Multiple choice: 1. Transactions affecting owner's equity include: A. owner withdrawals and owner investments B. purchases of assets for cash C. purchases of assets on account D. only owner investments 2. A cash investment into the business by the owner would: A. increase liabilities and increase owner's equity B. increase total assets and decrease owner’s equity C. increase owner’s equity and increase total assets D. increase total assets and decrease liabilities

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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