Question

On 30 April 2019, a proprietorship paid cleaning charges for April 2019 by Internet transfer from...

On 30 April 2019, a proprietorship paid cleaning charges for April 2019 by Internet transfer from bank account £320.

(a) Describe the effect of the transaction on the accounting equation.

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Answer #1

Cleaning charges is as general expenses for April for the proprietor so the net income of the proprietorship will reduce on the same way the cash spent on the cleaning charges(general expenses), the bank balance will reduce ultimately, the total assets on the balance will reduce. It will explain with the accounting equation

Sr.no. Assets = Liability + Owners' Equity
1 Cash Retained Earnings
- 320 -320

In accounting equation, by paying the cleaning charges(general expenses) of the proprietor the cash balance will reduce and net income of the proprietor will also reduce.

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