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The fundamental accounting equation states: assets = _________.

Victoria Fowler

in Business

1 answer

1 answer

Jennifer Patterson on April 30, 2018

The accounting equation fundamental states: assets = liabilities + equityExplanation:This equation is also called balance sheet equation. Represents the relationship between assets, liabilities and owner's equity.Assets are the resources own business. Any thing, tangible or intangible, which is used by the company to produce products or give companies are active. The liabilities are the future sacrifices of economic benefits for which it has been used in the past, but that will be settled in the future.Equity is the difference between the value of the assets and the value of the liabilities.Example:A student buys the mobile phone for $ 850. To pay the shopkeeper, the student has cash of $ 400 and asked to borrow $ 450 for the remaining amount. Now, he has an asset of $850, of the liabilities is $450 and equity is $400.

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