Accounting Equation Assets

Double Enrty System

In accounting every single activity is known as transaction. Every transaction has two effects.
we gain something and at the same time we lose something. One of these effects is known as Debit (Dr.)
and other is called Credit (Cr.)

1 Mr. Ali (The Owner of the business) brought $ 50,000 in his business.

Capital Increase Cr.

Cash Increase Assets Increase Dr.

2 Our Business Bought Office Building of $ 30000 cash.

Building Increase Assets Increase Dr.

Cash Decrease Assets Decreased Cr.

3 Our Business borrowed $ 20000 loan from a bank.

Cash Increase assets increase Dr.

Loan Increase Liability increase Cr.

4 Paid rent for the office building $ 10000.

Rent Expense Inceased Capital Decreased Dr.

Cash Decreased Assets decreased Cr.

5 Received $ 15000 as trasnportation income.

cash Increase Assets Increase Dr.

Transp. Income Increase Capital Increase Cr.

o effects.
known as Debit (Dr.)
 Accounting Cycle

Step 1: General Journal

It is a format used in Accounting to record day to day (Choronological) activities of the business.

L.p. It is bascially a page no. where this transction will be recorded in ledger. Rememeber ledger is the second step of ac

Journal
Date Accounts L.P. Dr.
1 Building 50000
Owner's Capital

(Owner invested capital in the form of buidling)

2 Utility Bill Paid 5000

Cash
(Business paid its utility bills)

3 Salary Paid 4000

Cash
(Salary is paid by the business to its employees)

4 Loan 15000
Cash
(Business repaid its loan)

5 Cash 20000
Building
(Business sold its building for cash)

6 Drawings 6000
Purcahses
(Owner taken away goods of the business for
personal use)
7 Cash 5000
Ali's Capital
(Owner brought additional funds in the business)
 of the business.

meber ledger is the second step of accounting cycle.

Cr.

50000

5000

4000

15000

20000

6000
5000