The accounting equation (Assets 5 Liabilities 1 Equity) is a fundamental business concept. Explain what this equation reveals about a company's sources and uses of funds and the claims on company resources

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Kahlua

Business

23 October, 22:13

The accounting equation (Assets 5 Liabilities 1 Equity) is a fundamental business concept. Explain what this equation reveals about a company's sources and uses of funds and the claims on company resources

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Nigel · Answer 1

Explanation: The Accounting Equation (Assets = liabilities + Equity) shows the relationship between a company's assets, Liabilities and owners equity which at the end of the day balance out.

Assets reflect the total value of the property that the business has, and which is in its turnover.

Liabilities reflect the size of the financing of an organization's assets by third parties, banks, and private financial institutions.

Owner's Equity is characterized the value of investments made in this organization by its owner/s (shareholders). It can be said to be Capital plus retained earnings.

The accounting equation can be said to be Assets = liabilities+capital+revenue-expenses - dividend.

this is simply put that assets are totality of a company's liabilities, capital, revenue, expenses and dividend.