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Question - In this week's discussion, we will introduce the basic accounting equation. Understanding the relationship between the equation's key components is essential in learning accounting. Those components are assets, liabilities, and equity. We will also introduce basic transactions within a company that can occur, and how those transactions are recorded. Finally, we look at the 4 basic financial statements and their particular importance.
1) Define and discuss the accounting equation and each of its components.
2) Give an example of a typical business transaction and discuss its impact on the accounting equation (Your explanation should describe which account(s) are increasing/decreasing and whether those accounts were "debited or credited").
3) Finally, list and discuss the importance of each of the 4 basic financial statements.
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