Discuss the Accounting equation
Posted by Ripon Abu Hasnat on Thursday, May 29, 2014 | 0 comments
Earlier it was stated that the accounting entity concept regards the business as a separate accounting entity from its owner. The formula for the Accounting Equation extends this concept.
The Accounting Equation is: Assets − Liabilities = Equity. In an abbreviated form this is A − L = EQ.
By simple transposition the Accounting Equation can also be shown as:
1. Assets = Liabilities + Equity (A = L + EQ)
2. Assets −Equity = Liabilities (A − EQ = L).
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