Anyone know about Accounting Equations?
I have a piece of work where I am meant to write down an accounting equation after transaction however I am totally stuck on how it's meant to be laid out? Can anyone on here help?
- 1 decade agoFavorite Answer
Well THE accounting equation is;
Assets = liabilities + equity
So for instance if one side of the equation changes (assets goes down) as shown;
Dr Accounts payable
then either liabilities or equity must go down; in this case liabilities goes down. [this isn't really a transaction but imagine a sale with COGS account etc. and how either/both assets, liabilities and equity change.
If you want a more specific accounting equation add further details to your question :)
- Anonymous7 years ago
The financial position of a company is measured by the following items:
Assets (what it owns)
Liabilities (what it owes to others)
Owner's Equity (the difference between assets and liabilities)
The accounting equation (or basic accounting equation) offers us a simple way to understand how these three amounts relate to each other. The accounting equation for a sole proprietorship is:
Assests = Liabilities + Owner's Equity
The accounting equation for a corporation is:
Assests = Liabilities + Stockholder's Equity
- RENDEVOUSLv 41 decade ago
The main accounting equation is Assets = Liabilities + Equity.
Revenue - Costs = Profit
Revenue - Expenses = Profit
There are hundreds of other accounting related equations.
- Phade3Lv 71 decade ago
Need more details !