Have you ever heard of the basic accounting equation? And do you know what this is? This equation is really, really important. In fact, all accounting entries are derived from this. If you really understand it, the rest of accounting is much easier. If you don't, you'll probably find the subject pretty hard. So listen up...
Accounting as a whole is based on a single equation:
ASSETS = EQUITY + LIABILITIES
The word equation comes from the word equal.
For any equation, one side always equals another. Also, equations can be made out of anything.
1 Orange = $0,50
House = Walls + Doors + Windows + Roof
1 week = 7 days
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Accounting Equation Exercises
Q: Tom Jones is the owner and operator of Jones Enterprise, a motivational consulting business. At the end of its accounting period, December 31, 2009, …
MAIN PURPOSE OF
Q: 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 …