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Meaning of accounting equation

Every field of knowledge in the history of formal education has been through a revolution of its own. This has led to the present situation where scientific approach towards every subject has developed as the elementary consideration to decide its effectiveness.

In the same way, scientific studies were conducted in the field of accounting too. This research led to the innovation of ‘Accounting Equation’. The scientific study further revealed that accounting revolves around three terminologies. Even the accounting structure concentrates on these three terms. Further, these three terms are even inter-laced and inter-related. These three terms are-

  • Assets
  • Liabilities
  • Capital