Basic Accounting Equation

Basic Accounting Equation

  Basic Accounting Equation is a summary of the recording of the results of any analysis of economic events or transactions that occur on the Company's financial and ogranisasi.

  So what is a Basic Accounting Equation?


a. Understanding Basic Accounting Equation and formula.

           In case the financial transaction will result in changes in assets, liabilities, and capital. Change is what we are quick in the basic accounting equation.
         
           Maybe you already learned about basic accounting majors in high school when Ips. But, for those that did not learn we learn together about the basic accounting equation.


            To better understand the basic accounting equation in the example at the beginning of the establishment of the company, its owners depositing cash or in the form of objects worth USD 5000.00 to start their business without any capital debt
then the equation is:
  Assets = Capital
   So, USD 5000.00 = USD 5000.00

Kesimpulanya property owned by the same company that owned the property owner.
  On the other hand there are rights of creditors called debt
If the owner 2500.00 USD to raise capital from debt, then its equation becomes:
   Assets = Liabilities + Capital
So, Rp Rp 2500.00 + 7500.00 = USD 5000.00
Thus the development of the basic accounting equation is as follows:
Assets = Liabilities + Capital
  Basic Accounting Equation Analysis
   ASSETS = LIABILITIES
ASSETS = CAPITAL DEBT +
  
The effect of financial transactions:
- Increase / decrease Assets only
- Increase / decrease Liabilities alone
- Increase / decrease assets and liabilities

Revenue and Expenses
Capital increase revenue, reduce cost of capital