To Determine the Economic Effect of a Transaction on the Entity

question 89

True/False

To determine the economic effect of a transaction on the entity in terms of its accounting equation,each transaction is analyzed as to the accounts (at least two)that are affected.

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Definitions:

Market System

An economic system where decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand.

Self-interest

Acting in a way that is most beneficial for oneself.

Private Property

The right of private persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other property.

Economically Most Efficient

The state where resources are allocated in a way that maximizes the production of goods and services at the lowest cost.