Accounting Equation- Concept, Meaning and Formulas
Hello Guys, Today we discuss about Accounting Equation- Concept, Meaning and Formulas. Accounting Equation is the basis for Double Entry System of Book Keeping. Total assets of the business firm are provided by the lenders and the owners. Therefore, at any point of time, the total assets of a business are equal to its total liabilities. Liabilities or loans to the outsiders are known as "liabilities" but liability to the owners, in accounting is referred to as "capital". Accounting Equation We Learn- Meaning of Accounting Equation Transactions affecting two items Transactions affecting more than two items Meaning of Accounting Equation Accounting Equation also known as Balance Sheet Equation, which is a mathematical expression which shows the assets and liabilities of the firm are equal, here liabilities include owner's equity and claims from outsiders. It means total claims (claim of outsiders and claim of proprietors) will always equal to the total assets of