How to Balance the Accounting Equation

Accounting rule "what is the accounting rule for "" bought refrigerator for personal use $ 400?

I know refrigerator comes and cash goes out, but what is the effect of this transaction on the Asset=liability+capital side? thank you for your time?
and if you can please give me some more examples with other kind of transactions on the equation. please not that i'm not confused with what to debit or what to credit, rather i get confused when i try to balance a transaction on accounting equation.. thank you for all"

Mohamed sadik from UAE

Mohamed Sadik! there is big relationship between accounting rule and accounting  equation.  There are 6 accounting rules which apply on three accounts. Personal accounts rules apply on the real and artificial persons. Real accounts' accounting rules apply on tangible and intangible assets. Nominal accounts' accounting rules apply expenses and incomes. For learning accounting rules, it is good, you should learn accounting equation. In accounting equation, you will see one of basic formula which you have mentioned Total assets = External liabilities + capital. If you want to balance the accounting equation, you should keep following things in your mind.

a) If any asset will buy, total asset side will increase with that asset and cash will decrease or creditor of that asset will increase in liability side. But it should be for office use. If it will be for personal use as you mentioned in your example. This will decrease the capital and this will decrease cash. There will not any effect on the quantity or price of office  refrigerator. So, our accounting equation will easily be balanced by doing this.

b) All the expenses will decrease the value of our capital. It will decrease our cash or bank balance if we have paid expenses with our cash or bank money. If we did not pay the expenses, it will increase our current liability.

c) All the incomes will increase the value of our capital. It will also increase our cash or bank balance if we have received incomes in cash or through cheque. If we have to receive our income, it will increase the debtor amount. Debtors are also our assets.

d) All personal account may be asset account or liability account. Suppose, when you will buy  office refrigerator of $ 400 on credit from Rahim, Rahim account will open. By balancing accounting equation. We will increase the asset with the value of refrigerator of $ 400. We will also increase our liability of $ 400 which is payable to Rahim.
Share above Content to Your Friends


accounting Accounting Concepts Accounting Course Accounting Education accounting equation Accounting Solutions Algebra Answer the Questions and Become Master Balance Sheet bank Bodybuilding Education Business Business Education Business Environment Business Solutions CA Calculus cameras car Car Driving Course Career Solutions carpentry Class 10 Maths Class 9 Maths Computer Computer Basics Computer Hardware Computer Networking Computer Software Computer Solutions cooking education Corporate Accounting Corporate Law cost cost accounting CSE Dailymotion depreciation determinant drawing Driving Education e-accounting earn money Economics Education Education Education Solutions Electronics Email Events Examination Finance Education Finance Solutions financial Financial Accounting FIR Football Gambling Gambling Addiction Goldsmith Google Adsense GST Guest Writers Health Education Help History Home Building Home Maintenance amp; Repair Index Number India Indian Language Inspiration insurance internal audit Internet Internet Forum Jobs amp; Careers Journal journal entries journal entry Kenya Laptop Basics Law Education Law Solutions Learning Lecture Legal Education Linear algebra Linear Programming Malaysia Management Accounting Management Education Management Solutions Marketing Education Mathematics Education matrices Medical and Surgery Education Mobile motivation MS Excel Nepal Nigeria organisation Other Pakistan Personal Finance Philippines Photography Photoshop Software Picture Plumbing Education Probability Profiles provision real estate rectification Relationships amp; Family Religious Studies Result Sahas Saudi Arabia Science Education Self-Learning Skating Slideshow Solution Spiritual Education Sports Statistics Statistics Education stock Story svtuition Tablet Education Tally Tally Solutions Tally.ERP 9 tax Tax Solutions teaching Teaching Education Tech Simplify Test Testimonials Travel Trigonometry tuition TV Shows UK USA variance analysis VAT vector Video Video on Demand videos Vocational Education Web design website Welding Skills Wife Window Movie Maker Wordpress working capital Youth youtube
Svtuition: How to Balance the Accounting Equation
How to Balance the Accounting Equation
Not found any lecture VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock