Give the basic purpose of accounting equation.
Dear Student,
Accounting equation lays the foundation for the double entry system of accounting. That is, the total of debits shall always be equal to the total of credits.
The basic purpose of accounting equation is to indicate the extent to which the assets are financed by owner's equity (capital) and borrowed funds (debts/liabilities).
Accounting equation lays the foundation for the double entry system of accounting. That is, the total of debits shall always be equal to the total of credits.
The basic purpose of accounting equation is to indicate the extent to which the assets are financed by owner's equity (capital) and borrowed funds (debts/liabilities).