The accounting equation table below acts as a quick reference to help show you the effects of typical start-up business transactions on the fundamental accounting equation. The table is based on the formula for the accounting equation as follows:
Assets = Liabilities + Owners Equity
The Accounting Equation Table Guide and Key
- Transaction: Each row represents a business transaction typical used when starting a business.
- Assets: The assets part of the basic accounting equation.
- Liabilities: The liabilities part of the basic accounting equation.
- Equity: The equity part of the accounting equation, which includes capital and reserves.
- + The item is increased due to the transaction.
- – The item is decreased due to the transaction.
- + /- One item is increased and another is decreased due to the transaction.
Transaction | Assets | Liabilities | Equity |
---|---|---|---|
Injection of capital by owner | + | + | |
Property provided by owner | + | + | |
Office equipment purchased with cash | + / – | ||
Equipment purchased on account | + | + | |
Equipment sold | + / – | ||
Supplier account payment made | – | – | |
Revenue for cash sale received | + | + | |
Expense paid by cash | – | – | |
Cash withdrawn by the owner | – | – | |
Cash received from an account customer | + / – | ||
Loan is taken from a bank | + | + | |
Expenses incurred on account with a supplier | + | – | |
Loan repayment is made with cash | – | – |
The Accounting Equation Table November 6th, 2016