Formula Sheet: Recording of Transactions - I

A represents Assets, L represents Liabilities, and C represents Capital. This equation signifies the fundamental relationship between the assets owned by a business and the claims against those assets.

Rearrangement of the accounting equation, used to find Capital if Assets and Liabilities are known. Useful for various accounting assessments.

In double-entry accounting, this principle ensures that for every debit entry, there is a corresponding credit entry, maintaining the balance of the accounting equation.

Indicates that when assets increase, they are debited. This applies universally in accounting for all asset transactions.

Indicates that when assets decrease, they are credited, reflecting outflows or disposals of assets in accounting.

Shows that when liabilities increase (e.g., debt, payables), they are credited, which indicates a source of funds for the business.

Indicates that a decrease in liabilities should be recorded as a debit, reducing the obligations of the business.

Increases in the owner's equity (capital) from profits or additional investments are credited.

This indicates that any withdrawals or losses reducing the equity are debited against Capital.

For Assets: Debit = Increase, Credit = Decrease; For Liabilities: Debit = Decrease, Credit = Increase; For Capital: Debit = Decrease, Credit = Increase.

Illustrates the impact of starting a business with cash on the Cash and Capital Accounts.

This entry reflects the transaction of moving cash to open a bank account, impacting both cash and bank holdings.

Shows the purchase of furniture through a bank payment, thereby reducing bank assets and increasing furniture assets.

Records the purchase of goods on credit, which increases expenses and accounts payable.

This entry shows the sale of goods on credit, affecting both sales income and accounts receivable.

Indicates the payment of rent, increasing the expense and decreasing the cash assets.

Shows the transaction reflecting salary payment, indicating an increase in expense and a decrease in available cash.

A template for recording transactions in the journal, where each entry captures the date, accounts involved, and respective amounts.

Describes the process of transferring journal entries into the respective ledger accounts, maintaining chronological order.

Reflects the core principle of double-entry bookkeeping which ensures accuracy and balance in accounting records.