A man who cannot make mistakes cannot do

anything. (Bernard's Bingo Magazine)

ACCOUNTING
MECHANICS

Dr Amit Kumar Sinha

aksinha1@amity.edu

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ACCOUNTING EQUIVALENCE
Assets = Owner’s Equity +
Outside Liabilities

A = OE + OL

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 DOUBLE ENTRY SYSTEM

A = OE + OL
Debit = Credit
In
In the
the double-entry
double-entry accounting
accounting system,
system,
every
every transaction
transaction is
is recorded
recorded by
by equal
equal
amounts
amounts of
of debits
debits and
and credits.
credits.
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 ACCOUNTANT’S LIFE
A = OE + OL
ASSETS LIABILITIES EQUITIES
Debit Credit Debit Credit Debit Credit
for for for for for for
Increase Decrease Decrease Increase Decrease Increase

ASSETS LIABILITIES EQUITIES

Debit Credit Debit Credit Debit Credit

+ - - + - + 4
ACCOUNTING CYCLE
1. Business Transaction
2. Transaction is recorded in document
(Voucher / Receipt)
3. Analyze the transaction – location ?
4. Journal Entry
5. Ledger Accounts (or ‘T’ account)
6. Trial Balance
7. Balance Sheet, P&L A/c, Cash Flow
Statement

5
 ACCOUNTANT’S ROUTINE

Source
Transaction documents Analyze

Balance Sheet
Prepare a trial Post to the Journal Entry
P & L A/c ledger
balance
Cash Flow
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 ACCOUNTANT’S ROUTINE

Source
Transaction documents Analyze

Balance Sheet
Prepare a trial Post to the Journal Entry
P & L A/c ledger
balance
Cash Flow
7
TRANSACTION-1
Chirag started business with cash $
30,000.
The accounts involved are:
(1) Cash (asset)
(2) Owner’s Equity (equity)

8
TRANSACTION-1
Chirag started
ASSETS business with cash Rs.
EQUITIES

30,000.
The accounts involved are:
Debit
(1) Cash (Credit
asset) Debit Credit
-
(2)+Owner’s Equity (equity)- +

9
TRANSACTION-1 - LEDGER

10
Thank You Now, was that debits
to the left or credits
to the left?
I sure wish I had paid
more attention in
class!

Email: dramitksinha@gmail.com

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