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Iteru [2.4K]
3 years ago
15

Effect of Transactions on Accounting Equation

Business
1 answer:
PolarNik [594]3 years ago
4 0

Answer:

<u>ASSET         =            LIABILITY                 +                CAPITAL </u>

                                  Loan 80000

                                (previous-given)

-115000 (Lot)               No Effect                                     183000

+298000 (Cash)    

                                   

-80000 (Cash)              -80000 (Loan)

Explanation:

Accounting Equation : Assets = Capital + Liabilities

Previous Given Information : Loan Rs 80000

The Vacant lot costing 115000 decreases the asset lot by that amount, sold for cash at 298000 increases cash by same amount, adds the capital by the amount of profit (298000-115000).

The previous loan 80000 paid decreases the loan liability by same, also decreases cash asset by same.

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