![]() ![]() ![]() Here’s the impact on the balance sheet formula: The company posts a $10,000 debit to cash (an asset account), and a $10,000 credit to bonds payable (a liability account). DEBIT CREDIT ASSETS LIABILITIES EQUITY HOW TOHow to do a balance sheetĪssets on the left side of the equation (debits) must stay in balance with liabilities and equity on the right side of the equation (credits).Īssume, for example, that a firm issues a $10,000 bond and receives cash. The formula is used to create the financial statements, and the formula must stay in balance. The components are connected by the balance sheet formula (or accounting equation ):
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