Chapter 1, Problem 1.7E

To determine

Accounting Equation: Accounting equation refers to the equation which is based on the double entry system of accounting. This implies that if there is a change in the assets of the entity, there will be a corresponding effect on the liabilities or stockholder’s equity of the entity also. The accounting equation is as follows:

$\text{Assets}=\text{Liabilities}+\text{Stockholder's}\text{Equity}$

To Identify: The effect of transactions on the accounting equation and indicate with appropriate letter.