A business purchased goods for Rs 50,000 on credit. What is the effect on the accounting equation? MCQ with Answer and Explanation

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A business purchased goods for Rs 50,000 on credit. What is the effect on the accounting equation?

A. Liabilities increase, Capital decreases

B. Assets increase, Liabilities increase

C. Assets increase, Capital increases

D. Assets decrease, Liabilities decrease

Answer: Option B

Solution (By JKSSB Mock Tests)

Stock (Asset) increases by Rs 50,000 and Creditors (Liability) increase by Rs 50,000, maintaining the equation balance.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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The 'GST on Crypto transactions' (transfer of VDA) is:

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Correct Answer: Option C

Explanation:
GST on cryptocurrency transactions is generally 18% on the service/value.

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The 'Cost of Goods Sold' in a manufacturing company includes:

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Correct Answer: Option C

Explanation:
COGS for manufacturer = Opening finished goods + Cost of production - Closing finished goods. Cost of production = total manufacturing cost + opening WIP - closing WIP.

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Correct Answer: Option D

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