How Do You Solove The Accounting Equation.?
All answers are in the format Assets=Liabilities + Owners Equity ( also known as Capital) (a) $20,000= $0+ $20,000 (Capital is always a liability to the business though not listed under the heading “Liabilities”, here the money given is available to be spent on the business activity as capital is received in the form of Bank or Cash, so it becomes an asset eventually,and has no other liabilities) (b) $23,500= $3500 + $20,000 (New equipment bought is a fixed asset to the business,on the same hand it was bought on credit,which means thats a liability to be yet paid) (c) $23,500=$3500 + $20,000 (Here part of the asset side(either the bank or cash) has been used up to buy new equipment, again this equipment is an asset, so to the equal value of asset that was spent(money) new equipment was gained, no change to the Liabilities side,so the equation rremains unchanged). (d) $22,000=$2000 + $20,000 (The money from the asset side was used to cover the equal amount of liabilities on the other si
