What is Accounting Equation? Example Problems - Shikshaglobe

The accounting equation is the foundation for double-entry bookkeeping. The equation is: Assets = Liabilities + Equity. In other words, assets are everything the company owns and liabilities are everything the company owes. Equity is the difference between assets and liabilities and represents the owners' stake in the business.

The accounting equation is the foundation for double-entry bookkeeping, which is used by businesses around the world. The accounting equation is also used to prepare financial statements. The balance sheet, for instance, reports a company's assets, liabilities, and equity at a specific point in time. The income statement and statement of cash flows show how these numbers have changed over time.

The accounting equation is the fundamental foundation of double-entry bookkeeping. The equation states that a company's total assets are always equal to the sum of its liabilities and shareholders' equity. In other words, the left side of the accounting equation (assets) always equals the right side (liabilities and equity).

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