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Analytical Accounting Equation

Arjun EP

Published on: June 16, 2020

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =

Binesh Thapa commenced BT Consulting Firm providing consultancies; He had following transactions during May:

May 2: Invested Rs 250,000 from his personal savings into BT Consulting Firm.

May 2: Office rent paid in cash for two months in advance @ Rs 6,000 per month.

May 3: Office equipment purchased for Rs 25,000, paying Rs 8,000 cash and accepted bill for 2 months.

May 4: Stationery purchased for cash Rs 500.

May 8: Consultancy collected Rs 5,000 in cash.

May 15: Consultancy services receivable from a client Rs 15,000.

May 20: Received Rs 10,000 from client for the work completed on May 15.

May 30: Advance rent had expired and become an expense.

May 31: Salary paid to office secretary Rs 10,000.

Required: Show the effects of the above transactions in the firm and apply the rules of debit and credit.

Solution

Analytical Accounting equation

Date	Transaction	Accounts Involved	Nature of Accounts	Effect	Rule of Dr and Cr
2 May	Invested by owner	Cash	Asset	Increase	Increase in asset	Dr	250,000
2 May	Invested by owner	Capital	Owner’s equity	Increase	Increase in OE	Cr	250,000
2 May	Rent paid in advance	Advance rent	Asset	Increase	Increase in asset	Dr	12,000
2 May	Rent paid in advance	Cash	Asset	Decrease	Decrease in asset	Cr	12,000
3 May	Office equipment purchased	Equipment	Asset	Increase	Increase in asset	Dr	25,000
		Cash	Asset	Decrease	Decrease in asset	Cr	8,000
		Account payable	Liability	Increase	Increase in liability	Cr	17,000
4 May	Stationery purchased	Office materials	Expenses	Increase	Increase in expenses	Dr	500
4 May	Stationery purchased	Cash	Asset	Decrease	Decrease in asset	Cr	500
8 May	Collected consultancy fees	Cash	Asset	Increase	Increase in asset	Dr	5,000
8 May	Collected consultancy fees	Consultancy fees	Revenue	Increase	Increase in revenue	Cr	5,000
15 May	Earned consultancy fees	Account receivable	Asset	Increase	Increase in asset	Dr	15,000
15 May	Earned consultancy fees	Consultancy fees	Revenue	Increase	Increase in revenue	Cr	15,000
20 May	Partial A/R received	Cash	Asset	Increase	Increase in asset	Dr	10,000
20 May	Partial A/R received	Account receivable	Asset	Decrease	Decrease in asset	Cr	10,000
30 May	Prepaid rent expired	Rent	Expenses	Increase	Increase in expense	Dr	6,000
30 May	Prepaid rent expired	Advance rent	Asset	Decrease	Decrease in asset	Cr	6,000
31 May	Salary paid	Salary	Expenses	Increase	Increase in expense	Dr	10,000
31 May	Salary paid	Cash	Asset	Decrease	Decrease in asset	Cr	10,000

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Click on link for YouTube videos CHAPTERS OF CLASS 11

ACCOUNTING EQUATION http://tiny.cc/c89jkz

BASIC JOURNAL ENTRIES IN NEPALI http://tiny.cc/uaakkz

BASIC JOURNAL ENTRIES http://tiny.cc/8aakkz

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LEDGER http://tiny.cc/haakkz

SUBSIDIARY BOOK http://tiny.cc/399jkz

CASH BOOK http://tiny.cc/889jkz

TRIAL BALANCE & ADJUSTED TRIAL BALANCE http://tiny.cc/c59jkz

BANK RECONCILIATION STATEMENT (BRS) http://tiny.cc/q59jkz

DEPRECIATION http://tiny.cc/ugakkz

FINAL ACCOUNT: CLASS 11 http://tiny.cc/y89jkz

ADJUSTMENT IN FINAL ACCOUNT http://tiny.cc/keakkz

CAPITAL AND REVENUE http://tiny.cc/peakkz

SINGLE ENTRY SYSTEM http://tiny.cc/n19jkz

NON-PROFIT ORGANIZATION (NON-TRADING CONCERN http://tiny.cc/j09jkz

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GOSWARA VOUCHER (JOURNAL VOUCHER) http://tiny.cc/hcakkz

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