Financial statements are the final product of process. They provide information on the financial condition of a company. The balance sheet, one type of financial statement, provides a summary of what a company owns and what it owes on a particular day.
Assets represent everything of value that is owned that by a business, such as property, equipment, and account receivable. On the another hand, liabilities are the debts owed by a company-for example, to suppliers and bank. If liabilities are subtracted from assets ( assets-liabilities), the amount remaining is the owners share of a business this is know as owners or stockholders equity.
One key to understanding the accounting transaction of a business is to understand the relationship of its assets, liabilities, and owners equity. This is often represented by the fundamental accounting equation : assets equal liabilities plus owners equity.
ASSETS = LIABILITIES + OWNERS’ EQUITY
These three factors are expressed in monetary terms and therefore are limited to item that can be given a monetary value. The accounting aquation always remains in balance in other words side one must equal the other.
Assets represent everything of value that is owned that by a business, such as property, equipment, and account receivable. On the another hand, liabilities are the debts owed by a company-for example, to suppliers and bank. If liabilities are subtracted from assets ( assets-liabilities), the amount remaining is the owners share of a business this is know as owners or stockholders equity.
One key to understanding the accounting transaction of a business is to understand the relationship of its assets, liabilities, and owners equity. This is often represented by the fundamental accounting equation : assets equal liabilities plus owners equity.
ASSETS = LIABILITIES + OWNERS’ EQUITY
These three factors are expressed in monetary terms and therefore are limited to item that can be given a monetary value. The accounting aquation always remains in balance in other words side one must equal the other.
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