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Accounting Equation - Balance

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What is the accounting equation? What does it tell you? Why does it have to balance? What happens if the equation does not balance? How does technology play a role in this?

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Solution Summary

The answer contains the meaning of the accounting equation, need for balancing of the equation, the reasons for non-balancing of the equation and the role of technology (accounting software) in this regard.

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Accounting equation:

Assets = Liabilities + owner's equity

i.e., resources and claims on the resources.

Here, owner's equity means the share capital + revenues - expenditure + Gain - loss + contribution - withdrawals.

The accounting equation tells us the how resources (both fixed assets and current assets) of the company is ...

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