The Main Two Sides of The Accounting

Reference:
Label, W. (2010, Jul. 11). “Exploring the Ins and Outs of Double Entry Accounting”. Evan Carmichael, from: http://www.evancarmichael.com/Accounting/5234/Exploring-the-Ins-and-Outs-of-Double-Entry-Accounting.html

Summary:
In this article, Label explained the double entry system though steps of the accounting cycle. According to Label, the double entry system has two equal sides, debit in the left side and credit in the right side. However, this cycle includes five steps in an accounting period. First, an accountant writes a financial transaction in a general journal. In this step, the accountant distributes this transaction on accounts by using the double entry system. In the Second step, the accountant sends the financial information from the general journal to the general ledgers. There is a specific general ledger for each account. Third, the accountant creates a trial balance that includes a debit and a credit side to receive the balances of accounts. In this step, the total of the debit and the credit side must be equal. In the Fourth step, the accountant does the adjusting entries. The accountant uses the double entry system to edit the balances of some accounts such as a prepaid building rent and office supplies. Fifth, the accountant figures out the net income by using the double entry system on revenues and expense accounts. In this step, he or she closes these accounts close in the owner's equity account.

Reaction:
I agree with the author as he showed the relationship between the double entry system and the steps of the accounting cycle. Also, I think he is creative, because he can explain his points with clear examples. However, I disagree with the author when he said the basic accounting equation is assets = liabilities + owner's equity, for I think that the basic accounting equation is assets + revenues = liabilities + owner's equity + expenses.