accounting equation is the basic concept for the recording of transactions in accounting, all of the business firms and accounting organizations record transactions on the basis of this equation.
The accounting equation states that:
Assets = Liabilities + Capital
This means that what the business owns is equal to what it owes (to any creditors, other
lenders and the proprietor).
The procedure for balancing off is as follows.
(a) Total both sides of the ledger account.
(b) Which side is "bigger"? Enter the balancing figure required on the "smaller" side.
(c) The total of both sides should now agree. Enter the totals and "rule off" (i.e. underline).
(d) Bring the balance down to the beginning of the following month.
0 Comments