Accounting Dictionary - Accounting Terms & Definitions
A: Accounting Equation
Account equation is a reflection of the assets the business owns and financial means how these assets are being financed, i.e. by own means (Equity) or by borrowed means (Liabilities).
Since all the assets are financed by either Equity or Liabilities, there is an equation between these items, i.e. ASSETS=LIABILITIES+EQUITY and such expression is called Accounting Equation.
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