<Dl> <Dd> Assets - Liabilities = (Shareholders' or Owners' Equity) </Dd> </Dl> <Dd> Assets - Liabilities = (Shareholders' or Owners' Equity) </Dd> <P> Now it shows owners' interest is equal to property (assets) minus debts (liabilities). Since in a corporation owners are shareholders, owner's interest is called shareholders' equity . Every accounting transaction affects at least one element of the equation, but always balances . Simplest transactions also include: </P> <Table> <Tr> <Th> Transaction Number </Th> <Th_colspan="2"> Assets </Th> <Th_colspan="2"> Liabilities </Th> <Th_colspan="2"> Shareholder's Equity </Th> <Th> Explanation </Th> </Tr> <Tr> <Td> </Td> <Td> + </Td> <Td> 6,000 </Td> <Td> </Td> <Td> </Td> <Td> + </Td> <Td> 6,000 </Td> <Td> Issuing stocks for cash or other assets </Td> </Tr> <Tr> <Td> </Td> <Td> + </Td> <Td> 10,000 </Td> <Td> + </Td> <Td> 10,000 </Td> <Td> </Td> <Td> </Td> <Td> Buying assets by borrowing money (taking a loan from a bank or simply buying on credit) </Td> </Tr> <Tr> <Td> </Td> <Td> − </Td> <Td> 900 </Td> <Td> − </Td> <Td> 900 </Td> <Td> </Td> <Td> </Td> <Td> Selling assets for cash to pay off liabilities: both assets and liabilities are reduced </Td> </Tr> <Tr> <Td> </Td> <Td> + </Td> <Td> 1,000 </Td> <Td> + </Td> <Td> 400 </Td> <Td> + </Td> <Td> 600 </Td> <Td> Buying assets by paying cash by shareholder's money (600) and by borrowing money (400) </Td> </Tr> <Tr> <Td> </Td> <Td> + </Td> <Td> 700 </Td> <Td> </Td> <Td> </Td> <Td> + </Td> <Td> 700 </Td> <Td> Earning revenues </Td> </Tr> <Tr> <Td> 6 </Td> <Td> − </Td> <Td> 200 </Td> <Td> </Td> <Td> </Td> <Td> − </Td> <Td> 200 </Td> <Td> Paying expenses (e.g. rent or professional fees) or dividends </Td> </Tr> <Tr> <Td> 7 </Td> <Td> </Td> <Td> </Td> <Td> + </Td> <Td> 100 </Td> <Td> − </Td> <Td> 100 </Td> <Td> Recording expenses, but not paying them at the moment </Td> </Tr> <Tr> <Td> 8 </Td> <Td> − </Td> <Td> 500 </Td> <Td> − </Td> <Td> 500 </Td> <Td> </Td> <Td> </Td> <Td> Paying a debt that you owe </Td> </Tr> <Tr> <Td> 9 </Td> <Td> </Td> <Td> 0 </Td> <Td> </Td> <Td> 0 </Td> <Td> </Td> <Td> 0 </Td> <Td> Receiving cash for sale of an asset: one asset is exchanged for another; no change in assets or liabilities </Td> </Tr> </Table>

Where does rent go on the accounting equation