Finance Formulas / July 13, 2018 / Kenley Hopper
The accounting equation, also known as the balance sheet equation, is written as Assets = Liabilities + Equity and underpins the balance sheet's foundation. The accounting equation is the foundation of double entry accounting, and displays that all assets are either financed by borrowing money or paying with the money of the company's shareholders.
Assets include anything a company owns that has monetary value, even if it can't be readily sold. They are split into two classes current assets, which refers to assets that a company can (or will) sell within one year, and long-term assets, which are the assets a company cannot (or doesn't plan to) sell within a year.
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