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The accounting equation (Assets = Liabilities + Owner's Equity) must remain in balance after every transaction is recorded, so accountants must analyze each transaction to determine how it affects owner's equity and the different types of assets and liabilities before recording the transaction.

List the six steps of business transaction analysis.Identify the accounts affected.Classify the accounts affected.Determine the amount of increase or decrease for each account affected.Which account is debited? For what amount?Which account is credited? For what amount?What is the complete entry in T account form?

Transaction analysis is the act of examining a transaction to decide how it affects the accounting equation. It's also the first step in the accounting cycle. In order to properly analyze a transaction, you must know and understand a few key things.

Account analysis is a process in which detailed line items in a financial transaction or statement are carefully examined for a given account, often by a trained auditor or accountant. In accounting, account analysis is quite complex and involves an in-depth understanding of both the data and the company.

The transaction analysis sheet is not a source document. It is a tool used to teach transaction analysis.

Accountants are equipped with a very special tool that they use when analyzing transactions - that tool is the accounting equation. The accounting equation states that assets = liabilities + owner's equity. An asset is something that a business owns. A liability is something that a business owes.

Liabilities = Assets Owner's equity. = $120,000 $80,000. = $40,000. The basic accounting equation is: Assets = Liabilities + Owner's equity. Therefore, If liabilities plus owner's equity is equal to $300,000, then the total assets must also be equal to $300,000.