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What is the basic accounting equation? How does a transaction keep the equation balanced? What is the expanded accounting equation? How does the accounting equation relate to the balance sheet?
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Financial Accounting › The Accounting Equation

A business takes a $10,000 bank loan. How does the equation change?

Intermediate

Answer

Assets increase (cash +10,000) and liabilities increase (loan +10,000); equity is unchanged.
Assets +10,000 (Cash) = Liabilities +10,000 (Loan) + Equity 0
Real-world example Raising debt funds growth without diluting the owner's equity.
All 5 The Accounting Equation questions