Accounts-Accounting Equation

By: Rahul Singh

Accounting Equation approach

M: 9716242358

American Accountants have derived the rules of debit and credit through a novel medium, i.e., accounting equation. This is also known as modern system of Accounting

This equation holds good for all transactions and events and at all periods of time
The equation is as follows: Assets = Equities Equities can be subdivided into i. equity of the owners which is known as capital (internal equity) ii. equity of creditors who represent the debts of the business know as liabilities.( external equity) The accounting equation can be restated as follows: Assets = Liabilities + Capital (Or) Capital = Assets Liabilities (Or) Liabilities = Assets Capital.

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