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How do you complete the accounting equation?
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3:21
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The Accounting Equation — YouTubeYouTubeStart of suggested client of suggested clip
The Accounting Equation — YouTube
What is the accounting equation formula?
The accounting equation whereby assets = liabilities + shareholders' equity is calculated as follows: Accounting equation = $157,797 (total liabilities) + $196,831 (equity) equal $354,628, (which equals the total assets for the period)
How can you explain the basic accounting equation?
The fundamental accounting equation, also called the balance sheet equation, represents the relationship between the assets, liabilities, and owner's equity of a person or business. It is the foundation for the double-entry bookkeeping system. For each transaction, the total debits equal the total credits.
What is the basic accounting equation explain with example?
How does the accounting equation work, and what are some examples of using the accounting equation? The #accounting equation states that assets always equal liabilities plus equity. Assets are what a company owns, and they are recorded on the left-hand side of the balance sheet.
How do you do accounting equations?
0:54
3:21
Suggested clip
The Accounting Equation — YouTubeYouTubeStart of suggested client of suggested clip
The Accounting Equation — YouTube
What is the reason for the accounting equation?
It helps ensure that debits and credits are recorded accurately. Beyond this, however, it helps to measure how profitable your business is. The accounting equation is the foundation of your company's balance sheet, which expresses your business's assets, liabilities, and owner's or shareholder's equity in detail.
How do you calculate liabilities in accounting?
On the balance sheet, liabilities equals assets minus stockholders' equity. Use the balance sheet equation to calculate liabilities.
How do you calculate liabilities?
Subtract total stockholders' equity from total assets to calculate total liabilities. In this example, subtract $2,000 from $10,000 to get $8,000 in liabilities. This means that $8,000 of assets are paid for with liabilities, or debts, to the company.
How do you find liabilities in accounting?
Locate the company's total assets on the balance sheet for the period.
Total all liabilities, which should be a separate listing on the balance sheet.
Locate total shareholder's equity and add the number to total liabilities.
Total assets will equal the sum of liabilities and total equity.
How do you calculate assets and liabilities?
List Your Assets. To begin calculating your assets and liabilities, write down all the assets you believe you have. ...
List Your Liabilities. Determine your liabilities, including what you owe on student loans, car leases or purchases, credit cards and your house. ...
Analyze Your Lists. ...
Determine Your Net Worth.
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