Accounting Equation

What is the Accounting Equation?

The main relationship in introductory accounting is the accounting equation.

Knowledge of this equation is necessary for you to understand how debits and credits work.

The accounting equation

The relationship says the things the business owns either come from the borrowing from outsiders or the funding of the owners.

Assets are what the business owns and the amounts owed to the outsiders are liabilities. Finally the amounts the owners have put into the business is the owners equity.

Taking this further, the following infographic explains the relationship in simple terms.

Now access the free resources and low cost business tutorials on businesstute.com to succeed in your study.

08

Oct'18

Accounting Questions and Answers

Accounting Questions and Answers Learn the basics with these accounting questions and answers so you succeed with your accounting study.

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09

Jun'18

Summary of the Debit and Credit Rules

Summary of the Debit and Credit Rules This is a simple summary of the debit and credit rules. Use this rule to determine which accounts to debit and credit in double entry accounting. Because the rule is based on the accounting equation, it will always apply. Use this rule where …

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09

Jun'18

The Accounting Equation

The Accounting Equation The accounting equation is the logic behind double entry accounting or accrual accounting. To understand this logic, you need to know there are five types of transactions in the accounting process. These types of ledger accounts are Assets, Liabilities, Owners Equity, Revenues and Expenses. Because this is …

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01

Jun'18

What is a Ledger Account?

What is a Ledger Account? This is a common question for beginning accounting students. There should be a ledger account for each financial transaction type. This example shows a columnar ledger account. Accounting software packages report transaction balances using this style. (Often people learn accounting using a T account ledger …

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