# The accounting equation Accounting and Accountability

Listen to the audio recording while you read the text below. Then answer the comprehension questions that follow the text. Metro Corporation paid a total of \$1,200 for utility bill. Metro Corporation paid a total of \$900 for office salaries. Sept. 23 A customer returned 5 games sold on 12 September and included a cheque for the amount due on the other 15 games. The games were not defective and were returned to inventory. Sept. 10 Returned 5 of the games purchased on 4 September for credit.

To further illustrate the analysis of transactions and their effects on the basic accounting equation, we will analyze the activities of Metro Courier, Inc., a fictitious corporation. Refer to the chart of accounts illustrated in the previous section. D)As per the accounting equation, assets are equal to a sum of equity and liabilities. B)It is an incorrect option as liabilities are equal to the sum of assets and equity as per the accounting equation. You may have made a journal entry where the debits do not match the credits. This should be impossible if you are using accounting software, but is entirely possible if you are recording accounting transactions manually.

This is the same approach we took for all the http://cyberhits.ru/index.php?newsid=11637s. Every single transaction that occurs in your bakery will be recorded using the accounting equation.

For every transaction, both sides of this equation must have an equal net effect. Below are some examples of transactions and how they affect the accounting equation. This equation sets the foundation of double-entry accounting, also known as double-entry bookkeeping, and highlights the structure of the balance sheet. Double-entry accounting is a system where every transaction affects at least two accounts. Locate the company’s total assets on the balance sheet for the period. Assets represent the valuable resources controlled by the company, while liabilities represent its obligations.