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Accounting Equation Elements and Journal Entries Create a post about the accounting equation, elements and effects on element

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The accounting equation is Assets = Liabilities + Owners Equity

I will concentrate the following accounting elements in this posts: Assets and Owners Equity (specifically Revenue).

A business transaction affecting the accounting equation is one in which we (the company) provide tax reporting services (1040 long form) to a individual customer for $150 and the customer pays our company cash. First, cash an ASSET account is increased because cash is coming into the company from the customer. To increase an asset account, we debit the cash account. Second, the revenue account which is part of Owners Equity is also increased because services are provided. To increase a revenue account, we need to credit the account. We can go further and label revenue accounts, appropriately. In this case, we can call it Individual Preparation Services. The entry is as follows

Cash DR $150
Indiv. Prep. Services CR $150

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Answer #1

The Accounting equation is, Assets = Liabilities + Owners equity.

The concentration is on the following accounting elements in this posts: Assets and Liabilities.

A business transaction affecting the accounting equation is, Taking a loan of $1,000 (repayable in long run) in cash. First, loan, a liability account is increased because we have created a Liability of repaying the loan in future for received cash. For Increasing the liability, we will credit the loan account . Second Cash is part of Assets, it is also increased because we are receiving cash as loan. To increase cash (asset) we need to debit the cash account.

The journey entry is,

Cash account Dr $1,000

Loan account Cr $1,000

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