Pay Thanks to Allah, not to me

Waqar Aamir Katiar

Contact No. 031-22-22-99-69, 0300-2831681

Accounting Equation
Accounting equation is a check to business transparency. If it is not balance
then something is not going right

Assets = Liabilities + Capital (Owner’s Equity)

From 1st transaction of business to huge volume of transactions it should be

balance.

By an example we will learned about that

1st Transaction Mr. Aamir started a business with 250000 cash

Cash 250000
Capital 250000

2nd Transaction He Purchased a building worth of 100000. He paid 50000

cash

Building 100000
Cash 50000
Account Payable 50000

3rd Transaction He gives services to a customer. The customer paid 25000

cash and reaming 20000 will pay letter.

Cash 25000
Account Recievable 20000
Services Income 45000
 Pay Thanks to Allah, not to me
Waqar Aamir Katiar
Contact No. 031-22-22-99-69, 0300-2831681

4th Transaction He Purchased Machine on Cash 75000

Machine 75000
Cash 75000

5th Transaction. He paid 50000 to creditor

Account Payable 50000

Cash 50000

Exercise for Class

You have to make accounting equation in excel of following transaction

1. Mr. Waqar started a business with cash 500000

2. He purchased a building worth of 100000 on cash
3. He drawn 30000 for his personal use
4. He purchased a machine on credit worth of 100000
5. He paid 75000 to creditor

Exercise for Home

1. Mr. Goher invested 700000in a business. With his investment of
500000
2. He Purchase a building on cash 250000
3. He Paid 100000 to creditor
4. He purchased a machine worth of 250000. he paid 150000 cash
5. He paid to creditor 100000