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The difference between economic resources and claims to economic resources is that economic resources consist of what the business owns and or controls, examples include land, labor, capital and entrepreneurship. Claims to economic resources consist of assets and liabilities, these are the claims that shareholders and creditors have over those assets.

The accounting equation must always be in balance, every time a transaction occurs it affects at least two of the companies accounts. If a company borrows money, assets will increase and so do liabilities for the same amount.

Transactions such as expense accounts will decrease owners equity, and transactions such as capital accounts will increase equity.

Net income is the amount that remains after all expenses are paid off revenues-expenses. It affects owner equity, equity can increase if large profits are made and retained after all expenses are paid an owners net income increases, same goes if there is a loss or if the owner borrows money from the company, net income will decrease.

An example of a transaction applied to accounting equation would include for example is a company has 50,000 worth of equity and 35,000 worth of liabilities that would mean that the company has 85,000 worth of assets, 50,000+35,000= 85,000. If we needed to find to out with the equity is we simply just use the value of the asset-liability=equity. Example; 85,000-35,000= 50,000.