Step Two: Determine the effect of the transaction on the expanded accounting equation: Questions to ask when looking at the effect of transactions: 1. What accounts were affected by this transaction? 2. Do those accounts impact assets, liabilities, or equity? 3. Did the account increase (add) or decrease (subtract)? 4. Is my accounting equation still in balance? AL+SE Remember: 1. Every transaction has a. 2. The accounting equation must ALWAYS An Liabilities effect on the accounting equation. Common Stock Stockholders' Equity Retained Earnings Revenues Expense Dividends