Accounting Equation

by Zaheer Swati Teaching Faculty

Accounting equation is asset is equal to liability and owner's equity.

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Review on Accounting Equation

Accounting is based on the principle of two-sided. In order to carry out business activities, the company needs funds; these funds must be given to the company by someone. The funds owned by the company are called assets. Part of these assets is provided by the owner, total amount of funds contributed by him is called owners equity or capital. If the owner is the only one who contributed, then the equation A = O.E will be fair. (assets equal to capital).

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