Accounting equation
Definition
Assets = Liabilities + Equity. The identity every balance sheet must satisfy.
Long reference
Handbook
The Accounting Equation
Citations, procedures, and worked examples for accounting equation.
Related terms
Balance sheet
A financial statement showing what the corporation owns (assets), what it owes (liabilities), and the owner's residual equity at a point in time.
Debit
An entry recorded on the left side of an account. Increases assets and expenses; decreases liabilities, equity, and revenue.
Credit
An entry recorded on the right side of an account. Decreases assets and expenses; increases liabilities, equity, and revenue.