Match the terms in Column A with the statements in Column B. Then, describe the effect of cash transactions on the accounting equation.

Here are the solutions for Activity 1 and Activity 2.

Activity 1: Concepts relating to the accounting equation.

NO.	COLUMN A	ANSWER	COLUMN B
1.1	A = OE + L	B	B. The accounting equation should always balance.
1.2	Assets	C	C. Examples hereof are equipment and vehicles.
1.3	Owner's equity	A	A. Refers to the capital contribution made by an owner and it is increased by profits.
1.4	Liabilities	E	E. A loan that is granted to a business will increase ....
1.5	Income	D	D. All the .... received by a business will increase owner's equity.

Activity 2: Effect of cash transactions on the accounting equation.

No.	Transaction	Effect on accounting equation
		ASSETS | OWNER'S EQUITY | LIABILITIES
2.1	The owner increases his capital contribution with R35 000.	+ | + | 0
2.2	A loan of R15 000 is granted to the business.	+ | 0 | +
2.3	The bank statement shows interest of R150 on the business' current account.	+ | + | 0
2.4	Receive R3 200 from N. Nel with regards to a part of the building she is renting.	+ | + | 0
2.5	The cash register roll shows current income of R8 750.	+ | + | 0