What is the accounting equation?

The accounting equation is an equation that allows us to determine whether or not there has been a difference in the total assets and total liabilities. We also can find out if there has been a change in stockholders' equity for either the debit or credit side of the account.

What is the accounting equation formula?

Assets = liabilities + owners equity

How does the accounting equation impact a company's financial statements?

The accounting equation is the foundation of a company's financial statements. The balance sheet, which shows a company's assets, liabilities, and shareholders' equity at a specific point in time, is based on the equation. The income statement and cash flow statement are also based on the Accounting Equation.

How can the accounting equation be used to track a company's financial health?

The accounting equation can be used to track a company's financial health by monitoring the changes in its assets, liabilities, and shareholders' equity. When one of these elements increases or decreases, it can indicate whether a company is becoming more or less financially healthy.

What are the components of the accounting equation?

The components of the accounting equation are assets, liabilities, and shareholders' equity. These three elements are all part of a company's balance sheet.

Accounting Equation Fill in the Blanks Questions & Answers

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1. In accounting only events are considered.

2. is an occurrence, happening change or incident which may or may not bring any change in the financial position of the business.

3. Accounting equation is: Assets = Liabilities +

4. The excess of assets over liabilities is .

5. The obligations of the business to creditors are called .

6. When an expense is paid, the amounts of two items in the accounting equation are reduced. These are .

7. An increase in one asset either reduces another asset or increases a .

8. A decrease in one asset either increases or decreases a liability.

9. In the accounting equation, the discount received is to the owner's equity.

10. Assets - Owner's equity =