I am new to using double-entry bookkeeping for personal finances.
assets - liabilities = equity + (income - expenses)
This can be re-arranged as:
equity = assets - liabilities - income + expenses
Rearranging it in this way shows that, all other things being unchanged, an increase in income results in a decrease in equity. Conversely, an increase in expenses results in a increase in equity.
To me, this is totally counter-intuitive. I would have expected (if all else remains unchanged): increased income to increase equity; and increased expenses to decrease equity.
My question is: have I misunderstood the equation or the meaning of the terms; and if so, what is the correct interpretation; or if not, then why is this the correct interpretation?