What Is the Accounting Equation?

Business & Management
#1

The accounting equation is regarded as the bedrock of the double-entry accounting system. The total assets of a corporation are equal to the sum of the firm’s liabilities and shareholders’ equity, as shown on its balance sheet.
The accounting equation guarantees that the balance sheet stays “balanced” based on this double-entry method, and that each entry made on the debit side has a matching entry (or coverage) on the credit side.
Assets=(Liabilities+Owner’s Equity)