Let's Learn Accounting !

I always explore everything in which i'm interested. I've been learning this complicated stuff for about 2 months. I didn't like something that connected with math before, but recently I don't know why accounting caught my eye. And I want to record everything that I learn here.

First, I want to explain about the basic accounting equation. The two basic elements of a business are what it owns and what it owes.  We have to remember these three basic accounting "Assets, Liabilities and Equity". "Asset" are the resources a business owns. claims of those to whom the company owes money are called "Liabilities", and claims of owners are called "equity". We can express the relationship of "Asset, liabilities and Equity" like this :

ASSET = LIABILITIES + EQUITY.
this relationship is the basic accounting equation. Assets must equal the sum of liabilites and equity.

Key notes  :

* Assets : The common characteristic possessed by all assets is the capacity to provide future services or benefits.
* Liabilities : are claims against assets (existing debts and obligations). Includes : "Note payable, accounts payable, wages payable, sales and real estate taxes payable"
*Equity  generally consists of : Share capital-ordinary (is the term used to describe amounts paid in by shareholders for the ordinary shares they purchase), and retained earnings (determined by three items : revenue, expenses and dividends).

Let's go to the simple example : The total assets of NaMira Company are Rp.150.000.000 and its equity is Rp. 70.000.000. what is the amount its total liabilities?
answer:
ASSET             = LIABILITIES + EQUITY
150.000.000     = Liabilities + 70.000.000
Liabilities           = 150.000.000 - 70.000.000 = Rp. 80.000.000


Transaction 1. Investment by Shareholders.
Sarah and Mira decide to to open a computer company that they incorporate as SarahNamira Inc. on July 1, 2013, they Invest Rp.150.000.000 in cash in the business exchange for Rp.150.000.000 of ordinary shares. This transaction results in an equal increase in both assets and equity. The asset cash increases Rp. 150.000.000, as does Share Capital-Ordinary. This transaction is like this :

Assets                                   =  Liabilities      +       Equity
                                                                                   Share

Cash                                                                           Capital

+Rp.150.000.000                  =                                  +Rp.150.000.000


Transaction 2. Purchase of Equipment for Cash
SarahNamira Inc. Purchases computer equipment for Rp. 70.000.000 cash.  Cash decreases Rp. 70.000.000, and the asset Equipment increases Rp. 70.000.000. The specific affect of this transaction and the cumulative effect of the first two transactions are :

Assets                                                           =  Liabilities      +     Equity
                                                                                                        Share

Cash                            +  Equipment              =                                Capital

+Rp.150.000.000                                          =                               +Rp.150.000.000                                             

-Rp. 70.000.000            +Rp.70.000.000     =

 Rp. 80.000.000            +Rp. 70.000.000     =

                                                                                                   

   Rp. 150.000.000                                     =                   Rp. 150.000.000

Observe that total assets are still Rp.150.000.000. Share Capital- Ordinary also remains at Rp. 150.000.000, the amount of the original investment.

Hope this help! Let's learn accounting together!  ;)

source : Financial Accounting IFRS Edition, Weygandt,Kimmel,Kieso.