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What is a trade discount and how is it treated in the day books? How do you post the purchases returns day book? What is a remittance advice and how does it relate to the books of prime entry? What controls help ensure completeness and accuracy in the books of prime entry? What is the difference between capital and revenue expenditure? How does a settlement (cash) discount get recorded compared with a trade discount? How do the books of prime entry contribute to the double-entry system? How would you record the purchase of a non-current asset on credit in the books? How do you record opening entries when starting a new set of books?
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What is the accounting equation and how does bookkeeping maintain it?

Intermediate

Answer

The accounting equation is Assets = Liabilities + Capital (owner's equity). Double-entry bookkeeping maintains it because every transaction affects the equation on both sides equally or offsets within one side, so it always balances. The trial balance and balance sheet reflect this equality.
Owner invests 10,000: Assets (cash) +10,000 = Capital +10,000.
Real-world example Taking a loan raises cash (asset) and a liability equally, keeping the equation in balance.

Common follow-ups: What are the three elements? | Why does the equation always balance?

Trial Balance Control Accounts Books of Prime Entry
All 26 Books of Prime Entry questions