Accounting Equation Calculator

The accounting equation is a mathematical representation that shows the relationship between a company's assets, liabilities, and owner's equity. It states that the total assets of a business must equal the sum of its liabilities and equity. This equation is the foundation of the double-entry bookkeeping system, which ensures that every financial transaction is recorded accurately and that the books remain balanced.

In its simplest form: Assets = Liabilities + Equity

This fundamental accounting principle means that everything a company owns (assets) is financed either by money borrowed from creditors (liabilities) or by money invested by owners (equity). The accounting equation must always balance, which is why it's sometimes called the "balance sheet equation" or the "fundamental accounting equation."