Transaction Analysis: Transaction analysis is the first step in accounting process where transactions are analysed to know how it impacts the business.
The accounting equation for transaction analysis comprises of assets, liabilities and owner’s equity. The transaction that effects increase total assets must also increase total liabilities or owner’s equity and the transaction that effects decrease in total assets must also decrease total liabilities or owner’s equity.There are certain transactions that has same side impact. In that case, one account to be increased and other account to be decreased either in Assets or Liabilities and Owner’s Equity.
Analysing effects of the transactions of Meg McIntyre firm using the accounting equation for transaction analysis.
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