Assets – liabilities equal to______?
Has it was said by most of them it is a basic accounting equation of
Assets = Liabilities + Equity (includes preference, retained earnings etc. in simple words owners capital)
The simple logic behind equation : If you look at the balance sheet you will find the Assets side of balance sheet and Liabilities side of balance sheet. In Liabilities side it also includes the owners capital. Both the sides should be tallied to give the proper balance sheet of the organization.
Thus from this only the equation was taken as Assets = Liability + owners capital and it has to be equal on both sides to be a perfect balance sheet.
