Certainly! Let's analyze the effect of the transaction on the accounting equation, which states that:
[tex]\[ \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \][/tex]
### Initial State
Before the transaction, let's assume there are no other transactions so that we can focus solely on this one.
### Transaction Overview
1. Goods Purchased: Rs. 50,000 worth of goods are purchased.
2. Cash Payment: Rs. 30,000 is paid in cash.
3. Credit Payment: The balance of Rs. 20,000 is on credit.
### Effects on the Accounting Equation
1. Goods Purchased (Rs. 50,000):
- This increases your assets by Rs. 50,000 because the goods are now part of the company's inventory.
2. Cash Payment (Rs. 30,000):
- Paying Rs. 30,000 in cash decreases your assets by the same amount because cash is an asset.
3. Credit Payment (Rs. 20,000):
- The remaining balance of Rs. 20,000 means you owe this amount, increasing your liabilities by Rs. 20,000.
### Updated Accounting Equation
#### Total Assets
- Initial Assets: Let's assume initially zero for this simplified scenario.
- Increase in assets due to goods purchased: + Rs. 50,000
- Decrease in assets due to cash payment: - Rs. 30,000
- Final Assets: [tex]\( 50,000 - 30,000 = 20,000 \)[/tex]
#### Total Liabilities
- Increase in liabilities due to credit purchase: + Rs. 20,000
#### Owner's Equity
- For this transaction, Owner's Equity remains unaffected if it's an initial simplified state and we aren't considering other operations.
Finally, let's summarize:
- Assets = Liabilities + Owner's Equity
- Assets: Rs. 20,000
- Liabilities: Rs. 20,000
- Owner's Equity: Rs. 0 (unchanged in this scenario)
Thus, the accounting equation remains balanced after the transaction:
[tex]\[ 20,000 = 20,000 + 0 \][/tex]
In conclusion, purchasing goods worth Rs. 50,000 by paying Rs. 30,000 in cash and Rs. 20,000 on credit results in an increase in assets by Rs. 20,000 and an equivalent increase in liabilities by Rs. 20,000, maintaining the balance in the accounting equation.
