500000

=

480000

3

+60000

-60000

60000

500000

=

420000

20000

4

+125000

-10000

60000

500000

=

420000

10000

+115000

125000

115000

+

5

+55000

60000

500000

=

420000

10000

+55000

125000

170000

+

5) Goods purchased from Royal Traders for Rs. 55,000

55000

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Assets

=

Liabilities

+

Capital

Cash

Bank

Furniture

Machinery

Creditors

Transactions

No.

Stock

=

+

Capital

1

500000

=

2

-480000

+480000

20000

500000

=

480000

3

+60000

-60000

60000

500000

=

420000

20000

4

+125000

-10000

60000

500000

=

420000

10000

+115000

125000

115000

+

5

+55000

60000

500000

=

420000

10000

+55000

125000

170000

+

55000

6

-25000

60000

510000

=

420000

45000

+10000

125000

170000

+

30000

6) Goods costing Rs. 25,000 sold for cash Rs. 35,000.

+35000

₹ 5,10,000

₹ 6,80,000

=

₹ 1,70,000

+

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Amount

Liabilities

Amount

Assets

Creditors

170000

Capital

510000

680000

Balance Sheet

Cash

45000

Bank

420000

Furniture

60000

Machinery

125000

Stock

30000

Assets =

Liabilities

+

Capital

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT

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Accounting Equation

Illustration - 2

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Analyse the effect of each transaction on assets, capital and liabilities and show that the both sides of Accounting Equation remains equal.

1) Introduced Rs. 8,00,000 as cash and stock Rs. 50,000.

2) Deposited Rs. 6,00,000 into the bank.

3) Purchased office furniture for Rs. 1,00,000 and made payment by cheque

4) Purchased goods worth Rs. 80,000 for cash and for Rs. 35,000 in credit.

5) Goods amounting to Rs. 45,000 was sold for Rs. 60,000 on cash basis.

6) Goods costing to Rs. 80,000 was sold for Rs. 1,25,000 on credit.

7) Cheque issued to the supplier of goods worth Rs. 15,000.

8) Withdrawn by owner for personal use Rs. 25,000.

9) Paid Salary Rs. 10000.

10) Commission received Rs. 1000

Cash, Stock, Capital

Cash, Bank

Furniture, Bank

Stock, Cash, Creditors

Stock, Cash, Capital

Stock, Debtors,Capital

Creditors, Bank

Cash, Capital

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Assets

=

Liabilities

+

Capital

Cash

Stock

Bank

Furniture

Debtors

i)

800000

50000

850000

ii)

-600000

+600000

200000

50000

850000

+

=

600000

+

iii)

-100000

+100000

200000

50000

850000

+

=

500000

+

100000

iv)

+115000

-80000

+35000

120000

165000

850000

35000

+

=

500000

+

100000

v)

-45000

+60000

+15000

180000

120000

865000

35000

+

=

500000

+

100000

vi)

-80000

+125000

+45000

180000

40000

910000

35000

+

=

500000

+

100000

125000

+

vii)

-15000

180000

40000

910000

20000

+

=

485000

+

100000

125000

+

viii)

-25000

155000

40000

885000

20000

+

=

485000

+

100000

125000

+

ix)

-10000

145000

40000

875000

20000

+

=

485000

+

100000

125000

+

x)

+1000

146000

40000

876000

20000

+

=

485000

+

100000

125000

+

8,96,000

8,76,000

20,000

+

=

1) Introduced Rs. 8,00,000 as cash and stock Rs. 50,000.

2) Deposited Rs. 6,00,000 into the bank.

3) Purchased office furniture for Rs. 1,00,000 and made payment by cheque

4) Purchased goods worth Rs. 80,000 for cash and for Rs. 35,000 in credit.

5) Goods amounting to Rs. 45,000 was sold for Rs. 60,000 on cash basis.

6) Goods costing to Rs. 80,000 was sold for Rs. 1,25,000 on credit.

7) Cheque issued to the supplier of goods worth Rs. 15,000.

8) Withdrawn by owner for personal use Rs. 25,000.

9) Paid Salary Rs. 10000.

10) Commission received Rs. 1000

=

Creditors

Capital

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Assets = Liabilities + Capital

8,96,000

8,76,000

20,000

+

=

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MUJEEB RAHIMAN C

HSST COMMERCE

GHSS PATTIKKAD

MALAPPURAM DT