What is an example of the accounting equation?

As an example, consider a business with $1 million in assets and $500,000 in liabilities. Assets = Liabilities + Equity, according to the accounting equation. With these numbers, we can readily determine that the company’s equity is $500,000. These figures would show on the balance sheet and might be utilized by investors, analysts, or corporate executives to evaluate the firm’s quality and estimate its future prospects.