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Questions and Answers
What does Vaibhav start his business with?
cash
From whom did Vaibhav purchase goods on credit?
Rita
What type of asset did Vaibhav purchase for office use?
laptop
To whom did Vaibhav sell goods on credit?
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What is the total value of assets listed?
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Vaibhav's capital is recorded as 100000 in the Asset & Capital (+) Liability table.
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What is the amount received as interest?
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The amount paid for the telephone bill is ______.
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Study Notes
Business Transactions Overview
- Vaibhav initiated his business using cash as the starting capital.
- Goods were acquired from Rita on credit, indicating an initial debt.
- A laptop was purchased for office use, indicating an investment in necessary equipment.
- Goods were sold to Rina on credit, showcasing ongoing business operations and future income.
Financial Position Analysis
- Initial asset valuation was 160,000, with capital at 100,000 and no liabilities.
- Following transactions included:
- Purchase of goods for 100,000, maintaining capital at 100,000 but incurring liabilities of 9,000.
- Acquisition of goods and capital increased to 109,000, with fluctuating liabilities.
- The asset peaked at 147,000, with capital steady at 109,000 and liabilities at 38,000.
Changes in Assets and Liabilities
- Total assets and capital consistently remained at 109,000 across various transactions, indicating stability in capital management.
- Liabilities varied, indicating periods of credit usage and repayment strategies.
Interest Revenue
- Interest received amounted to 250, impacting the overall asset base positively.
- After accounting for interest, the asset value rose significantly, culminating in a total of 119,200.
Expense Management
- Payment for telephone bills indicates ongoing operational costs that need to be managed within the budget.
Summary of Financial Movements
- Overall asset management reflects effective balance between capital investment and credit utilization.
- Continuous monitoring of liabilities is crucial to maintain financial health amidst business operations.
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Description
Test your understanding of basic business transactions and accounting principles. This quiz covers how to manage cash, purchases, and sales in a simple business context. Engage with practical scenarios to enhance your learning in financial literacy.
