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Accounting Equation

The document discusses the accounting equation which states that a company's assets must always equal its liabilities plus equity. It explains the major accounts of assets, liabilities, owner's equity, income, and expenses and provides examples of how to calculate values using the accounting equation.

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Angel Asis
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29 views9 pages

Accounting Equation

The document discusses the accounting equation which states that a company's assets must always equal its liabilities plus equity. It explains the major accounts of assets, liabilities, owner's equity, income, and expenses and provides examples of how to calculate values using the accounting equation.

Uploaded by

Angel Asis
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Accounting Equation

Module 3, lesson 1
Review:

The five major accounts:


1. ASSETS
2. LIABILITIE
3. OWNER’S EQUITY
4. INCOME
5. EXPENSES
In accounting, it is understood that every business activity always
has a two-sided effect on the business. This two-sided effect is best
illustrated in the accounting equation, which states that the asset of
the business entity should always be equal to the business’s total
capital added to its total liabilities to its suppliers. Thus:

• Assets = Liabilities + Equity


• Liabilities = Assets – Equity
• Equity = Assets – Liabilities
Regardless of how
the accounting
Debit Credit

equation is
represented, it is
important to
remember that the
equation must
always balance.
• Example:
Answer:
• 1.Company A has assets of P1,000,000 ASSETS LIABILITI EQUITY
and has liabilities of P400,000. How
much is the capital?
ES
1,000,000 400,000
• 2.Company B has liabilities of P500,00
and capital of P700,000. How much are
the assets? 500,000 700,000
• 3.Company C has assets of P400,000
and capital of P2,800,000. How much
are the liabilities? 400,000 2,800,000
Answer your quiz in Genyo

Thank You

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