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:
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.
|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|Cash withdrawn by the owner||–||–|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||–||–|