Question

What relationship exists between the position of an account in the balance sheet equation and the rules for recording increases in that account? Assets are located on the left side of the balance sheet equation; an increase in an asset account is recorded by an entry on the left (or debit) side of the account

Answer 1

Answer:

In the accounting equation Assets = Liabilities + Equity, if an asset account increases (by a debit), then one must also either decrease (credit) another asset account or increase (credit) a liability or equity account.

Answer 2

The answer is debit and credit:

Explanation:

• If one asset account increases (by a debit) in the accounting equation Assets = Liabilities + Equity, another asset account must drop (by a credit)
• or a liability or equity account must increase (by a credit).

• Total assets will always equal the sum of liabilities and equity, according to the accounting equation.

• Accounts such as cash, inventory, and property are on the asset side of the balance sheet,
• while accounts payable and long-term debt are on the liability side.
• The accounts on a balance sheet will vary depending on the firm and industry.