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    Acconting equation

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    Assignment Type: Discussion Board Deliverable Length: 1-2 paragraphs

    For each of the following items, give an example of a business transaction that has the described effect on the accounting equation:

    Increase an asset and increase a liability.
    Increase one asset and decrease another asset.
    Decrease an asset and decrease owner's equity.
    Decrease an asset and decrease a liability.
    Increase an asset and increase owner's equity.

    Instructor Comments:
    In this discussion board you are asked to give examples of a business transaction that has specific affects on the accounting equation. Do not use examples from the text! Use examples that reflect transactions you see at your own place of business or from your industry or ones reflected in the transactions you encounter in your personal or professional life.
    Please submitt references. Thank you

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    Solution Preview

    The accounting equation is
    Liabilities + Equity = Assets.

    This tells that the sources of funds are equal to the application of the assets. This balance because of dual aspect concept. This means that every business transaction has a dual aspect as every transaction affects at least two accounts.

    A. Increase an asset and increase a liability.
    Taken a Loan of $2 mn from CitiBank

    B. Increase one asset and ...

    Solution Summary

    This explains the concept of accounting equation with the help of various examples