ACCOUNITNG EQUATION SOME

BASIC UNDERSTANDING
EVENTS
ASSETS LIABILITIES EQUITY =
+

OWNER BRINGS SOME
ASSETS IN BUSINESS

INC N.E
INC(CAP)
=
+
PURCHASE OF AN ASSET
ON CREDIT
INC INC N.E =
+
PURCHASE OF AN ASSET
ON CASH

DEC
N.E N.E
=
+
PAYMENT OR
RETIREMENT OF LIABILITY
DEC N.E =
+
INC
DEC
CONT
ACCOUNITNG EQUATION SOME
BASIC UNDERSTANDING
EVENTS
ASSETS
LIABILITIES EQUITY
=
+
EXPENSES DUE AND
PAID
DEC
N.E DEC(EXP)
=
+
EXPENSES DUE BUT
NOT PAID
N.E
INC DEC(EXP)
=
+
PAYMENT OF EXPENSES
IN ADVANCE
N.E N.E
=
+
INC
DEC
CONT
ACCOUNITNG EQUATION SOME
BASIC UNDERSTANDING
EVENTS
ASSETS
LIABILITIES EQUITY
=
+
REVENUE EARNED AND
RECEIVED
INC
N.E INC(REV)
=
+
REVENUE EARNED BUT
NOT RECEIVED
INC
N.E INC(REV)
=
+
REVENUE RECEIVED
BUT NOT EARNED
INC N.E
=
+
INC
ACCOUNITNG EQUATION SOME
BASIC UNDERSTANDING
DOUBLE ENTRY
SYSTEM
DEBIT AND CREDIT
DEBIT
CREDIT
THE EQUALITY OF DEBITS AND CREDITS PROVIDES THE
BASIS OF DOUBLE ENTRY ACCOUNTING SYSTEM
(ENSURES ACCURACY OF RECORDED AMOUNTS)
ACCOUNTING IS A BUSINESS LANGUAGE , THERE IS A
WAY TO WRITE THIS LANGUAGE CALLED TRANSACTION
(ENTRY) , AN ENTRY HAS TWO SIDES , LEFT AND RIGHT
ANY THING WRITTEN ON THE LEFT SIDE OF THE ENTRY
ANY THING WRITTEN ON THE RIGHT SIDE OF THE ENTRY
ACCOUNITNG EQUATION SOME
BASIC UNDERSTANDING
RULES OF DEBIT AND CREDIT
NATURE OF ACCOUNT INCREASE DECREASE
ASSET DEBIT CREDIT
LIABILITIES CREDIT DEBIT
EQUITY CREDIT DEBIT
EXPENSES DEBIT CREDIT
REVENUE CREDIT DEBIT