Accounting equation informs one of the basic relationship between assets, liabilities and shareholder’s equity. It is used by all the organizations irrespective of their nature, form and size. Accounting equation helps in analyzing two basic things i.e. what a business owns and what a business owes. The resources that are owned by an organization are considered as assets, whereas the claims against the resources are considered as claims, which incorporate liabilities and shareholder’s equity. Liabilities are considered as the claims made by creditors against a company’s resources whereas Shareholder’s equity is the claims made by owners.
Call Us: USA +1 862 207 3288