Goods costing ₹10,000 have been sold for cash at 25% profit. How will the transaction be shown in the accounting equation?
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Goods costing ₹10,000 have been sold for cash at 25% profit. How will the transaction be shown in the accounting equation?
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Meaning of accounting equation
Accounting equation, also called the balance sheet equation, represents the relationship between the assets, liabilities, and owner's equity of a business.
It is the foundation for the double-entry bookkeeping system.
For each transaction, the total debits equal the total credits
Accounting equation
Asset = capital + liabilities
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Solution
Stock (Asset) will decrease by 10000
Cash (Asset) will increase by 12500
Capital (profit ) will increase by 2500
Explanation:
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