Balance Sheet Equation Examples

Balance sheet equation is also called accounting equation. Balance sheet equation shows all the assets will always equal to owner's equity and outside liabilities. There is deep relationship of business's total assets and total liabilities. Total liabilities represents owner's equity and outside liabilities which are the sources of total asset's fund.

For knowing balance sheet equation, we take some examples which will helps you to understand balance sheet equation.



1st Example

Ajay started business with cash Rs. 330000, goods Rs. 200000 building Rs. 300000

Total Assets                                  =   Total outside Liabilities + Total Capital
Cash
Goods
Building
 330000
200000
300000
 Outside Liabilities
Capital
 Nil
830000
830000830000

2nd Example

Amount Withdrawn by him for personal use. Rs. 30000

Total Assets                                  =   Total Liabilities + Total Capital
Cash
Goods
Building
 (330000-30000)
200000
300000
 Outside  Liabilities
Capital
Less drawing 
 Nil
830000
-30000
800000880000

3rd Example

Depreciation charged on building Rs. 20000

Total Assets                                  =   Total Liabilities + Total Capital
Cash
Goods
Building
 300000
200000
(300000-20000)
 Outside Liabilities
Capital
Less depreciation loss
 Nil
800000
- 20000
780000780000


4th Example

Fresh capital invested Rs. 60000

Total Assets                                  =   Total Liabilities + Total Capital
Cash
Goods
Building
 (300000+60000)
200000
280000
 Outside  Liabilities
Capital
New capital 
 Nil
780000
+60000
840000840000

5th Example

Purchased goods from Ritu Rs. 7000

Total Assets                                  =   Total Liabilities + Total Capital
Cash
Goods
Building
 360000
(200000+7000)
280000

Capital
Creditors

840000
7000
847000847000

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Accounting Education: Balance Sheet Equation Examples
Balance Sheet Equation Examples
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