Sunday, August 7, 2011

procedure for developing an accounting equation

The steps required for developing an accounting equation are as under :
 step 1 : To find out variables : Each and every transaction affects an accounting equation . The main three elements , assets, liabilities, and capital are included inaccounting equation .

step 2 : To find out effects variablrs : After financing out the variable effected by a transation , the second step  for developing an equation is to find out effects on  variable .

step 3 : Sho the effects on equation : After ascertaining the veriable of a transaction , it is necessary to show the effect on the appropriate side of equation .  

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