The Basic Accounting Formula
The basic accounting formula is: Assets = Liabilities + Owners’ Equity. This formula can also be written as:Liabilities = Assets – Owners’ Equity. Additionally, this formula can be written as: Owners’ Equity = Assets – Liabilities. When looking at financial reports for a company, you’ll notice that this formula represents the Balance Sheet. When looking at financial reports for a company, you’ll notice that this formula represents the Balance Sheet.
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