Assignment 1: Discussion—The Accounting Equation

By the due date assigned, respond to the following in the Discussion Area below:
The accounting equation is assets = liabilities + owner’s equity.
Please explain the relationship between economic resources and claims to economic resources.
Why must this equation always balance?
What transactions increase or decrease owner’s equity?
How does net income or loss affect owner’s equity?
Provide an example of a transaction, applied to the accounting equation.
Be sure to cite any sources using APA style. You may use this APA Citation Helper as a guide.
Through the end of the module, provide substantive responses to at least two other students’ initial posts. Be sure to post to the Discussion Area on two different days to meet your weekly attendance requirement.

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SAMPLE SOLUTION

The Accounting Equation
Economic Resources and Economic Claims
Economic resources refer to assets that the company owns or control, which are expected to generate future economic benefits. For example, inventory, machinery, equipment, | PLACE YOUR ORDER NOW AT writtask.com | liabilities and claims that creditors and shareholders have against the business assets (Needles, Powers & Crosson, 2013). For instance, loan, dividend, and common stock.
Why Accounting Equation Must Balance
The balance must always balance because each transaction has an impact on at | PLACE YOUR ORDER NOW AT writtask.com | a company borrows money from a financial institution, its assets and liabilities increase by the same amount (Nwosu, 2013). In…