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Basic Accounting Equation

The accounting equation states that a company's total assets are equal to the sum of its liabilities and shareholders' equity. Assets are anything of economic value owned by the company, including financial assets and intangible assets. Liabilities include every debt of the company such as loans and accounts payable. Owners' equity represents the total value of the company in pesos after deducting total liabilities from total assets. The accounting equation ensures the balance sheet balances by equating assets with the sum of liabilities and owners' equity.

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38 views7 pages

Basic Accounting Equation

The accounting equation states that a company's total assets are equal to the sum of its liabilities and shareholders' equity. Assets are anything of economic value owned by the company, including financial assets and intangible assets. Liabilities include every debt of the company such as loans and accounts payable. Owners' equity represents the total value of the company in pesos after deducting total liabilities from total assets. The accounting equation ensures the balance sheet balances by equating assets with the sum of liabilities and owners' equity.

Uploaded by

Leslie Perez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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BASIC ACCOUNTING

EQUATION
What Is the Accounting Equation?

The accounting equation states that a company's total assets are equal to the sum of its
liabilities and its shareholders' equity.

This straightforward number on a company balance sheet is considered to be the foundation of


the double-entry accounting system.

 The accounting equation ensures that the balance sheet remains balanced
Assets = Liabilities +
Owner’s Equity
Assets = Liabilities + Owner’s Equity
Total assets: ₱170 billion
Total liabilities: ₱120 billion
Total shareholders' equity: ₱50 billion
ASSET
 is anything with economic value that a company controls that can be used to benefit the
business now or in the future.

They may include financial assets, such as investments in stocks and bonds

They also may be intangible assets like patents, trademarks, and goodwill.
Liability

A company's liabilities include every debt it has incurred

 These may include loans, accounts payable, mortgages, deferred revenues, bond issues,
warranties, and accrued expenses.
OWNERS EQUITY
is the total value of the company expressed in peso.

Put another way, it is the amount that would remain if the company liquidated all of its assets
and paid off all of its debts.

The remainder is the shareholders' equity, which would be returned to them.

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