All 5 The Accounting Equation questions
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What is the basic accounting equation? How does a transaction keep the equation balanced? A business takes a $10,000 bank loan. How does the equation change? How does the accounting equation relate to the balance sheet?
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What is the expanded accounting equation?

Intermediate

Answer

Assets = Liabilities + Capital + Income - Expenses - Drawings. It breaks equity into its drivers to show how profit and owner activity affect it.
Equity = Opening capital + Profit (Income - Expenses) - Drawings
Real-world example Explaining to an owner why equity rose: profit added, drawings subtracted.
All 5 The Accounting Equation questions