Accounting · Capital Transactions & Balance Sheet Equation
A logistics company, SpeedTrans, purchases five new trucks for 2 crore rupees. The company pays 40 lakh in cash and finances the rest through a five-year bank loan. Simultaneously, the company sells its old, fully depreciated trucks for a scrap value of 5 lakh rupees in cash. How do these two major capital transactions collectively influence the SpeedTrans balance sheet equation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Total Assets increase by 1.55 crore, Liabilities increase by 1.6 crore, and Equity decreases by 5 lakh.
- 2Total Assets increase by 1.6 crore, Liabilities increase by 1.6 crore, and Equity remains unchanged.
- 3Total Assets increase by 1.45 crore, Liabilities increase by 1.6 crore, and Equity increases by 5 lakh.
- 4Total Assets increase by 1.65 crore, Liabilities increase by 1.6 crore, and Equity increases by 5 lakh.✓
Correct answer
Total Assets increase by 1.65 crore, Liabilities increase by 1.6 crore, and Equity increases by 5 lakh.
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