In Which Circumstances A Transaction Affects Only One Side Of The Accounting Equation
As we know that the two sides of an Accounting Equation must be equal otherwise, there are mistakes, errors or frauds in recording the Accounts . So, when only one side of the accounting equation is affected then the accounts involved in a transaction are debited and credited or increased and decreased with an equal amount either on the left side or on the right side of the accounting equation whichever is the case. Few of these circumstances or cases are fixed asset purchased for cash, declared cash dividend to be paid to shareholders from Retained Earnings, etc. For example, when Furniture purchased for Cash Rs. 5000, then it affects only the left side or asset side or only one side of the accounting equation. The following entry for furniture purchased is recorded as shown below: ...