Case Study: Balancing the Accounting Equation at XYZ Company XYZ Company is a small manufacturing business that specializes in crafting customized furniture. As the end of the fiscal year approaches, the company's accountant faces a challenge in ensuring that the accounting equation remains balanced. The accountant reviews various financial transactions and makes adjustments to achieve equilibrium in the equation. The Scenario: Throughout the year, XYZ Company recorded numerous financial transactions, including sales of furniture, purchases of raw materials, payments to suppliers, and various operating expenses. However, the accountant noticed that the accounting equation is currently imbalanced, with assets exceeding the sum of liabilities and owner's equity. Case Study Questions: Question 1: In the context of the case study, what is the fundamental accounting equation, and why is it crucial for XYZ Company to ensure that this equation remains balanced in its financial records? Explain how an imbalance in the accounting equation can signal potential issues or errors in the financial statements. Question 2: During the review of financial transactions, the accountant identified that the company's assets have exceeded the sum of liabilities and owner's equity. To rectify this imbalance, what specific adjustments or financial transactions should the accountant consider making? Provide examples of adjustments that would help restore the equilibrium in the accounting equation. Fill in the Blanks Questions (Two Questions): In the accounting equation, owner's equity is equal to minus When a company incurs an expense, it reduces both its assets and owner's equity. The specific accounts that decrease are and Feel free to fill in the blanks for the two "Fill in the Blanks" questions to test your understanding of the accounting equation and how certain transactions affect it