In a world as changing as the one we now live in, many practices that had been maintained for a long time, are seen in the rigorous need to be modified, in order to respond to the expectations of today's society, and in the field of Accounting is not the exception in fact it is one where major changes have occurred, and because of this, organizations need to continually adapt to these changes, where those companies that become successful are those that are professionally managed and They adhere to the standards based on correct, objective and timely information.
Businesses or companies, from the start of activities, carry out multiple transactions that have a direct impact on the elements of the accounting equation.
As we have seen, accounting is based on a double entry or registration system, which means that each transaction that the economic entity carries out will affect one or more accounts of the accounting system, which, as we have seen, is made up of: Assets, Liabilities and Capital.
A clear example of the impact of the operations carried out by a company affects the accounting equation is:
Transaction
A company starts operations which is made up of two partners who make their contributions, one contributes the amount of $ 1,000,000.00 in cash and the other contributes machinery and equipment in kind, an amount that amounts to $ 850,000.00 total contributions for $ 1,850,000.00.
Representation of the accounting record:
Representation of the accounting record
As we can see, a single transaction can affect one or more accounts in the accounting equation, and above all the total amount of the asset must be equal to the total amount of the liability plus the sum of capital, which is equal to every charge corresponds to a fertilizer.
In conclusion, any transaction that the economic entity carries out, be it a sale, purchase or expense, implies that its registration or accounting process will affect one or more accounts of the basic accounting equation.
