If One Account Is Increased, Another Account On The Same Side Of The Accounting Equation

If one Account is increased, another account on the same side of the Accounting Equation must be decreased.

Examples include Assets Purchased For Cash or By Cheque / Check, Dividend Declared, etc.

For example. Purchased Supplies for Cash Rs. 5000 is a Business Transaction. In that case, one Asset is Supplies and another is Cash. Here supplies account is increased by Rs. 5000, so we added it to assets side or left side of the accounting equation and cash is decreased by Rs. 5000, so deduct it from assets side of the Accounting Equation, but still the accounting equation remains in balance as shown below:

                                                       Assets            =   Liabilities       +    Owner’s Equity

                                                   +Supplies   -Cash   =            0                +                 0

                                                   +5000         -5000    =           0                +                 0