Accounting Equation Solutions for Bhanu's Business

Introduction:
Accounting equation is a fundamental concept in accounting that represents the relationship between assets, liabilities, and owner's equity. It states that assets always equal liabilities plus owner's equity. In this scenario, Bhanu commenced business with cash 1,00,000, and we will analyze the accounting equation solutions for his business.

Assets:
Assets are the resources owned by the business that have a monetary value and can be used to generate revenue. In this scenario, Bhanu's only asset is cash, which is 1,00,000.

Liabilities:
Liabilities are the obligations of a business to pay a certain amount of money in the future. In this scenario, there are no liabilities as Bhanu has not borrowed any money.

Owner's Equity:
Owner's equity represents the owner's interest in the business and is the residual claim against assets after deducting liabilities. In this scenario, Bhanu's owner's equity is also 1,00,000, as he is the sole owner of the business.

Conclusion:
Using the accounting equation, we can see that the total assets of Bhanu's business are 1,00,000, and the total liabilities are zero. Therefore, the owner's equity is also 1,00,000. The accounting equation is always balanced, and any transaction that affects one element of the equation will also affect the other elements to maintain balance.

Capital account