📊The Foundation
The Accounting Equation
Assets = Liabilities + Equity
What It Means
Everything a company owns equals what it owes plus what owners invested. This is the backbone of all accounting.
Example
Assets:$500,000
Liabilities:$200,000
$500,000 = $200,000 + Equity
Equity = $300,000
→ Owners have a $300,000 claim on company assets
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