CA Foundation · Accounting · Accounting Process
Kavita starts a business with cash Rs 2,00,000. She then buys goods for Rs 60,000 on credit and sells goods costing Rs 30,000 for Rs 45,000 in cash. What is the total of assets after these transactions?
Total assets are Rs 2,75,000. Capital of Rs 2,00,000 plus credit purchases of Rs 60,000 gives Rs 2,60,000. The cash sale adds Rs 45,000 cash but removes stock of Rs 30,000, increasing assets by the Rs 15,000 profit.
- ARs 2,75,000Correct
- BRs 2,45,000
- CRs 3,05,000
- DRs 2,60,000
Explanation
Cash after capital: 2,00,000; credit purchase adds stock 60,000 (assets 2,60,000, creditors 60,000). Cash sale: stock falls by 30,000 and cash rises by 45,000, a net asset increase of 15,000. Assets = 2,60,000 + 15,000 = Rs 2,75,000. Check: capital 2,00,000 + profit 15,000 + creditors 60,000 = 2,75,000.
Did you get it right without looking?
One question tells you little. A timed set on Accounting Process shows your real accuracy, how long you take and where you lose marks.
More Accounting Process questions
- At the start of a year, a firm's assets were Rs 9,00,000 and liabilities Rs 3,00,000. During the year, the owner introduced additional capit…
- Under the accounting equation approach, which of the following transactions causes a decrease in both assets and liabilities by the same amo…
- Under the accrual basis of accounting, rent of Rs 24,000 for the year ended 31 March was paid in cash on 1 April of the following year. How …
- Which of the following transactions is recorded in the Purchases Returns Book (Returns Outward Book)?
- Rs 6,500 paid to a creditor, Mohan, was correctly entered in the Cash Book but was not posted to Mohan's account at all. Which rectification…
- A compound journal entry records the following: Cash A/c Dr. 40,000; Bank A/c Dr. 60,000; Discount Allowed A/c Dr. 2,000; to Sundry Debtor M…