An Accounting Equation is a mathematical expression which shows that the assets and liabilities of a firm are equal. An Accounting Equation is based on the Dual Aspect Concept of accounting meaning that, every transaction has two aspects- Debit and Credit. We recently conducted a classroom activity for our students based on this very concept. The students were introduced to the idea of preparing a balance sheet. They also learnt that every transaction affects either both sides of the equation or a positive effect on one item and a negative effect on another item on the same side of the accounting equation.
The activity helped us achieve the objective of making the students aware about the effect of a transaction (increase or decrease) on the assets, liabilities, capital, revenue and expenses.