What is the role of the accounting equation in the analysis of business transactions?

In the book Financial Accounting Tools for Business Decision Making, Kimmel states, “Transaction analysis is the process of identifying the specific effects of economic events on the accounting equation (Kimmel, 2012).” The basic account accounting equation use in analyzing those economic events is assets = liabilities + stockholders equity. The role of the accounting equations is to provide a determination as to whether the company needs to record an economic event for the internal or external users. For instance, when a company hires a new employ that is an event, but not an economic event. It does not need to be accounted for until the employee actually is to be paid for their time worked. However, in determining whether or not to hire an employee, the economic events of the company weigh heavily on that decision. Kimmel, P., Weygandt, J. & Kieso, D. (2011). Financial accounting tools for business decision making. Danvers, MA: John Wiley & Sons, Inc.