accounting equation cheat sheet

Here’s a simple Accounting Equation Cheat Sheet — perfect for quick study or revision 👇

🧾 1. Basic Accounting Equation
Assets
=
Liabilities
+
Owner’s Equity
Assets=Liabilities+Owner’s Equity
Term Meaning
Assets What the business owns (cash, equipment, stock)
Liabilities What the business owes (loans, creditors)
Owner’s Equity Owner’s claim on assets (capital + profit - drawings)
🧩 2. Expanded Accounting Equation
Assets
=
Liabilities
+
Capital
+
Revenues
−
Expenses
−
Drawings
Assets=Liabilities+Capital+Revenues−Expenses−Drawings
Components:
Component Description Increases Decreases
Assets Resources owned Dr Cr
Liabilities Debts owed Cr Dr
Capital Owner’s investment Cr Dr
Revenues Income earned Cr Dr
Expenses Costs incurred Dr Cr
Drawings Owner withdrawals Dr Cr
⚖️ 3. Golden Rules of Accounting
Type of Account Rule Example
Personal Account Debit the receiver, Credit the giver Paid to supplier → Supplier a/c Cr
Real Account Debit what comes in, Credit what goes out Bought furniture → Furniture Dr
Nominal Account Debit all expenses & losses, Credit all incomes & gains Rent paid → Rent Dr
💰 4. Common Transactions & Effects
Transaction Asset Liability Capital Effect
Owner invests cash ↑ – ↑ Both sides ↑
Purchase asset on credit ↑ ↑ – Both sides ↑
Pay liability ↓ ↓ – Both sides ↓
Earn revenue (cash) ↑ – ↑ Both sides ↑
Incur expense (cash) ↓ – ↓ Both sides ↓
Owner withdraws cash ↓ – ↓ Both sides ↓
🧮 5. Profit/Loss in the Equation
Profit (or Loss)
=
Revenues
−
Expenses
Profit (or Loss)=Revenues−Expenses
Ending Capital
=
Beginning Capital
+
Profit
−
Drawings
Ending Capital=Beginning Capital+Profit−Drawings
🧠 6. Quick Memory Tricks

A = L + OE → Always balanced

DEAD CLIC rule:

Debit Expenses, Assets, Drawings

Credit Liabilities, Income, Capital