What must be done if a transaction increases the left side of the accounting equation?
Answers:
Depends on how you arrange your accounting equation. Let's assume it's Assets = Liabilities + Equity
So if you increase Assets, you must increase L or E, i.e. you must credit any L or E or both.
There is one type of transaction which doesn't evolution the equation, for e.g. you kind an insurance premium settlement on Dec 30 designed for the subsequent year. Your entry:
Dr Prepaid insurance
Cr Cash
effectively increases and decrease the departed side of the equation, disappearing it unbothered.
If you debit one side, you have need of to credit the other.
Accounting have other be the set off. For every entry you made any be it a debit or credit, you must other own a contra report - this vindication make sure that you other hold a harmonize entry. You can never put one entry individual may it be a debit or credit lacking have another one.
You must increase also the right side of the accounting equation, you hold to know if it's a liability or a funds.