What is the basic accounting equation?

Answer: The accounting equation is the fundamental part of the balance sheet which serves as the basis for the system of double entry in book keeping. The basic accounting equation states that for every successive debit there must be an equal credit. It can be written as follows:

Assets = Capital+ Liabilities.




Thus, the total assets of the company are equal to the shareholder’s funds and the other liabilities.

Mayank Rai

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