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what is the definition of a accounting equation. The fundamental accounting equation also called the balance sheet equation represents the relationship between the assets and liabilities of a person or business. The relation of assets liabilities and equity is reflected in the equation.
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The accounting equation or balance sheet equation forms the building blocks for the entire double entry accounting system. The formula for Accounting Equation comprises of three main components which include assets liabilities and equity. The accounting equation is a simple way to view the relationship of financial activities across a business.
The equality of debits and credits as used in the double-entry system.
Accounting Equation Definition Accounting Equation states that sum of the total liabilities and the owners capital is equal to the companys total assets and it is one of the most fundamental parts of the accounting on which the whole double entry system of accounting is based. Owner Equity Assets - Liabilities. Accounting equation is the relation between the assets liabilities and equity of a business. Assets Liabilities Shareholders Equity.
