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| equation | 1.11 | 0.8 | 3095 | 28 | 8 |
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Formula 1: The Accounting Equation The accounting equation equates assets with liabilities and owners’ equity: Assets = Liability + Owners' Equity Assets are things owned by the company — such as cash, inventory, and equipment — that will provide some future benefit.
Why you should know the accounting equation?Why you should know the accounting equation statementThe accounting equation is important because it can give you a clear picture of the financial health of your business. It is a financial reporting standard and a double entry accounting framework. Without a balance sheet comparison, you will not be able to read your balance sheet properly or ...
What is the basic accounting equation?These are the building blocks of the basic accounting equation. The accounting equation is: ASSETS = LIABILITIES + EQUITY. For Example: A sole proprietorship business owes $12,000 and you, the owner personally invested $100,000 of your own cash into the business. The assets owned by the business will then be calculated as:
