The principle of double entry developed from the axioms of accounting equation is given as

JAMB Accounting 2023 102 views

The principle of double entry developed from the axioms of accounting equation is given as

  1. Assets + Liability = Equity
  2. Assets + Equity = Liabilities
  3. Liabilities + Equity = Assets ✓
  4. Liabilties + Equity = Net assets

Explanation

The accounting equation states that what you own (assets) must equal what you owe (liabilities) plus owner ownership (equity). Rearranged: Liabilities + Equity = Assets. Both sides must always balance.

Adding liabilities and assets together makes no sense because you’re mixing what you own with what you owe. Net assets is assets minus liabilities, which would only equal equity.

Basic formula: Assets = Liabilities + Equity. Or rearranged: Liabilities + Equity = Assets.

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