The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

Question

Quizplus · Accepted Answer

This statement is true. The accounting equation, Assets = Liabilities + Equity, must always balance, meaning any increase or decrease in one element must be accompanied by an equal and opposite change in another element. Therefore, every transaction will impact the equation in some way.

The Effect of Every Transaction Is an Increase or a Decrease