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The accounting equation is: Assets = Owner's Equity + Liabilities.
Accounting
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2 stepsAnalyze the transactions for each day and identify the accounts affected and their impact on the accounting equation.
The accounting equation is: Assets = Owner's Equity + Liabilities.
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Day 1: P. Grace (Capital) - R20 000
- This is an owner's contribution of cash.
- Source Document: Receipt (R01 from previous CRJ).
- Account 1: Bank (Asset) increases.
- Account 2: Capital (Owner's Equity) increases.
- Effect: Assets increase, Owner's Equity increases.
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Day 5: Navashnee (Rent Income) - R2 500
- This is cash received for rent.
- Source Document: Receipt (assume Rxx).
- Account 1: Bank (Asset) increases.
- Account 2: Rent Income (Owner's Equity) increases.
- Effect: Assets increase, Owner's Equity increases (as income increases profit, which increases owner's equity).
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Day 25: BB Bank (Loan) - R28 000
- This is cash received from a loan.
- Source Document: Bank Statement (BS) or Loan Agreement.
- Account 1: Bank (Asset) increases.
- Account 2: Loan from BB Bank (Liability) increases.
- Effect: Assets increase, Liabilities increase.
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Complete the accounting equation table based on the analysis.
\boxed{ \begin{tabular}{|l|l|l|l|c|c|c|} \hline \textbf{Day} & \textbf{Source Document} & \textbf{Account 1} & \textbf{Account 2} & \multicolumn{3}{|c|}{\textbf{Effect on Accounting equation}} \\ \cline{5-7} & & & & \textbf{Assets (+/-)} & \textbf{Owner's equity (+/-)} & \textbf{Liabilities (+/-)} \\ \hline 1 & R01 & Bank & Capital & +R20 000 & +R20 000 & 0 \\ 5 & Receipt & Bank & Rent Income & +R2 500 & +R2 500 & 0 \\ 25 & BS / Loan Agreement & Bank & Loan from BB Bank & +R28 000 & 0 & +R28 000 \\ \hline \end{tabular} }
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