Question

how to make an accounting equation in the form of liabilities + capital = assets when invoice is given 4000. what to add and subtract ​

Answer 1

Answer:

Explanation:

Accounting Equation Example

ABC International engages in the following series of transactions:

ABC sell shares to an investor for $10,000. This increases the cash (asset) account as well as the capital (equity) account.

ABC buys $4,000 of inventory from a supplier. This increases the inventory (asset) account as well as the payables (liability) account.

ABC sells the inventory for $6,000. This decreases the inventory (asset) account and creates a cost of goods sold expense that appears as a decrease in the income (equity) account.

The sale of ABC's inventory also creates a sale and offsetting receivable. This increases the receivables (asset) account by $6,000 and increases the income (equity) account by $6,000.

ABC collects cash from the customer to which it sold the inventory. This increases the cash (asset) account by $6,000 and decreases the receivables (asset) account by $6,000.