Accounting equation(s)

Assets = Liabilities + Owners’ Equity

The three elements of this equation assets, liabilities, and owner’s equity are the three major sections of the balance sheet. The term accounting equation is sometimes extended to include another fundamental rule that applies to every accounting transaction.

Debits = Credits

See also double entry system, credit, and debit.

<< Accounting cycle

Accrued expense >>

© Copyright Solution Matrix 2004 - 2026