# the accounting equation

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the accounting equation
the accounting equation UK US noun [S] (also the balance sheet equation) ACCOUNTING
a mathematical statement showing that to calculate a company owners' equity you subtract its liabilities from its assets

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• Accounting Equation — The equation that is the foundation of double entry accounting. The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company’s shareholders. Thus, the accounting equation is …   Investment dictionary

• Accounting equation — Accountancy Key concepts Accountant · Accounting period · Bookkeeping · Cash and accrual basis · Cash flow management · Chart of accounts  …   Wikipedia

• accounting equation, the — *Assets = liabilities + *capital. Under the conventions of *double entry bookkeeping, each accounting transaction has at least one *debit entry and at least one *credit entry of equal value. At any moment, the mathematical integrity of… …   Auditor's dictionary

• accounting equation — balance sheet equation The formula underlying a balance sheet; it can be expressed as: assets = liabilities + capital. An increase or decrease in the total assets of a concern must be accompanied by an equal increase or decrease in the… …   Accounting dictionary

• accounting equation — noun 1. : the equality of debits and credits as used in the double entry system 2. : a statement of net worth as equal to assets minus liabilities …   Useful english dictionary

• equation — e‧qua‧tion [ɪˈkweɪʒn] noun [countable] a statement in mathematics, showing that two quantities are equal acˈcounting eˌquation one of the relationships between assets and liabilities used in accounting: • The accounting equation here is: assets… …   Financial and business terms

• the balance sheet equation — UK }} US }} noun [S] ► THE ACCOUNTING EQUATION(Cf. ↑the accounting equation) …   Financial and business terms

• Accounting identity — In finance and economics, an accounting identity is an equality that must be true regardless of the value of its variables, or a statement that by definition (or construction) must be true. [ Principles of Macroeconomics , Mankiw et al., pp. 211… …   Wikipedia

• accounting — /euh kown ting/, n. 1. the theory and system of setting up, maintaining, and auditing the books of a firm; art of analyzing the financial position and operating results of a business house from a study of its sales, purchases, overhead, etc.… …   Universalium

• equation — /ɪ kweɪʒ(ə)n/ noun a set of mathematical rules applied to solve a problem ● The basic accounting equation is that assets equal liabilities plus equity …   Dictionary of banking and finance