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11000
Equity = assets − liabilities.
O Level · English Medium · Cambridge · Accounting
Transactions and double-entry records
Record a transaction’s two effects and preserve the accounting equation.
Shared cross-level core and stretch unit. Start with the core questions, then use the stretch example for deeper work. The same unit is available in related class and board pathways; it is not a full grade-specific or examination-specification course. A teacher should select the appropriate depth and further topics.
Learn the idea
Assets = liabilities + equity. A debit or credit is a side of an account, not simply good or bad. Assets and expenses normally increase by debit; liabilities, equity and income normally increase by credit. A transaction’s total debits equal its credits.
Worked example
Owner contributes Tk 10,000 cash: debit cash 10,000; credit capital 10,000. Buy equipment for Tk 3,000 cash: debit equipment and credit cash. The second transaction changes asset composition, not total assets.
- Identify the accounts and transaction date.
- Classify the effect on each account.
- Check equal debits and credits.
Stretch example
Accrual accounting recognises revenue and expenses in their relevant periods, not simply whenever cash moves. The treatment depends on the transaction and applicable reporting framework.
Your written practice
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no
One asset rises and another falls by the same amount, ignoring other charges.
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capital
Owner contribution is not sales revenue.
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Debit supplies 600; credit trade payable 600.
Recognise the asset and obligation.
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It creates an obligation to repay rather than income from operations.
Distinguish financing from earning.
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300
800−500 = 300.
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The business still owes the promised service, so cash receipt alone does not establish earned revenue.
Connect recognition to performance under the stated case.
Transaction diary
Record five fictional transactions with two effects each.
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- Classify accounts.
- Show equal debits and credits.
- Recheck the accounting equation.
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