Accounting Equation
/ˈæk.aʊn.tɪŋ ɪˈkweɪ.ʒən/
Definitions
- (n.) A fundamental principle in accounting stating that assets equal liabilities plus owner's equity.
The accounting equation ensures that the balance sheet is balanced at all times.
Forms
- accounting equation
Related terms
See also
Commentary
The accounting equation forms the basis of double-entry bookkeeping, crucial for legal financial reporting and audit accuracy.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.