MANAGEMENT

Detailed explanation-1: -The main accounting equation is: Assets = Liabilities + Equity. Together, they make up a company’s balance sheet. The concept behind it is that everything the business has came from somewhere-either a third party, such as a lender, or an owner, such as a stockholder.

Detailed explanation-2: -Assets = Liabilities + Shareholder’s Equity This equation sets the foundation of double-entry accounting, also known as double-entry bookkeeping, and highlights the structure of the balance sheet.

Detailed explanation-3: -The accounting equation is a formula that shows the sum of a company’s liabilities and shareholders’ equity are equal to its total assets (Assets = Liabilities + Equity). The clear-cut relationship between a company’s liabilities, assets and equity are the backbone to double-entry bookkeeping.

Detailed explanation-4: -You can calculate it by deducting all liabilities from the total value of an asset: (Equity = Assets – Liabilities). In accounting, the company’s total equity value is the sum of owners equity-the value of the assets contributed by the owner(s)-and the total income that the company earns and retains.

Detailed explanation-5: -Assets – Liabilities = Owner’s Equity It may also be known as shareholder’s equity or stockholder’s equity if the business is structured as an LLC or a corporation.