The Accounting Equation.pptVIP

The Accounting Equation The Accounting Equation The equation must be in balance. If there is an increase to the left side the right side must increase as well. Or an increase to the left side could cause a decrease in another account on the left side. Assets = Liabilities + Owner’s Equity Shift in assets: A shift that occurs when the composition of the assets has changed, but the total of the assets remains the same. Example: Cash is used to purchase inventory. Both are assets – the composition has changed but the total of assets is still the same. Assets = Liabilities + Owner’s Equi