The Exposition of Fundamental Accounting Procedure.

Abstract Students with no previous knowledge of accounting often have considerable difficulty in appreciating the rationale of the debit/credit technique and its implications in relation to basic double entry theory. In performing the task of accounting for assets, one account for just these two concepts, namely, (i) assets themselves, and (ii) the rights to ownership of the assets. The term "equities" has been used up to the present as the one most appropriate to convey the notion of this ownership of or rights to assets. Thus, one can get as the interpretation of this twofold aspect of this positive notion of assets, the first expression of the basic accounting equation, that is, assets are always equal to equities. The right of ownership of assets constitutes a source of claim upon them, and these claims can be distinguished as resting in two main categories, designated "liabilities" and "proprietorship." That is, equities is equal to liabilities plus proprietorship, and hence, assets is equal to liabilities plus proprietorship.