Define the accounting equation and the expand version of the accounting equation. Provide examples of each of the following: assets, liabilities, equity( common stock, dividends, revenue, expenses too).
Define the
The accounting equation is considered to be the foundation of the double entry accounting system. On a company's balance sheet, it shows that a company's total assets are equal to the sum of the company's liabilities and shareholders' equity.
Accounting equation, also known as basic accounting equation, provides the foundation for all accounting systems. The entire double entry system in accounting is based on accounting equation.
The accounting equation is:
Assets = Liabilities + Equity.
For a corporation, equity stands as Stockholders’ Equity,
For Sole proprietorship, equity stands as Owner’s Equity.
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