Livestock Economics, Marketing and Business Management

ACCOUNTING EQUATION

Assets = Equities

• The properties owned by business are called “Assets”. The rights to properties called “Equities”.
• Equities may be subdivided into two types: the rights of creditors and the rights of the owners.
• The Equity of creditors represents debts of the business and are called liabilities.
• The Equity of the owner is called capital.

So, Assets = Liabilities + Capital

Or Assets – Liabilities = Capital

• The Accounting Equation can be understood with the help of following transactions.