Scribd
Upload
22 views2 pages

Accounting Equation: Assets Owner's Equity + Liabilities

The accounting equation states that a business's assets are equal to the sum of its owner's equity and liabilities. Assets are items of value owned by the business like buildings, machinery, cash, and stock. Liabilities are amounts owed to creditors, bills payable, bank loans, and overdrafts. Owner's equity represents the funds provided by the business owners and is calculated as total assets minus total liabilities.

Uploaded by

Lai Kee Kong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
22 views2 pages

Accounting Equation: Assets Owner's Equity + Liabilities

The accounting equation states that a business's assets are equal to the sum of its owner's equity and liabilities. Assets are items of value owned by the business like buildings, machinery, cash, and stock. Liabilities are amounts owed to creditors, bills payable, bank loans, and overdrafts. Owner's equity represents the funds provided by the business owners and is calculated as total assets minus total liabilities.

Uploaded by

Lai Kee Kong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Accounting equation

Assets = Owners Equity + Liabilities


The above accounting equation expresses the fact that everything the business owns has been
supplied by the owner (owners equity) and by external source (liabilities).

Elements of Accounting Equation


Assets
Assets are items of value owned by the business. Examples include

Building

Machinery

Motor vehicle

Cash at bank

Cash in hand

Stock

Debtors (people who own money to the business)

Liabilities
These denote the amounts which the business owes to others. Examples include

Creditors (people to whom the business owes money)

Bills payable

Bank overdraft

Bank loan

Owners equity
The
funds
of
a
business
Owners equity = Assets Liabilities

Owners equity increases by

provided

for

by

its

Owners equity decreases by

Profits

Losses

Additional investment into the business

Drawings

owners.

You might also like