An exchange of assets has no effect on the totals of the accounting equation.

Question

Quizplus · Accepted Answer

An exchange of assets refers to the transfer of one asset for another asset or for a liability, and it does not impact the totals of the accounting equation (Assets = Liabilities + Equity). This is because both sides of the equation are affected equally. For example, if a company exchanges cash for inventory, its assets increase by the value of the inventory, but its cash balance decreases by the same amount, resulting in no net impact on the overall equation.

An Exchange of Assets Has No Effect on the Totals