Example 1: Purchasing Equipment for Cash
A company purchases equipment for cash costing $5,000. This will create two impacts:
1. Increase in assets: Equipment is an asset and its value has increased by $5,000. This is Debit the Equipment A/c.
2. Decrease in cash: The business paid cash, so its cash account decreases by $5,000. This is Credit the Cash A/c. Hence, in journal entry: Equipment A/c Dr. and Cash A/c Cr.
In this case, total debits are equal to total credits so the transaction will be properly recorded.

Example 1: Purchasing Equipment for Cash
A company purchases equipment for cash costing $5,000. This will create two impacts:
1. Increase in assets: Equipment is an asset and its value has increased by $5,000. This is Debit the Equipment A/c.
2. Decrease in cash: The business paid cash, so its cash account decreases by $5,000. This is Credit the Cash A/c. Hence, in journal entry: Equipment A/c Dr. and Cash A/c Cr.
In this case, total debits are equal to total credits so the transaction will be properly recorded.