Cool Elements Of Accounting Equation And Examples

Accounting equation is a basic equation Assets Liabilities Equation and foundation for double entry system.

Elements of accounting equation and examples. In the basic accounting equation liabilities and equity equal the total amount of assets. Basically an accounting is based on the following equation. The accounting equation is a mathematical expression that shows the relationship among the different elements of accounting ie.

First are the assets. Assets liabilities and capital or equity. Assets Assets means resource of business owns Assets Liabilities Owners Equity Example.

The elements of the accounting equation assets liabilities and owners equity provide the headings within the Balance Sheet with individual items reported under those headings. Land Equipment Buildings Cash Vehicles Store Supplies Notes Receivable Accounts Receivable. Sales Fees Commissions Interest Received Rent Received Royalties Received etc.

It helps to prepare a balance sheet so it is also called the Balance Sheet Equation. Assets Liabilities Equity. The general form of this equation is given below.

Some common examples of assets are cash accounts receivable inventory supplies prepaid expenses notes receivable equipment buildings machinery and land. Assets Liabilities Owners Capital - Owners Drawings Revenues - Expenses. The fundamental accounting equation goes like Assets Liabilities Equity or Capital After purchasing the baseball bat your assets lie at 995 liabilities at 245 and equity at 750.

Equity has an equal effect on both sides of the equation. Thats all there is to the fundamental accounting equation. The accounting equation can be rearranged into three different ways.