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the relationship between economic resources and claims to economic resources is that the assets of the entity are the economic resources owned by the entity and the claims to economic resources are the liabilities and the owner's equity. Therefore, the equation must balance because any transaction done by the entity has either same effect on both sides of the equation or opposite effect on either one side of equation. Net income increases owner equity and net loss decreases owners equity.Transactions that increase owner's equity include issue of common stock and net income for the period, transactions that decrease owner's equity include net loss for the period and payment of dividends. For example: issue of loan payable for $20,000 has same result on both sides on the equation i.e. increase of $20,000 in assets and increase of $20,000 in liabilities.