Contains the formula Assets = Capital + Liabilities & details that how it works

1. Accounting Equation
Assets = Liabilities + Capital
By:- CA. MOHIT SHARMA

2. Accounting Rule:
•DEBIT the asset
what comes in
•CREDIT the asset
what goes out
Meaning
• Resources that the
business owns
• Measured in terms
of money
• Asset accounts increases
on the left or debit
• Decrease on the
right or credit side
Assets
In every transaction, the total Rs (money) value of all
debits equals the total Rs value of all credits
ASSETS
Debit Credit
+ -
BY:- CA. MOHIT SHARMA
8826980093/9650350688

3. Example:
• Creditors,
•Loans,
•Bank overdraft
•Outstanding-
Expense
Meaning
• Financial obligations
of an entity towards
outsiders
• Liabilities accounts
increases
on the right or credit side
• Decrease on the
left or debit side
Liabilities
In every transaction, the total Rs (money) value of all
debits equals the total Rs value of all credits
Liabilities
Debit Credit
- +
BY:- CA. MOHIT SHARMA
8826980093/9650350688

4. Example:
• Capital a/c
•Drawing a/c
Meaning
• These accounts relate
to owners of an
enterprise
• Equity accounts increases
on the right or credit side
• Decrease on the
left or debit side
Equity
In every transaction, the total Rs (money) value of all
debits equals the total Rs value of all credits
Liabilities
Debit Credit
- +
BY:- CA. MOHIT SHARMA
8826980093/9650350688