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Business Definition for: accounting equation
accounting equation
double entry bookkeeping where there is an identity of debit and credit elements of a transaction. For each transaction, the total debits equal the total credits. For example, the payment of $100 to a creditor requires a debit to accounts payable and a credit to cash for $100. The accounting equation can also be expressed as:
Assets = Liabilities + Capital
An increase (or decrease) in total assets is accompanied by an equalincrease (or decrease) in liabilities and capital.
accounting equation
formula in which assets must equal the sum of liabilities and owner's equity .
Copyright © 2005, 2000, 1995, 1987 by Barron's Educational Series, Inc., Reprinted by arrangement with Publisher.
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
