It has been mentioned several times that in accounting we have an equation that reads:

Assets = Liabilities + Equity.

Inherent in this equation is the need for what we call the double entry system.

This means that every transaction has to have at least two sides. This is because if we were to make only a one-sided transaction, our accounting equation would be out of balance. For instance, if we bought a car for $5,000 and only recorded the car becoming an asset on out books the equation would be out of balance.

Now accounting works on the double entry system. This means that every transaction has to have at least two sides. This is because if we were to make only a one-sided transaction, our accounting equation would be out of balance.

For instance, if we bought a car for $5,000 and only recorded the car becoming an asset on out books the equation would be out of balance.

Assets = Liabilities + Equity

+$5,000 = ______ + _____