THE ACCOUNTING EQUATION

Identifying

Identifying

Identification of the economic events relevant to the business

Posting

Journalizing

Preparing the journal entries

Classifying

Grouping assets, liabilities, revenues, expenses, and equities

(Summarizing

Prepare the Trial Balance

Basic Accounting Equation

ASSETS = LIABILITIES + OWNER’S EQUITY

Expanded Accounting Equation

ASSETS = LIABILITIES + OWNER’S CAPITAL - OWNER’S DRAWING + REVENUE - EXPENSES