Accounting Equation II Financial accounting II

#Accounting Equation II Financial accounting II
The accounting equation is considered to be the foundation of the double-entry accounting system. The accounting equation shows on a company’s balance sheet that a company’s total assets are equal to the sum of the company’s liabilities and shareholders’ equity. Assets represent the valuable resources controlled by a company. The liabilities represent its obligations.
Both liabilities and shareholders’ equity represent how the assets of a company are financed. Financing through debt shows as a liability, while financing through issuing equity shares appears in shareholders’ equity.

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