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What what will be the accounting equation for received a check in full settlement of from Ram 2400 of 2000 and deposited into bank on same day?
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What what will be the accounting equation for received a check in full...
Understanding the Accounting Equation
The accounting equation is fundamental in accounting, representing the relationship between a company's assets, liabilities, and equity. It is expressed as:
Assets = Liabilities + Equity
When a check is received in full settlement from Ram, it impacts the accounting equation as follows:
Transaction Details
- Amount Due: ₹2000
- Amount Received: ₹2400
- Excess Amount: ₹400 (This may be considered as income or adjustment in accounts)
Impact on Assets
- Increase in Bank: When the check is deposited, the asset 'Bank' increases by ₹2400.
- Assets (Bank): +₹2400
Impact on Accounts Receivable
- Decrease in Accounts Receivable: The amount due from Ram (Accounts Receivable) decreases by ₹2000 since it is settled in full.
- Assets (Accounts Receivable): -₹2000
Impact on Income
- Excess Amount Handling: The excess amount of ₹400 can be recorded as income or a gain.
- Equity (Income): +₹400
Final Accounting Equation
Putting this all together in the accounting equation:
- Assets:
- (Bank: +₹2400) - (Accounts Receivable: -₹2000)
- Total Assets: ₹400 (Net Increase from Excess Amount)
- Liabilities: No change in liabilities.
- Equity: Increase by ₹400 due to excess amount.
Thus, the final accounting equation reflects:
Assets (₹400) = Liabilities (₹0) + Equity (₹400)
This transaction illustrates the flow of funds, showing how assets and equity change in response to financial activities.
The accounting equation is fundamental in accounting, representing the relationship between a company's assets, liabilities, and equity. It is expressed as:
Assets = Liabilities + Equity
When a check is received in full settlement from Ram, it impacts the accounting equation as follows:
Transaction Details
- Amount Due: ₹2000
- Amount Received: ₹2400
- Excess Amount: ₹400 (This may be considered as income or adjustment in accounts)
Impact on Assets
- Increase in Bank: When the check is deposited, the asset 'Bank' increases by ₹2400.
- Assets (Bank): +₹2400
Impact on Accounts Receivable
- Decrease in Accounts Receivable: The amount due from Ram (Accounts Receivable) decreases by ₹2000 since it is settled in full.
- Assets (Accounts Receivable): -₹2000
Impact on Income
- Excess Amount Handling: The excess amount of ₹400 can be recorded as income or a gain.
- Equity (Income): +₹400
Final Accounting Equation
Putting this all together in the accounting equation:
- Assets:
- (Bank: +₹2400) - (Accounts Receivable: -₹2000)
- Total Assets: ₹400 (Net Increase from Excess Amount)
- Liabilities: No change in liabilities.
- Equity: Increase by ₹400 due to excess amount.
Thus, the final accounting equation reflects:
Assets (₹400) = Liabilities (₹0) + Equity (₹400)
This transaction illustrates the flow of funds, showing how assets and equity change in response to financial activities.
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What what will be the accounting equation for received a check in full settlement of from Ram 2400 of 2000 and deposited into bank on same day?
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What what will be the accounting equation for received a check in full settlement of from Ram 2400 of 2000 and deposited into bank on same day? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What what will be the accounting equation for received a check in full settlement of from Ram 2400 of 2000 and deposited into bank on same day? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What what will be the accounting equation for received a check in full settlement of from Ram 2400 of 2000 and deposited into bank on same day?.
What what will be the accounting equation for received a check in full settlement of from Ram 2400 of 2000 and deposited into bank on same day? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about What what will be the accounting equation for received a check in full settlement of from Ram 2400 of 2000 and deposited into bank on same day? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What what will be the accounting equation for received a check in full settlement of from Ram 2400 of 2000 and deposited into bank on same day?.
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