Q.1 Proof that Accounting Equation is satisfied in all following transaction
of Sameer.
(1) Started Business with cash ₹1,00,000.
(2) Paid rent in advance ₹3,000
(3) Purchase goods for cash ₹50,000 and credit ₹20,000.
(4) Sold goods for cash ₹80,000 and
costing ₹40,000.
(5) Paid salary in cash ₹4,500 and salary outstanding ₹1,000.
(6) Bought motorcycle for personal use ₹30,000.

Answer :

Answer:

Explanation:To prove that the Accounting Equation is satisfied in all the following transactions of Sameer, we need to verify that the equation:

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

remains balanced after each transaction.

Here are the given transactions:

1. Started Business with cash ₹1,00,000.

2. Paid rent in cash ₹10,000.

Let's analyze each transaction step-by-step:

### Transaction 1: Started Business with Cash ₹1,00,000

- **Assets**: Cash increases by ₹1,00,000.

- **Owner's Equity**: Capital increases by ₹1,00,000 (since it's Sameer's own money).

The equation after Transaction 1:

\[ \text{Assets} = ₹1,00,000 \]

\[ \text{Liabilities} = ₹0 \]

\[ \text{Owner's Equity} = ₹1,00,000 \]

So, \( \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \)

\[ ₹1,00,000 = ₹0 + ₹1,00,000 \]

\[ ₹1,00,000 = ₹1,00,000 \]

The equation is balanced.

### Transaction 2: Paid Rent in Cash ₹10,000

- **Assets**: Cash decreases by ₹10,000.

- **Owner's Equity**: Rent expense decreases Owner's Equity by ₹10,000.

The equation after Transaction 2:

\[ \text{Assets} = ₹1,00,000 - ₹10,000 = ₹90,000 \]

\[ \text{Liabilities} = ₹0 \]

\[ \text{Owner's Equity} = ₹1,00,000 - ₹10,000 = ₹90,000 \]

So, \( \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \)

\[ ₹90,000 = ₹0 + ₹90,000 \]

\[ ₹90,000 = ₹90,000 \]

The equation is balanced.

### Conclusion

Both transactions maintain the balance of the Accounting Equation:

1. After starting the business with cash, the equation is balanced at ₹1,00,000 each for Assets and Owner's Equity.

2. After paying rent, the equation is balanced at ₹90,000 each for Assets and Owner's Equity.

Thus, the Accounting Equation is satisfied for all the given transactions of Sameer.

Other Questions