The owner of a business purchase a building for R1200 000. Receive R500 000 from Ab bank as a mortgage bond and the rest is paid cash.What is the effect on the accounting equation?

Since that's homework. What do you think the answer is first and why.

You first have to know the basic accounting equation, which is: Assets = Liabilities + Owners equity

Now you need to analyze the problem. So you are purchasing a building paying part of it by cash and signing a mortgage, which is a note payable for the remainder of what you agreed to purchase the building.

Next you should journalize the transaction, then you should be able to figure out how the journal entry affects the basic accounting equation.


Here is a saying you should know that will help you in accounting: DEAD CURLS

D = Debits (normal balance)
E = Expenses
A = Assets
D = Dividends / owner withdrawals

C = Credits (normal balance)
U = Unearned Revenues
R = Revenues
L = Liabilities
S = Shareholder Equity / Owners Capital / Owners Equity

Accounts that have a normal debit balance will increase with a debit journal entry and decrease with a credit entry.
Accounts that have a normal credit balance will increase with a credit journal entry and increase with a debit entry.

For example you receive cash for providing a service to a customer. Your journal entry will be:
Debit Cash (an asset) for the amount received and Credit Service Revenue (revenue account) for the amount of service provided.

Note: your debits and credits should always equal.

Now you received cash which is a debit to an asset so you increased your balance in cash and you provided a service which is a credit to a revenue account so you increased your revenue balance.

You have to analyze every transaction and know how it affects the basic accounting equation.