MAIN PURPOSE OF
ACCOUNTING EQUATION

by NOUMAN
(ISLAMABAD, PAKISTAN)

accounting studentQ: WHAT IS THE MAIN PURPOSE OF THIS ACCOUNTING EQUATION?


A: The main purpose of the
basic accounting equation is to show the real-life financial condition or position for a business.

The basic accounting equation shows that a business is composed of
useful items (assets) , which are owned by the owner or owners (equity) , and that there are certain business debts (liabilities) , in other words the assets are partly owned and partly owed to people outside the business.

Different people are interested in the
financial position of the business for different purposes. I describe these different people on this page on accounting reports.

Click here to post comments

Return to Ask a Question About This Lesson!.











© Copyright 2009-2018 Michael Celender. All Rights Reserved. 
Click here for Privacy Policy.