Understanding the Accounting Equation (Simplified Case Daily)

In a study of accounting is very important to know the accounting equation, accounting equation is very useful in the preparation of financial statements. To study the accounting equation is try you see Learning Accounting Debit and Credit on http://kalmet.blogspot.com Blog

By using daily transactions and simple as described in Learning Accounting Debit and Credit, then we can learn how to record transactions on the debit side and credit side. Based on lessons learned in the notes to Learning Accounting Debit and Credit then can we shape the accounting equation as follows:

1. Look at the positive positions in each of the elements of accounting as discussed in Accounting Debit and Credit Education, namely:

- Assets increased debit positioned
- Obligation to grow in the position of credits
- Equities / Capital increase in the position of credits
- Revenue grew in the position of credits
- Cost / Expense increases are on the debit

2. By looking at the positive signs we may form the accounting equation, the accounting elements of the debit side the same as the credit side of the accounting elements, with the following equation:

ASSET PRICES = CAPITAL REVENUE OBLIGATIONS

3. In accounting, Assets, Liabilities and Capital is a component of the Balance Sheet, Income and expenses while the group of Income (Loss), above this, the accounting equation can be simplified to

- Group Balance Sheet, the accounting equation as follows:
ASSETS = LIABILITIES CAPITAL

In this equation can be concluded that the assets we have acquired from the loan and / or from capital

- Group Profit (Loss) with the accounting equation as follows:
EARNINGS (LOSS) = REVENUES - COSTS

In this equation can be concluded that if the income is greater than the costs, the difference is recognized as income, if income is less than the cost, the difference will be recognized as a Loss

4. Relationship Balance Sheet with Income (Loss)

Consolidated profit (loss) is a transaction made for a certain period and the results of income (loss) will affect the capital owned.

This means if we have gain the capital that we have will increase by profits derived, whereas if it will automatically lose our capital would be reduced by losses. Thus the accounting equation for capital is as follows

CAPITAL = CAPITAL INCOME (LOSS)

Conclusion:

Accounting equation Gain (Loss) are as follows:
EARNINGS (LOSS) = REVENUES - COSTS

Accounting equation for capital is as follows:
CAPITAL = CAPITAL INCOME (LOSS)

Accounting for the balance equation is as follows:
ASSETS = LIABILITIES CAPITAL