Accounting Equation: Difference between revisions
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The equation is as follows: | The equation is as follows: | ||
'''Assets - Liabilities = | '''Assets - Liabilities = Capital''' | ||
* [[Asset|Assets]] - What a business owns | * [[Asset|Assets]] - What a business owns | ||
* [[Liability|Liabilities]] - What a business owes | * [[Liability|Liabilities]] - What a business owes | ||
* [[ | * [[Capital]] - The owner's investments and profit | ||
Latest revision as of 03:58, 15 August 2025
The accounting equation shows the current financial position of a business and how much the owner's investment is currently worth. It is tightly related to the statement of financial position.
The equation is as follows:
Assets - Liabilities = Capital
- Assets - What a business owns
- Liabilities - What a business owes
- Capital - The owner's investments and profit