# The Accounting Equation Table

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 basic accounting equation as follows:

In this table, we will explore each element of the accounting equation and its relationship to the other two.

## The Accounting Equation Table Guide and Key

1. Transaction: Each row represents a business transaction typical used when starting a business.
2. Assets: The assets part of the basic accounting equation. Assets refer to any resources that a business owns or controls, such as cash, inventory, equipment, and property.
3. Liabilities: The liabilities part of the basic accounting equation. Liabilities are the debts and obligations that a business owes to others, such as loans, accounts payable, and taxes.
4. Equity: The equity part of the accounting equation, which includes capital and reserves. Equity represents the residual value of a business’s assets after liabilities are subtracted, and it can be either owner’s equity or shareholder’s equity.
5. + The item is increased due to the transaction.
6. The item is decreased due to the transaction.
7. + /- One item is increased and another is decreased due to the transaction.
The Accounting Equation
TransactionAssetsLiabilitiesEquity
Injection of capital by owner+ +
Property provided by owner+ +
Office equipment purchased with cash+ / –
Equipment purchased on account++
Equipment sold+ / –
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Cash withdrawn by the owner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

## Conclusion

In conclusion, the accounting equation is a fundamental concept in accounting that is used to understand and analyze the financial position of a business. The table shown above can be used as a reference to aid understanding of how typical bookkeeping transactions affect the accounting equation.