Equity between Assets and Liabilities

Assets Liabilities Equity

When you are doing journal entry, in double entry you should take care of accounting equation for any voucher. equity between assets and liabilities is so important that quantity of digits are important.

Advertisement of iGreen accounting

How can we use this Equity in Real Works

For first of all, let us have a look at real business in our daily life. When we buy an accessories for our office we will pay for it so we have a new asset but we don’t have any liability. now when we buy an accessories and vendor will accept to receive its money later on our credit basis account then we will create a liability.

However on credit basis system, we will record a liability equal to any assets that we receive from outside of company

Please have a look at this photo for example:


Example of Assets Liabilities Equity

Example of Assets Liabilities Equity