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April 22, 2025

Please explain the relationship between economic resources and claims to economic resources.

Discussion 2: Articulate an Accounting Equation

Instructions
This week contains multiple discussion questions that you are required to answer.

The accounting equation is assets = liabilities + owner’s equity.

Please explain the relationship between economic resources and claims to economic resources.
Why must this equation always balance?
What transactions increase or decrease owner’s equity?
How does net income or loss affect the owner’s equity?
Please give an example of a transaction, applied to the accounting equation.

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