Accounting Equation - Urdu/Hindi - Get Ahead in Cambridge Accounting 7707 / 9706 with Easy Tips

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BUSINESS ENTITY CONCEPT:
According to this concept, the business is considered as a separate business entity from its owner(s). Thus the financial information of the business will be recorded and reported separately from its owner’s personal financial information.
CONDITIONS FOR CONSIDERING A MONETARY EVENT AS “TRANSACTION”
1. There must be Two Parties Involved
2. The event must be Measurable in Terms of Money.
3. The Event must result in Transfer of Property and Service.
4. The events must Change the Financial Position of the Business.
MAKING OF ACCOUNTS AND DOUBLE ENTRY SYSTEM:
Instead of constantly drawing up balance sheets after each transaction what we have instead is Double Entry System.
DOUBLE ENTRY:
Double entry is the fundamental concept underlying present-day bookkeeping and accounting. Double-entry accounting is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the equation Assets = Liabilities + Equity, in which each entry is recorded to maintain the relationship.
BREAKING DOWN 'DOUBLE ENTRY':
In the double-entry system, transactions are recorded in terms of debits and credits. Since a debit in one account will be offset by a credit in another account, the sum of all debits must therefore be exactly equal to the sum of all credits. The double-entry system of bookkeeping or accounting makes it easier to prepare accurate financial statements directly from the books of account and detect errors.