Question

3. What is the balance sheet equation?​

Answer 1

It is the sum of the owner's capital and company's total liabilities is equal to the company's total assets at a particular point of the time.

Answer 2

Definition:The balance sheet equation or accounting equation is the most basic, fundamental part of accounting. The balance sheet equation forms the building blocks for the entire double entry accounting system.

The balance sheet is based on the fundamental equation:

Asset = Liabilities + Equity.

It helps the company to prepare a balance sheet and see if the entire enterprise's asset is equal to its liabilities and stockholder equity.