CA FOUNDATION: ACCOUNTING · THEORETICAL FRAMEWORK AND ACCOUNTING PROCESS

Accounting equation: find the missing figure

Assets = Liabilities + Capital. Closing capital = Opening capital + Fresh capital + Profit − Drawings.

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Worked examples

Example 1 · level 1

On 31 March, Mehta Enterprises’s capital is ₹6,83,000 and liabilities are ₹80,000. Find the assets.

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Assets = ₹80,000 + ₹6,83,000 = ₹7,63,000.

Answer: ₹7,63,000

Example 2 · level 2

On 31 March, Gupta & Sons’s total assets are ₹6,11,000 and the owner’s capital is ₹4,46,000. Find the liabilities.

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Liabilities = ₹6,11,000 − ₹4,46,000 = ₹1,65,000.

Answer: ₹1,65,000

Example 3 · level 3

Verma Hardware: capital on 1 April ₹4,62,000, fresh capital introduced ₹88,000, drawings ₹10,000, capital on 31 March ₹6,37,000. Find the profit for the year.

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Closing − Opening = ₹6,37,000 − ₹4,62,000 = ₹1,75,000.
Add drawings ₹10,000: ₹1,85,000.
Less fresh capital ₹88,000: profit = ₹97,000.

Answer: ₹97,000