Why is it important to record your selected transaction

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Genie purchases land for a new location and pays cash of $40,000. The effect of this transaction on the accounting equation is as follows: The purchase increases one asset(land) and decreases another asset (cash) by the same amount. After the transaction is completed, Genie has cash of $10,000, land of $40,000, and no liabilities. Stockholders' equity is unchanged at $50,000. Note that total assets must always equal total liabilities plus equity.

How does this impact the accounting equation. Make sure to identify the account impacted. Why is it important to record your selected transaction?

 

Reference no: EM13508880

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