Question

When analyzing routine economic events and their effects on a company's financial position using the accounting equation format, which elements are affected?

a) Assets and liabilities
b) Revenue and expenses
c) Equity and investments
d) Inventory and accounts payable

Answer 1

When analyzing routine economic events using the accounting equation format, the elements that are affected are assets and liabilities.

Step-by-step explanation:

When analyzing routine economic events and their effects on a company's financial position using the accounting equation format, the elements that are affected are assets and liabilities. The accounting equation is Assets = Liabilities + Equity, and any changes in economic events would impact both the assets and liabilities of a company. For example, if a company purchases new equipment, it would increase the asset value (equipment) while also increasing the liability value (accounts payable) if they financed the purchase.