The accounting equation is the cornerstone of the accounting system. It shows the relationship between a company’s assets, liabilities, and equity. The accounting equation is Total Assets = Total Liabilities + Total Equity.
Assets are economic resources owned by the company. This includes current assets like cash, inventory, and receivables. Assets also include non-current assets like equipment, machinery, land, and investments.
Liabilities
Equity
Basic Accounting Equation
Expanded Accounting Equation
Jeff Mankin teaches financial literacy and Excel. He is the founder of Finally Learn.
