Let's say that you make the the following journal entry: Debit Inventory $2,000 Credit Cash $2,000 How does this journal entry affect the accounting equation? [ans1]

No net affect: There is both an increase in Assets and a decrease in Assets

Explanation:

The journal entry is as follows

Inventory Dr $2,000

    To Cash $2,000

(Being the inventory is purchased for cash is recorded)

This journal entry states that the inventory is purchased for cash. The inventory is purchased that increases the asset and on the other side the cash is paid for the purchase of increased which decrease the asset

So, there is no impact on the asset side or accounting equation

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