# Accounting Equation

Knowledge Center

## Summary, forum, best practices, expert tips and information sources.

15 items • 35.204 visits

 Summary

### What is the Accounting Equation? Meaning.

The Accounting Equation is the foundation of many double-entry accounting systems, which state that assets equal liabilities plus owners' equity.

In other words, the two sides of the equation must always be in balance

The accounting equation is:

Assets = Capital + Liabilities

The accounting equation can also be written as:

Capital = Assets - Liabilities

Another variation of the accounting equation is to write it as:

Liabilities = Assets - Capital

Instead of the word 'Capital' you may also find 'Owners Equity' or 'Shareholders' Equity' or 'Stockholders' Equity' being used, which all indicate the same.

### Expanded Accounting Equation

Capital can be split up in a number of elements, resulting in the so called 'expanded accounting equation':

Assets = Capital + Liabilities = (Common Stock + Retained Earnings - Dividends + Revenues - Expenses) + Liabilities

### Usages of Accounting Equation. Applications

• Bookkeeping
• Business finance
• Investing
• Business decision-making

 Special Interest Group
 Accounting Equation Special Interest Group. Special Interest Group (672 members)
 Forum

Forum about the Accounting Equation. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.

 Start a new topic about Accounting Equation

 What's the Use of Accounting? Why Accounting? What the use of accounting for businesses? Why are accounting information systems important for business?... 6   2 comments
 Revenue versus Proceeds What's the difference between revenue and proceeds in accounting? In which conditions we use proceeds? Thanks for your advice...... 6   1 comments
 🔥 NEW The Accounting Cycle The "accounting cycle" is the name of a procedure or process of recognizing, recording, summarizing, and analyzing economic events of a business. For any business entity, recording its financial and n... 5
 Best Practices

The best, top-rated topics about the Accounting Equation. Here you will find the most valuable ideas and practical suggestions.

 Expert Tips
 Advanced insights about the Accounting Equation. Here you will find professional advices by experts.
 Information Sources

Various sources of information regarding the Accounting Equation. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.

 Quickly Reading a Profit and Loss Statement and a Balance SheetProfit and Loss Statement Analysis, Analyzing a P<his video explains that when we're reading a profit and loss statement as a director we should: - Not focus on the fig... Introduction to the Balance SheetInitial Understanding of a Balance Sheet, Financial Statement Analysis, AccountingThis video explains the main terms you need to read a balance sheet Assets: things a company owns that have value. -...

 Research Links

Jump to further research sources regarding the Accounting Equation.

 News Videos Presentations Books Academic More

Compare: Accrual Accounting

 Special Interest Group
 Do you know a lot about the Accounting Equation? Become our SIG Leader
 Return to Management Hub: Ethics & Responsibility  |  Finance & Investing More on Management  |  Return to Management Dictionary
 This ends our Accounting Equation summary and forum.

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2023 12manage - The Executive Fast Track. V16.1 - Last updated: 8-2-2023. All names ™ of their owners.