Accounting equation: The double entry accounting framework expressed as  Assets = Liabilities + Equity

  • May be expressed as Equity = Assets - Liabilities
  • Assets, liabilities, and equity represent balance sheet accounts
  • Revenue and expenses are income statement accounts that combine to create net income or net loss
  • Net income or loss gets added or subtracted to retained earnings at the end of the accounting period

M_1F_Accounting_equation

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