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This means that the total of a company's assets will always equal their liabilities plus the owner's equity. Every business transaction will affect the balance sheet, but must affect both sides of the sheet equally.
Before Connie Rocha began her operation, she funded the business, purchased equipment and supplies, and rented her facility. Her balance sheet showed an increase in cash to fund the business; with no liabilities against that money, the owner's equity increased by the same amount. As she purchased supplies and equipment with cash, her net cash dropped, but she gained assets of equal value in equipment and supplies...
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