ABC Co. paid salary $2,000 in cash. What would be the impact of this transaction on the accounting equation? Assets will decrease by $2,000 and liabilities will increase by $2,000 Assets balance will remain unchanged Assets and equity will decrease by $2,000 each Assets and equity will increase by $500 each

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is