Q4. Anoop started a business with ₹6,00,000 on January 1, 2015, and the following transactions took place during the month. Show the accounting equation:

1. Opened a bank account: ₹3,50,000
2. Bought furniture for cash: ₹30,000
3. Bought a machine and paid by cheque: ₹40,000
4. Purchased securities (shares): ₹80,000
5. Purchased an old car: ₹20,000
6. Paid salaries by cheque: ₹10,000
7. Paid cash for household expenses: ₹15,000
8. Received dividend on shares: ₹2,000
9. Personal investment in shares: ₹26,000
10. Introduced fresh capital: ₹2,00,000



Answer :

To solve this question, we need to understand how each transaction affects the accounting equation. The accounting equation is:

[tex]\[ \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \][/tex]

Let's go through each transaction step-by-step and see how it affects the accounting equation.

1. Initial Capital:
- Initial Capital: ₹6,00,000
- This means that initially, the owner's equity is ₹6,00,000.

2. Transaction (a): Opened a bank account, ₹3,50,000
- This will increase the bank account (assets) by ₹3,50,000 and decrease the cash (assets) by ₹3,50,000.
- Changes: No net change in total assets.

3. Transaction (b): Bought furniture for cash, ₹30,000
- This will increase furniture (assets) by ₹30,000 and decrease cash (assets) by ₹30,000.
- Changes: No net change in total assets.

4. Transaction (c): Bought a machine and paid by cheque, ₹40,000
- This will increase machinery (assets) by ₹40,000 and decrease bank account (assets) by ₹40,000.
- Changes: No net change in total assets.

5. Transaction (d): Purchased securities (Shares), ₹80,000
- This will increase investments (assets) by ₹80,000 and decrease bank account (assets) by ₹80,000.
- Changes: No net change in total assets.

6. Transaction (e): Purchased an old car, ₹20,000
- This will increase vehicle (assets) by ₹20,000 and decrease cash (assets) by ₹20,000.
- Changes: No net change in total assets.

7. Transaction (f): Paid salaries by cheque, ₹10,000
- This will decrease the bank account (assets) by ₹10,000 and decrease the owner's equity (expenses) by ₹10,000.
- Changes: Net decrease in assets and equity by ₹10,000.

8. Transaction (g): Paid cash for household expenses, ₹15,000
- This will decrease cash (assets) by ₹15,000 and decrease the owner's equity by ₹15,000.
- Changes: Net decrease in assets and equity by ₹15,000.

9. Transaction (h): Received dividend on share, ₹2,000
- This will increase cash (assets) by ₹2,000 and increase the owner's equity (income) by ₹2,000.
- Changes: Net increase in assets and equity by ₹2,000.

10. Transaction (i): Personal investment in shares, ₹26,000
- This will increase investments (assets) by ₹26,000 directly from personal account (does not affect business equity).
- Changes: Overall assets increase by [tex]$26,000$[/tex]

11. Transaction (j): Introduced fresh capital, ₹2,00,000
- This will increase cash/bank (assets) by ₹2,00,000 and increase the owner's equity by ₹2,00,000.
- Changes: Net increase in assets and equity by ₹2,00,000.

Summary:
- Initial Capital: ₹6,00,000
- Net impacts on assets and equity from transactions:
1. Assets: ₹6,00,000 (initial) + ₹2,00,000 (fresh capital) + ₹2,000 (dividend) + ₹26,000 (personal investment) - ₹15,000 (household expenses) - ₹10,000 (salaries) = ₹8,83,000
- Total assets after all transactions: ₹9,83,000

Hence, the new value of total assets and owner's equity will be ₹9,83,000.

As a result, the detailed solution and the final accounting equation with all transactions considered for January 2015 is:

[tex]\[ \text{Assets (Final)} = \text{Liabilities} + \text{Owner's Equity (Final)} \][/tex]
[tex]\[ \text{₹9,83,000} = \text{₹0} + \text{₹9,83,000} \][/tex]

This correctly shows the capital and transactions accurately, maintaining the balance in the accounting equation.