Question

How are the following items dealt in Accounting Equation ?
(i) Interest due but not received ₹500.
(ii) Rent received in a dvance ₹1,000
(iii) Isurance premium paid in advance ₹1,500.
(iv) Salaries due to not paid ₹2,000.

Answer 1

(i) Interest due but not recived shall be added to assest on one side and to the capital on other side.
(ii) It will increase cash on the assets side and increase the liabilities.
(iii) It will decrease one assets ( cash) and increase another assets (Prepaid insurance).
(iv) Salary being an expense will be deducted from the capital and being unpaid will be added to liabilities.