The accounting equation: Class 11 practice
Assets = Liabilities + Capital after every transaction. Read the method, follow the three worked examples, then try the six questions.
What you should know first
- Assets and liabilities
The idea behind the accounting equation
Assets = Liabilities + Capital after every transaction. Each transaction changes at least two items so the equation stays balanced.
Step-by-step method
- Start with the opening equation.
- Apply each transaction's effects.
- Check that both sides still match.
Worked example 1 (Basic)
A business starts with cash ₹2,00,000 from the owner and a bank loan of ₹30,000. Write the accounting equation.
- Assets = cash ₹2,30,000
- Liabilities ₹30,000 + Capital ₹2,00,000
- Answer: ₹2,30,000 = ₹30,000 + ₹2,00,000
Worked example 2 (Standard)
Assets ₹1,50,000 = liabilities ₹40,000 + capital ₹1,10,000. Goods worth ₹20,000 are bought on credit. Write the new equation.
- Assets +20000; creditors +20000
- Answer: ₹1,70,000 = ₹60,000 + ₹1,10,000
Worked example 3 (Challenge)
From cash ₹60,000 = capital ₹60,000: goods costing ₹15,000 (bought for cash) are sold for ₹19,000 cash, and the owner withdraws ₹2,000. Find the closing equation.
- Profit = ₹4,000
- Cash = 60000 − 15000 + 19000 − 2000
- Capital = 60000 + 4000 − 2000
- Answer: ₹62,000 = 0 + ₹62,000
Common mistakes and misconceptions
- Changing only one side
- Treating drawings as an expense
Practice questions
- (Basic) A business starts with cash ₹1,50,000 from the owner and a bank loan of ₹30,000. Write the accounting equation.
- (Basic) A business starts with cash ₹1,40,000 from the owner and a bank loan of ₹20,000. Write the accounting equation.
- (Standard) Assets ₹1,40,000 = liabilities ₹10,000 + capital ₹1,30,000. Goods worth ₹15,000 are bought on credit. Write the new equation.
- (Standard) Assets ₹2,40,000 = liabilities ₹40,000 + capital ₹2,00,000. Goods worth ₹30,000 are bought on credit. Write the new equation.
- (Challenge) From cash ₹60,000 = capital ₹60,000: goods costing ₹10,000 (bought for cash) are sold for ₹12,000 cash, and the owner withdraws ₹5,000. Find the closing equation.
- (Challenge) From cash ₹1,00,000 = capital ₹1,00,000: goods costing ₹30,000 (bought for cash) are sold for ₹33,000 cash, and the owner withdraws ₹1,000. Find the closing equation.
Answer key with full working
- Q1: Assets = cash ₹1,80,000 → Liabilities ₹30,000 + Capital ₹1,50,000 → Answer: ₹1,80,000 = ₹30,000 + ₹1,50,000
- Q2: Assets = cash ₹1,60,000 → Liabilities ₹20,000 + Capital ₹1,40,000 → Answer: ₹1,60,000 = ₹20,000 + ₹1,40,000
- Q3: Assets +15000; creditors +15000 → Answer: ₹1,55,000 = ₹25,000 + ₹1,30,000
- Q4: Assets +30000; creditors +30000 → Answer: ₹2,70,000 = ₹70,000 + ₹2,00,000
- Q5: Profit = ₹2,000 → Cash = 60000 − 10000 + 12000 − 5000 → Capital = 60000 + 2000 − 5000 → Answer: ₹57,000 = 0 + ₹57,000
- Q6: Profit = ₹3,000 → Cash = 100000 − 30000 + 33000 − 1000 → Capital = 100000 + 3000 − 1000 → Answer: ₹1,02,000 = 0 + ₹1,02,000
Syllabus note
This skill is listed under "Theory Base of Accounting" for Class 11 in the NCERT/CBSE books. ICSE, IGCSE, IB and state boards may teach it in a different chapter or year.
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.
Related practice and notes
Frequently asked questions
Which chapter is the accounting equation in?
"Theory Base of Accounting", Class 11 Accountancy (NCERT/CBSE). Other boards may place it differently.
How were the answers checked?
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.