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 = 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.

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: -The accounting equation states that-assets = liabilities + equity. As a result, we can re-arrange the formula to read liabilities = assets-equity. Thus, the value of a firm’s total liabilities will equal the difference between the values of total assets and shareholders’ equity.