TS Grewal Class 11 Accountancy Solutions Chapter 2 – Accounting Equation, gives students details about different constituents of Accounting Equations. It states that an Accounting Equation is the reflection of a company’s financial indices, associated very closely with each other. These are liabilities, assets as well as owners’ equity.
The Accounting Equation is the basic accounting or a balance sheet equation. Transactions carried out by a company accurately reflected in its financial records, are ensured by the Accounting Equation.
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TS Grewal Class 11 Accountancy Solutions Chapter 2 – Accounting Equation
Details of TS Grewal Class 11 Accountancy Solutions Chapter 2 – Accounting Equation
Terms to remember:
Liabilities:
Liabilities is a term used for representing obligations, something a company owes, like huge sums of money. So to describe liability, TS Grewal says that it is an obligation between two parties, that is yet to be paid for and is settled over a period of time by either giving them money or financial benefits via goods and services.
Mortgages, loans, deferred revenues, payables, accrued expenses, and warranties are liabilities.
Types of liabilities:
Liabilities are further divided into two types:
- Short-term liability – These are the ones that an organization expects to pay for within or before 12 months.
- Long-term liability – These are the ones that an organization expects to pay for within 12 months or later than that
Assets:
The resources owned and controlled by the company can be called assets. It is a resource carrying financial value which is used for future benefits, in any form. The forms can be generating cash flow, improving sales by reducing expenses (may affect the sales directly or indirectly).
Owner/shareholders’ equity:
TS Grewal Class 11 Accountancy Solutions has defined this term as the net amount of a company’s total liabilities and assets. Liabilities, assets, and owners’ equity are listed on the balance sheet of the company.
The Double-entry System:
TS Grewal Class 11 Accountancy Solutions teaches students about the Double-entry system in Chapter 2. The foundation of the Double-entry system is formed by the accounting equation.
The Double-entry system is a representation of a financial record, known as a balance sheet. It shows the sum of total liabilities and shareholders’ equity is equal to its total assets.
Class 11 Accountancy Chapter 2 – Accounting Equation Sample questions
Illustrate the effect of the following on the Accounting Equation?
- Started a business with Rs. 45,000, cash.
- Opened a bank account by depositing Rs. 4,500.
- Bought goods from Mr. X for Rs. 11,200.
Answer: The table mentioned below shows the Accounting Equation:
|
S.no. |
Transactions |
Assets = Liabilities + Capital |
|
|
|
Cash + Bank + Stock = Creditors (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) |
|
1. |
Started business with Rs. 45,000 |
45,000 = 45,000 |
|
2. |
Opened a bank account with deposit of |
45,000 = 45,000 (4,500) + 4,500 |
|
|
New Equation |
40,500 + 4,500 = 45,000 |
|
3. |
Purchased goods from Mr X worth |
|
|
|
New Equation |
11,200 = 11,200 |
|
|
|
40,500 + 4,500 + 11,200 = 11,200 + 45,000 |
|
Total Assets |
= |
Cash + Bank + Stock Value |
|
|
= |
40,500+4,500+11,200 |
|
|
= |
56,200 |
|
Liabilities |
= |
Creditors |
|
|
= |
11,200 |
|
Capital |
= |
Assets – Liabilities |
|
|
= |
56,200 – 11,200 |
|
|
= |
45,000 |
If you have any queries regarding the CBSE TS Grewal Class 11 Accountancy Solutions Chapter 2 – Accounting Equation, you can ask in the comments.
FAQs: TS Grewal Class 11 Accountancy Solutions Chapter 2- Accounting Equation
How do you define liabilities?
Liabilities is a term used for representing obligations, something a company owes, like huge sums of money. It is an obligation between two parties, that is yet to be paid for and is settled over a period of time by either giving the money or financial benefits via goods and services. Mortgages, loans, deferred revenues, payables, accrued expenses, and warranties are liabilities.
How do you define assets?
The resources owned and controlled by the company can be called assets. It is a resource carrying financial value which is used for future benefits, in any form. The forms can be generating cash flow, improving sales by reducing expenses (which may affect the sales in a direct or indirect manner).
What are the types of liabilities?
Liabilities are divided into two types:
Short-term liability – These are the ones that an organization expects to pay for within or before 12 months.
Long-term liability – These are the ones that an organization expects to pay for within 12 months or later than that.
Define the Double-entry system?
The Double-entry system is a representation of a financial record, known as a balance sheet. It shows the sum of total liabilities and shareholders’ equity is equal to its total assets.