All Courses
Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity Get the App Login Join for Free
Sign in Open App
Commerce Exam  >  Commerce Questions  >  goods given as Charity 1,000 please tell me a... Start Learning for Free
SaveJoin the Discussion on the App
goods given as Charity 1,000 please tell me about this production in accounting equation
Clear all your Commerce doubts with EduRev
Most Upvoted Answer
goods given as Charity 1,000 please tell me about this production in a...
It will affect two accounts -stock and capital. Both stock nd capital will reduce by 1000. As goods are given so the stock is reduced nd since the goods went out simply i.e. no payment for this goods will be received so capital is reduced.

HOPE THIS WILL HELP YOU.
Community Answer
goods given as Charity 1,000 please tell me about this production in a...
Concept of Accounting Equation and Balance Sheet


The accounting equation is a fundamental concept in accounting that represents the relationship between a company's assets, liabilities, and equity. It is expressed as:


Assets = Liabilities + Equity


The balance sheet is a financial statement that summarizes a company's financial position at a specific point in time. It shows the company's assets, liabilities, and equity and how they are related to one another. The balance sheet is prepared based on the accounting equation and is divided into two sections: assets and liabilities and equity.


Assets


Assets are resources that a company owns or controls that have the potential to provide future economic benefits. They are divided into two categories:



  • Current assets: These are assets that are expected to be converted into cash within one year. Examples include cash, accounts receivable, inventory, and prepaid expenses.

  • Non-current assets: These are assets that are expected to provide economic benefits for more than one year. Examples include property, plant, and equipment, intangible assets, and long-term investments.



Liabilities


Liabilities are obligations that a company owes to others. They are divided into two categories:



  • Current liabilities: These are liabilities that are expected to be settled within one year. Examples include accounts payable, short-term loans, and accrued expenses.

  • Non-current liabilities: These are liabilities that are expected to be settled after one year. Examples include long-term loans, bonds payable, and deferred taxes.



Equity


Equity represents the residual interest in the assets of a company after deducting liabilities. It is divided into two categories:



  • Retained earnings: This represents the portion of a company's profits that have not been distributed as dividends to shareholders.

  • Share capital: This represents the amount of capital raised by a company through the issuance of shares.



Goods given as Charity 1,000 in Accounting Equation


If a company gives goods as charity, it would reduce the company's assets by the value of the goods given away. Assuming the cost of the goods given away was 1,000:



  • Assets: The company's assets would decrease by 1,000.

  • Equity: There would be no change to equity as a result of giving away goods as charity.

  • Liabilities: There would be no change to liabilities as a result of giving away goods as charity.



The accounting entry to record the giving away of goods as charity would be:



  • Debit: Charity expense 1,000

  • Credit: Inventory 1,000



This entry would reduce the company's inventory account by
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
Explore Courses for Commerce exam

Similar Commerce Doubts

Read the following hypothetical Case Study and answer the given questions:The financial statements, comprising the Trading A/c, Profit & Loss Account, Balance Sheet and Cash Flow Statement, that are prepared from the accounting information are published for the use by different entities, persons, etc. It is therefore essential that the published information is based on defined principles, concrete concepts and conventions. Accounting principles are the basic guidelines that provide standards for accounting practices and procedures to be followed, so that uniformity in accounting transactions is maintained. Accounting concepts are the assumptions on the basis of which financial statements are prepared. Accounting conventions emerge out of the accounting practices that have been followed by various organizations, over a period of time. The generally accepted accounting principles are generally accepted accounting standards. The concepts on the basis of which the financial statements are prepared and are agreed upon by the accountants, acting as a foundation for accounting are called accounting concepts. They are uniform set of rules for uniformity and understandability of accounting information. They are derived from experience. They are not static. It needs to satisfy relevance, objectivity and feasibility. The going concern concept assumes that the enterprise has neither any intention nor any necessity to close the business and will last for a long time. It enables the firms to enter into long term contracts. It enables for the charge or depreciation on assets which have fixed life. Due to this concept prepaid expenses are treated as assets. It helps in the classification of assets and liabilities. According to Consistency concept, the accounting principles and methods should be consistent. It should not vary every year. It enables to compare the financial stability of the business. There needs to be consistency in valuation of stock, depreciation and provisions, to enable better decision making by the management. It doesn’t mean that the accounting methods should not change, but the nature and effect and the reason for change should be stated._____________ concept assumes that the enterprise has no intention of closing the business.

Top Courses for CommerceView all

Top Courses for Commerce

goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet
Question Description
goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet.
Solutions for goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet in English & in Hindi are available as part of our courses for Commerce. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet defined & explained in the simplest way possible. Besides giving the explanation of goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet, a detailed solution for goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet has been provided alongside types of goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet theory, EduRev gives you an ample number of questions to practice goods given as Charity 1,000 please tell me about this production in accounting equation Related: Concept of Accounting Equation and Balance Sheet tests, examples and also practice Commerce tests.
Explore Courses for Commerce exam

Top Courses for Commerce

Explore Courses

Suggested Free Tests

Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Get App
© EduRev
Education Revolution
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup