BUSINESS TRANSACTIONS'UPON THE ACCOUNTING EQUATION

BUSINESS TRANSACTIONS 'UPON THE ACCOUNTING EQUATION
Recall that every business transaction brings about a double change in Ifae financial position of the s. The financial position of a business is represented by the accounting equation:
Assets s Liabilities + Owner's equity.
Regardless of whether a business 'grows or contracts this equality between the assets and the claims the assets is always maintained.. Any increase in the amount of total assets is necessarily lied by an equal increase on the other side of the equation, that is, by an increase in either the or the owner's equity. Any decrease in the amount of total assets is necessarily accompanied by an decrease in liabilities or owner's equity. Any expense incurred will decrease the owner's equity on one and decrease cash on the other side of the equation. Any revenue earned will increase the owner's on one side and increase assets on the other side.
The effect of transactions upon the accounting equation can best be illustrated by taking a brand-•business as an example:-