Accounting Equation Class 11 : TS Grewal Solutions Accountancy Chapter 2

Accounting Equation Class 11 Practical Problems Solutions focus on helping students solve real-world accounting problems based on the fundamental accounting equation. The accounting equation, expressed as:

Assets = Liabilities + Owner’s Equity

is central to understanding how transactions impact a company's financial standing.

Here’s an example of a practical problem and its solution:

Problem:

Mr. Sharma starts his business with ₹50,000 cash. He buys equipment worth ₹30,000 and borrows ₹10,000 from a bank.

Solution:

1. Initial Transaction:

• Assets (Cash) = ₹50,000

• Liabilities = ₹0

• Owner’s Equity = ₹50,000

2. Purchase of Equipment:

• Assets (Cash - ₹30,000) = ₹20,000, Equipment = ₹30,000

• Liabilities = ₹0

• Owner’s Equity = ₹50,000

3. Loan from Bank:

• Assets (Cash + ₹10,000) = ₹30,000, Equipment = ₹30,000

• Liabilities = ₹10,000 (Loan)

• Owner’s Equity = ₹50,000

Now the accounting equation becomes:

Assets (Cash ₹30,000 + Equipment ₹30,000) = Liabilities ₹10,000 + Owner’s Equity ₹50,000

TS Grewal Solution for Class 11 Accountancy Chapter 2 - Mentioned Concepts

There are many important concepts in this chapter that students need to learn and understand. Some of the important concepts discussed include:

• Balance and Income sheet and statement

• Accounting Balance

• Fundamental of Accounting Equations

• Accounting Equation of an Income Statement

• Double Entry Book System

These important concepts and topics are discussed in TS Grewal Solutions. There are many important questions based on the above-mentioned concepts that students need to understand from the examination point of view.

Important Terms 

Assets:

These represent the resources owned and controlled by the company, An asset is a resource that carries financial value utilised to get the future benefit. in any form viz: generating cash flow, reducing expenses may directly or indirectly improve sales.

Liabilities:

This term is used to represent  obligations. A liability is something a company owes, usually a sum of money. Loans, payables, deferred revenues, bonds, mortgages, warranties, and accrued expenses. A liability is a financial obligation between two parties that is yet to be paid for. Liabilities are settled over time through money or financial benefits through goods or services.

Liabilities are Usually Considered of the Following 2 Types:

Short Term Liabilities are the ones that the organisation expects to pay for in 12 months or before.

Long term Liabilities are the ones that the organisation expects to pay for in a period of the following 12 months or later than that.

Shareholders' Equity:

It is the net amount of a company's total assets and total liabilities. All the above terms are listed on a company's balance sheet.

The Double-Entry System:

The accounting equation forms the foundation of double-entry accounting and is a concise representation of a financial record called a balance sheet where the total assets of a company are equal to the total liabilities and shareholder equity. We will learn more about this in detail in subsequent chapters.

TS Grewal accountancy class 11 solutions chapter 2 practical problems focus on questions that appear in the exams. To get a detailed understanding of Numerical Questions that are asked in the exams TS Grewal accountancy class 11 chapter 2 solutions 2024-25 practical problems.pdf by Vedantu can be downloaded. There is a clear elucidation of different formats of the various types of questions covered under this chapter follows:

Example: Format of a Solved end of chapter question: Balance Sheet Contents:

TS Grewal Accountancy Class 11 solutions by Vedantu help you understand these methods in detail.

Definition of Accounting Equation

The accounting equation is the foundation of the balance sheet and the foundation of accounting theory. It aids in the preparation of a balance sheet and the determination of whether the enterprise's assets are equal to its liabilities and stockholder equity. The double-entry accounting system is built on this foundation.

Double-entry accounting is a method of accounting that assures that the accounting and transaction equations are equal on both sides. Any change in the asset account should result in corresponding changes in the liability and stockholder's equity accounts. The accounting equation should be kept in mind when performing journal entries.

Steps to Calculate an Accounting Equation

On the basis of a balance sheet, the accounting equation can be calculated as:

• On the balance sheet for a specific period, the total assets of the business should be listed.

• A company's liabilities should be stated separately in the balance sheet and calculated separately.

• To calculate the total liability, add the whole stockholder's equity.

• The company's assets will be equal to the sum of its liabilities and equity.

Working Notes

The methods of calculation keeping in mind the rules of Accounting Equations entries have been mentioned at the end of each question in TS Grewal Accountancy Class 11 chapter 2 solutions 2024-25 practical problems. Such step by step explanations given in solving practical questions will help you in adopting a very methodical approach to solving practical exercise questions.

Extended Version of The Accounting Equation

The accounting equation is fundamental to double-entry bookkeeping and is expressed as:

Assets = Liabilities + Owner’s Equity

An extended version includes revenue and expenses, making the equation:

Assets = Liabilities + Owner’s Equity + Revenue - Expenses

Here’s what each component means:

• Assets: Resources owned by the business (e.g., cash, property).

• Liabilities: Debts owed by the business (e.g., loans, payables).

• Owner’s Equity: The owner's claim on the business after liabilities are deducted (e.g., capital, retained earnings).

• Revenue: Income earned from business activities (e.g., sales).

• Expenses: Costs incurred to generate revenue (e.g., rent, salaries).

Impact:

• Revenue increases assets and equity.

• Expenses reduce assets and equity.

Example:

If a company has assets of ₹100,000, liabilities of ₹40,000, and equity of ₹60,000, the equation is:

₹100,000 = ₹40,000 + ₹60,000

After earning ₹20,000 in revenue and incurring ₹5,000 in expenses:

• New assets: ₹115,000

• New equity: ₹75,000

The updated equation is:

₹115,000 = ₹40,000 + ₹75,000

The extended equation offers a clearer picture of how revenues and expenses impact financial health, helping maintain balanced records and measure profitability.

Preparing From T S Grewal Accountancy Class 11-Solutions Chapter 2

In addition to the prescribed Accountancy textbook that you must thoroughly read, downloading class 11 accounts chapter 2 practical problems solutions by Vedantu will be of great help. It is a wholesome resource for quick revision and solving numerical questions. 

The following tips will be helpful for exam preparation:

• Writing and practising helps a lot towards learning the format, you may need to write and practise from class 11 TS Grewal solutions accounting equation regularly to become skilled at solving Accounting Equations

• Refer to TS Grewal class 11 solutions 2024-25 chapter 2 numerical with solutions every two days for regular practice.
  
  

TS Grewal class 11 solutions 2024-25 chapter 2 pdf is easily accessible and is a  good resource for quick revision and contains topics like Assets, Liabilities, Shareholder’s Equity and balance Sheet with solved numerical examples. TS Grewal class 11 chapter 2 solutions 2024-25 for practical questions will help you in understanding the details of the calculations and also why some entries find a way to a particular column in the format and other entries don’t, once you understand the accountancy rules behind these.

Benefits of TS Grewal Solutions

TS Grewal Solutions is the most widely used book for commerce students of class 11 Accountancy. These solutions have been carefully created by subject experts that students can refer to. The TS Grewal Solutions are explained in detail chapter-wise. Some of the benefits of TS Grewal Solutions include:

• It is widely used by most commerce students

• The solutions are designed based on the syllabus provided by CBSE

• Students can download these solutions for free through Vedantu

• The ideal study material for revision during exams

• All the complex questions are explained in detail with step by step solutions to help students understand all these questions easily.

• There are chapter-wise solutions available

Conclusion:

Understanding the accounting equation is essential for Class 11 students, as it forms the basis of financial accounting and ensures the accuracy of financial records. Through practical problems and their solutions, students can gain a clear understanding of how transactions affect a company’s assets, liabilities, and owner’s equity. By mastering the accounting equation, students will be well-prepared to tackle CBSE Class 11 Accountancy exams and handle real-world financial scenarios. TS Grewal Class 11 Solutions provide invaluable guidance and step-by-step explanations, helping students strengthen their grasp of these key accounting principles. Additionally, students can refer to the Class 11 Accounts Chapter 2 Question Answers PDF to practise and improve their understanding. This foundation will not only support academic success but also prepare students for future financial studies and careers.