Accounting equation
| Individual
Accounting Equation Paper |
Write a 350-word essay describing the accounting equation.
Include how the accounting equation relates to the components of the balance sheet, Provide examples that show how the components of the accounting equation affect each other and how transactions affect the accounting equation. Format your paper consistent with APA guidelines. Please include a running header paginations, and reference page. |
Describe the accounting equation
Accounting equation or the balance sheet equation entails the relationship between the assets, liabilities and owner’s equity in a business. The equation is the foundation for double-entry bookkeeping system. The equation depicts that total debits should be equal to total credit and it is expressed as : –
Assets = Liabilities + Capital
a = l + c
Capital reflects the stockholder’s equity as business transaction affect two accounts of a company. Accounting equation makes sure that balance sheet is in form i.e. in balance where the left side always equals the right side. (Libby, 2012) This…………………