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Friday, 1 April 2016

Accounting Equation

Every business transaction has an effect on company's financial position and the financial position on and organization can be measured by the following items:
Assets
Liabilities
Owner Equity
Using the above terms we are now able to make an accounting equation as:

                                 Sole business    Assets = Liabilities + Owner Equity
                               Corporate    Assets = Liabilities + Shareholder's Equity

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