Asked by Briana Quist on Jun 06, 2024
Verified
Explain the accounting equation and define its terms.
Accounting Equation
The fundamental equation of accounting stating that assets equal liabilities plus equity (Assets = Liabilities + Equity).
- Distinguish between liabilities and equity, comprehending their functions in the context of the accounting equation.
Verified Answer
NR
nikkola regimbalJun 11, 2024
Final Answer :
The accounting equation is stated as: Assets = Liabilities + Equity.Assets are resources owned or controlled by a business that are expected to provide future benefit.Creditors' claims on assets are called liabilities.Stockholders' claims on assets are called equity.The accounting equation shows that the resources (assets)of the business equal the source of funds to acquire and the claims against those resources.
Learning Objectives
- Distinguish between liabilities and equity, comprehending their functions in the context of the accounting equation.
Related questions
You Are Reviewing the Accounting Records of Buddy's Foreign Automotive,owned ...
When a Company Wants to Place a Value on a ...
The Accounting Equation Can Be Expressed as Assets - Liabilities ...
Purchasing Supplies on Account Increases Liabilities and Decreases Equity
If Total Assets Decreased by $30,000 During a Specific Period ...