transaction analysis
Before you can write anything down, you have to figure out what actually happened in money terms. A customer paid you — fine, but which of your accounts went up, and which went down, and by how much? Transaction analysis is the thinking step: looking at an event and deciding exactly how it changes the company's accounts before any entry is made.
The tool that keeps you honest is the accounting equation: Assets = Liabilities + Owner's Equity. Every transaction must keep this equation balanced, so it always touches at least two accounts. For example, buying $500 of supplies for cash: the asset 'Supplies' rises by $500 while the asset 'Cash' falls by $500 — two changes that cancel, so the equation still balances. Analysis means naming those accounts, the direction (up or down), and the amount.
This is the brain of double-entry bookkeeping; journalizing is just writing the conclusion down in debit-and-credit form. Get the analysis wrong and every later step inherits the error. A common beginner trap is stopping after spotting one effect (cash went down) and forgetting that something must have come in return (supplies went up). Each transaction has at least two sides — finding them all is the whole point.
The owner invests $10,000 cash to start the business. Analysis: the asset Cash rises $10,000, and Owner's Equity rises $10,000. Assets = Liabilities + Equity stays balanced ($10,000 = $0 + $10,000), so the analysis is sound and ready to journalize.
Naming the accounts, directions, and amounts that keep the equation balanced.
Every transaction touches at least two accounts; if your analysis finds only one effect, you have not finished — something must offset it to keep Assets = Liabilities + Equity.