1.

ACCOUNTING
EQUATION &
PRINCIPLES OF
DOUBLE ENTRY
 Accounting equation
Basic Accounting Equation:

ASSETS = OWNER’S EQUITY + LIABILITIES

Extended Accounting Equation:

ASSETS + DRAWINGS + EXPENSES = CAPITAL +

REVENUES + LIABILITIES
 DOUBLE ENTRY SYSTEM

 Every debit entry must have a credit entry

DEBIT CREDIT
 The total amount of debit entry must EQUAL ASSET LIABILITY
to the total amount of credit entry. EXPENSES REVENUE
DRAWING CAPITAL

The T-account consists of:

1. Title or name of the account
ACCOUNT NAME
2. Left side called Debit
3. Right side called Credit
DEBIT CREDIT
 ACCOUNTING EFFECTS

INCREASE ↑ (DR)

ASSET/EXPENSES (DR)

DECREASE ↓ (CR)

INCREASE ↑ (CR)

LIABILITY/REVENUE/O’EQUITY (CR)

DECREASE ↓ (DR)
LET’S
DISCUSS
1. TUTORIAL 2
2. Past year question