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Transactions – 20000 + 0 = + 3000 + 20,000

N.E. 2,93,000 + 20,000 = 3,03,000 + 10,000

Explanation:- The transaction will affect both sides as cash has been paid so it is
to be deducted from cash as well from creditors as payment made to them.
· Transaction related to Expenses

All the expense or Losses is to born by the owner although business has separate

legal entity from its owner as He/She is the person who has taken risk to do
business.

E. Rent paid Rs. 5,000.
Effect

Assets = Capital + Liabilities

Cash Goods Capital Creditors

Old Equation 3,13,000 + 20,000 = 3,03,000 + 10,000

Transactions – 5,000 + 0 = – 5000 + 0

N.E. 2,88,000 + 20,000 = 2,98,000 + 10,000

Explanation:- The transaction will affect both sides as cash has been paid so it is
to be reduced as well as Capital is to be reduced because expense is to be born by
the owner
· Transaction related to Income

F. Commission received Rs. 8,000.
Effect

Assets = Capital + Liabilities

Cash Goods Capital Creditors

Old Equation 2,88,000 + 20,000 = 2,98,000 + 10,000

Transactions + 8,000 + 0 = +8000 + 0

N.E. 2,96,000 + 20,000 = 3,06,000 + 10,000