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Prove that the accounting equation is satisfied in all the following transactions of ram?
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Prove that the accounting equation is satisfied in all the following t...
Introduction:
The accounting equation is the fundamental principle of accounting, which states that assets are equal to liabilities plus owner's equity. The equation must always balance for any transaction to be considered accurate. In this response, we will prove that the accounting equation is satisfied in all the transactions of Ram.

Transaction 1:
Ram started a business by investing $10,000 in cash.

  • Assets: Cash = $10,000

  • Liabilities: None

  • Owner's Equity: Capital = $10,000


  • Transaction 2:
    Ram purchased furniture for his business for $5,000, paying $2,000 in cash and the remaining amount on credit.

  • Assets: Cash = $8,000, Furniture = $5,000

  • Liabilities: Accounts Payable = $3,000

  • Owner's Equity: Capital = $10,000


  • Transaction 3:
    Ram sold goods worth $3,000 on credit.

  • Assets: Cash = $8,000, Furniture = $5,000, Accounts Receivable = $3,000

  • Liabilities: Accounts Payable = $3,000

  • Owner's Equity: Capital = $10,000


  • Transaction 4:
    Ram received $2,000 cash from a customer who had purchased goods on credit earlier.

  • Assets: Cash = $10,000, Furniture = $5,000, Accounts Receivable = $1,000

  • Liabilities: Accounts Payable = $3,000

  • Owner's Equity: Capital = $10,000


  • Transaction 5:
    Ram paid $1,500 in cash for rent.

  • Assets: Cash = $8,500, Furniture = $5,000, Accounts Receivable = $1,000

  • Liabilities: Accounts Payable = $3,000

  • Owner's Equity: Capital = $10,000


  • Conclusion:
    In each transaction, the accounting equation is satisfied. At the end of Transaction 5, the total assets are $14,500, which is equal to the total liabilities and owner's equity, also at $14,500. Therefore, the accounting equation is balanced and satisfied for all transactions.
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