Ledger

The Accounting Equation

• The amount of the resources supplied by the owners is called capital

• The actual resources that are in the business are called assets

  assets = capital

• Liabilities represent the amounts owing to people other than the owners(s) in relation to supply of the assets

  assets = capital + liabilities

Double-entry Principle

• Every business transaction has a twofold aspect
• Both sides must be recorded
• The double-entry system has an account for every asset, every liability and capital