How Do You Solve an Accounting Equation? The accounting equation says that the total value of assets of a business is always the sum of its liabilities and owner's equity. This is the foundation of modern double-entry system of accounting, and it is applicable to small proprietors as well as large multinational corporations as well. If you are an accounting student, this knowledge of the accounting equation can provide you with enough Australian assignment help on accounting tasks. It is given that every business owns a certain amount of properties which are known as assets. The claims to the assets of a business entity are primarily divided into two different types – i.
The claims of creditors which are referred to as liabilities
ii.
The claims of the owner of the business that is referred to as owner’s equity
For accounting assignment help, you need to understand the relationship among assets, liabilities and owner’s equity business, which can be expressed in the following equation: Assets = Liabilities + Owner’s Equity While the left-hand side of the equation, better known as asset side, shows the resources owned by the business, the right-hand side, or the equity side, shows the sources of funds used to acquire the resources. The total monetary values of two sides of the accounting equation are always equal since they represent two different views of the same thing. If you hire an online assignment writer for your accounting task, he/she also places liabilities before owner's equity since the rights of creditors are always given priority over the rights of owners. That' why you can also write the equation as follows:
Assets – Liabilities = Owner’s Equity If the monetary values of any two of the three elements of the equation are known. Then we can easily find the third one. Let's assume that a business has total assets of $400,000, and its total liabilities are $120,000. Then the owner's equity must be $280,000 from the following calculation: Assets – Liabilities = Owner’s Equity $400,000 – $120,000 = $280,000 In conclusion, This is the fundamental concept that you will have to use to solve various accounting problems. It is possible to have queries after learning this. It will be better if you get the answers from someone professional, like your professor.