Effect of transactions on accounting equationWhat is the effect of each of the following transactions on the three elements (assets, liabilities, and stockholders’ equity) of the accounting equation?a. Invested cash in business in exchange for common stock.b. Paid for business expenses.c. Paid dividends.d. Purchased supplies on account.e. Received cash for services performed.

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is