Question

audit your understanding 1 - 2
assignment: audit your understanding 1 - 2 (practice)
questions gi6mc11h.au.1 - 2.03
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how can a transaction affect only one side of the equation?
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Explanation:

In accounting, a transaction can affect only one - side of the accounting equation (Assets = Liabilities + Equity) when there is an internal transfer within a category. For example, when cash is used to buy inventory, both cash and inventory are assets. So, the total assets remain the same, but the composition of assets changes.

Answer:

A transaction can affect only one side of the equation when there is an internal re - classification within an element of the accounting equation, such as an asset - to - asset transfer (e.g., cash to inventory), a liability - to - liability transfer, or an equity - to - equity transfer.