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A fellow accounting student has difficulty understanding how the fundamental accounting equation stays in balance when a compound entry with one debit and two credits is recorded. Consider, for example, that a business bought equipment for $15,000, paid $5,000 in cash, and placed the remainder on account. This means that there are two credits and one debit—one debit and one credit on the left side of the equation and the other credit on the right side of the equation. Explain to your fellow student how the equation stays in balance.

BuyFind

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
Publisher: South-Western College Pub
ISBN: 9781337280570
BuyFind

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
Publisher: South-Western College Pub
ISBN: 9781337280570

Solutions

Chapter
Section
Chapter 2, Problem 2A
Textbook Problem

A fellow accounting student has difficulty understanding how the fundamental accounting equation stays in balance when a compound entry with one debit and two credits is recorded. Consider, for example, that a business bought equipment for $15,000, paid $5,000 in cash, and placed the remainder on account.

This means that there are two credits and one debit—one debit and one credit on the left side of the equation and the other credit on the right side of the equation. Explain to your fellow student how the equation stays in balance.

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Chapter 2 Solutions

College Accounting (Book Only): A Career Approach
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