1. The Double-Entry Bookkeeping System
Every economic event impacts at least two accounts in the accounting system. This system is governed by the structural bedrock of accounting: the Accounting Equation.
Assets = Liabilities + Equity

To expand this equation to include operational metrics:
Assets = Liabilities + Contributed Capital + Beginning Retained Earnings + Revenue − Expenses − Dividends

2. Debit (Dr.) and Credit (Cr.) Rules
The terms debit and credit simply mean left side and right side of an account (T-Account), respectively. The impact of a debit or credit depends entirely on the classification of the account:
┌───────────────────────────────────────────────────────────────────────────┐
│                        DEBIT AND CREDIT RULES SUMMARY                     │
├───────────────────────────────┬───────────────────────────────────────────┤
│    INCREASED BY DEBITS (Dr.)  │         INCREASED BY CREDITS (Cr.)        │
│    DECREASED BY CREDITS (Cr.) │         DECREASED BY DEBITS (Dr.)         │
├───────────────────────────────┼───────────────────────────────────────────┤
│ • Assets                      │ • Liabilities                             │
│ • Expenses                    │ • Equity                                  │
│ • Dividends / Drawings        │ • Revenue / Income                        │
└───────────────────────────────┴───────────────────────────────────────────┘

3. Chronological Steps of the Accounting Cycle
The accounting cycle is a strict, recurring 9-step process completed during each reporting period:
  1. Identify & Analyze Transactions (Source documents)
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  2. Journalize Transactions (Record chronologically in General Journal)
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  3. Post to the Ledger (Transfer entries to T-accounts in General Ledger)
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  4. Prepare unadjusted Trial Balance (Verify debits equal credits)
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  5. Journalize & Post Adjusting Entries (Accruals, deferrals, depreciation)
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  6. Prepare Adjusted Trial Balance (Confirm visual ledger mathematical equality)
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  7. Prepare Financial Statements (Income Statement, Equity, Balance Sheet, Cash Flows)
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  8. Journalize & Post Closing Entries (Zero out temporary accounts to Retained Earnings)
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  9. Prepare Post-Closing Trial Balance (Verify permanent accounts for next perio
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