Accounting Equation

Accounting Equation 

Accounting equation also known as balance sheet equation is considered to be the foundation of double entry system of bookkeeping and accounting being used by sole proprietors, partnerships and multinational corporations. As per the accounting equation, the total value of assets of the business equals to the sum of its liabilities and owner’s equity.

The formula for accounting equation is as follows:

Assets = Liabilities + Owner’s Equity 

 

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