THE EFFECT OF DIFFERENT TRANSACTIONS ON THE ACCOUNTING
EQUATION
ASSETS = OWNER’S EQUITY + LIABILITIES (A = OE + L)
Steps to follow when analysing transactions on the accounting
equation
eg Transactions for Sharp Cleaning Services for the month
of March, 2019.
Day Transaction
1 The owner deposited R10 000 capital contribution.
Receipt No. 001
2 Drew cash cheque No.43, R5000 for wages.
5 Bought a delivery van from Tate Motors,R50 000.
6 Received R400 for services rendered. Receipt No. 002
1. Identify two accounts that are affected and
write down their names
2. Classify each account, it can be an Asset, Owner’s
Equity or Liability
3. Determine what the effect will be on each element of
the equation…determine whether the element will
increase (+) or decrease (-)
4. Determine if accounts Debit or Credit
NOTE: For every Debit entry there must be a Credit
entry
EQUATION
ASSETS = OWNER’S EQUITY + LIABILITIES (A = OE + L)
Steps to follow when analysing transactions on the accounting
equation
eg Transactions for Sharp Cleaning Services for the month
of March, 2019.
Day Transaction
1 The owner deposited R10 000 capital contribution.
Receipt No. 001
2 Drew cash cheque No.43, R5000 for wages.
5 Bought a delivery van from Tate Motors,R50 000.
6 Received R400 for services rendered. Receipt No. 002
1. Identify two accounts that are affected and
write down their names
2. Classify each account, it can be an Asset, Owner’s
Equity or Liability
3. Determine what the effect will be on each element of
the equation…determine whether the element will
increase (+) or decrease (-)
4. Determine if accounts Debit or Credit
NOTE: For every Debit entry there must be a Credit
entry
