Doubleentry Bookkeeping System A L OE Accounting Equation

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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. • Accounting Equation (A = OE + L)- All assets that a business owns have to be supplied by the owner and the external parties- Therefore, the relationship between The assets and the equities (that of the owner and the external parties) of the business can be expressed in the following equation: Assets = Owner’s Equity + Liabilities A = OE + L OE = A – L- The above equation is known as basic accounting equation or the balance sheet equation.-The accounting equation A = OE + L is expressed in a financial statement known as the Balance Sheet. • #DoubleentryBookkeepingSystem #AccountingEquation

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