Multiple choice

Directions: Choose the correct option for the given question.

On 1.4.2007, a firm's capital was Rs. 2,00,000, assets Rs. 2,40,000 and liabilities Rs. 40,000. It sold goods costing Rs. 10,000 for Rs. 12,000. What will be the position of accounting equation after this transaction has been recorded in accounts ?(Assets = Capital + Liabilities)

  1. Rs. 2,42,000 = Rs. 2,02,000 + Rs. 40,000

  2. Rs. 2,52,000 = Rs. 2,12,000 + Rs. 40,000

  3. 2,30,000 = Rs. 2,00,000 + Rs. 30,000

  4. 2,22,000 = Rs. 1,82,000 + Rs. 40,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Initially: Assets = Capital + Liabilities (2,40,000 = 2,00,000 + 40,000). Selling goods costing 10,000 for 12,000 increases assets by 2,000 (net effect: inventory decreases by 10,000, cash increases by 12,000). Capital increases by profit of 2,000. New position: Assets 2,42,000 = Capital 2,02,000 + Liabilities 40,000.

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