**Accounting equation, **

### Definition of Accounting equation:

The accounting equation is considered to be the foundation of the double-entry accounting system. The accounting equation shows on a company's balance sheet whereby the total of all the company's assets equals the sum of the company's liabilities and shareholders' equity.

Assets = liabilities + owners equity. The most fundamental equation of double-entry bookkeeping system, it expresses the relationship between what is owned and what is owed by an entity.

Based on this double-entry system, the accounting equation ensures that the balance sheet remains “balanced,” and each entry made on the debit side should have a corresponding entry (or coverage) on the credit side.

### How to use Accounting equation in a sentence?

- Both liabilities and shareholders' equity represent how the assets of a company are financed.
- When you want to try and figure out what your net worth is you can use the accounting equation to figure it out.
- The liabilities represent their obligations.
- Before I could run the business, my dad told me that I must figure out how to read an accounting equation .
- Financing through debt shows as a liability, and financing through issuing equity shares appears in shareholders' equity.
- The accounting equation shows on a company's balance sheet where the total of all the company's assets equals the sum of the company's liabilities and shareholders' equity.
- The accounting equation is considered to be the foundation of the double-entry accounting system.
- Assets represent the valuable resources controlled by the company.
- If you want to find out how much money you really are making you can use the accounting equation to find your bottom line.

Meaning of Accounting equation & Accounting equation Definition