Answer to Question #247064 in Accounting for Roy

Question

Indicate the nett effect of the transactions under the accounting equation

Answer 1

Solution:

The accounting equation is as follows:

Assets = Liabilities + Equity

The net effect of transactions under the accounting equation is normally balanced, that is for every debit transaction there must be a credit transaction hence creating a balancing effect.

Usually, for a given transaction, either asset is increasing and liabilities decreasing, and vice versa.