Accounting Equations Overview, Formulas & Examples Lesson
Every transaction demonstrates the relationship of the elements and shows how balance is maintained. For example, an increase in an asset account can be matched by an equal increase to a related liability or shareholder’s equity account such that the accounting equation stays in balance. Alternatively, an increase in an asset account can be matched by an equal decrease in another asset account. It is important to keep the accounting equation in mind when performing journal entries. The purchased office equipment will increase Assets…