Credits These two equations are absolute in accounting. They are something to memorize. Accounts are used to indicate and summarize the increases or decreases to and balances of each asset , liability and owner's equity -type items, such as, capital , withdrawals , revenues and expenses .
Businesses establish an account for anything they wish to keep track of separately.
Think of an account like a bucket. An account works the same way. I need to record the different transactions in one place and I need to keep the effects to the different assets, liabilities, capital, withdrawals, revenues and expenses separate. I need to show the increases and decreases to each account, but I want the accounts to look the same. It just was not possible to do both those things at the same time unless the accounts looked the same.