The Accounting Equation

The accounting equation is the relationship between assets, liabilities, and capital of a business. It can be represented as A = C + L, where A represents assets, C represents capital (owner's equity), and L represents liabilities.

The value of capital can be found by subtracting liabilities from assets. The equation is Capital = Assets - Liabilities.

The accounting equation represents the fundamental relationship between the assets, liabilities, and capital that are shown on a balance sheet.

<p>The accounting equation can also be represented as Assets = Liabilities + Capital (Owner's equity).</p> Signup and view all the answers

<p>The accounting equation is one of the most important equations in accounting as it shows the relationship between assets, liabilities, and capital, which are key components of a balance sheet.</p> Signup and view all the answers