To determine the economic effect of a transaction on the entity in terms of its accounting equation,each transaction is analyzed as to the accounts (at least two)that are affected.

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To determine the economic effect of a transaction on an entity in terms of its accounting equation, it is necessary to analyze each transaction and identify the accounts (at least two) that are affected by it. This analysis helps to ensure that the accounting equation remains in balance after the transaction is recorded. Therefore, the given statement is true.

To Determine the Economic Effect of a Transaction on the Entity