Accounting Equation

What Is Accounting Equation?

The accounting equation is a fundamental concept in accounting that represents the relationship between a company's assets, liabilities, and owner's equity. It is expressed as follows:

Assets = Liabilities + Owner's Equity

This equation shows that a company's assets must equal the sum of its liabilities and owner's equity. In other words, everything the company owns must be financed by either debt or equity.

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