Why assets = capital + liabilities??? # I want reasons!?

Question

Answer

The balance sheet reports a company's assets, liabilities, and owner's (or stockholders') equity at a specific point in time. Like the accounting equation, it shows that a company's total amount of assets equals the total amount of liabilities plus owner's (or stockholders') equity.

Answer

Everthing u have(house, clothes, money, etc) r your properties or  assets... and u purchase or u have all these things because of your own money or by borrowings from others... so value of your property is equal to value of your own money and borrowings...likewise a business has various assets whose value is equal to proprietors fund(capital) + liabilities(borrowing from others)... buildings, plants etc can be only purchased by owners fund or borrowed funds...

Answer

The equation that is the foundation of double entry accounting. The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company's shareholders. Thus, the accounting equation is: Assets = Liabilities + Shareholder Equity.Or =liab +cap The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and shareholder equity...if u want to understand in more detail search google or read accounting eqaution chapter for more clarity ...

Answer

This is accounting equation and is considered to be the foundation of the double entry accounting system. The equation shows on a company's balance sheet whereby the total of all the company's assets equals the sum of the company's liability and shareholders' equity.

If a company keeps accurate records, the accounting equation will always be 'in balance,' meaning the left side should always equal the right side. The balance is maintained because every business transaction affects at least two of a company's accounts. For example, when a company borrows money from a bank, the company's assets will increase and its liabilities will increase by the same amount. When a company purchases inventory for cash, one asset will increase and one asset will decrease. Because there are two or more accounts affected by every transaction, the accounting system is referred to as double entry accounting. A company keeps track of all of its transactions by recording them in accounts in the company's general ledger Each account in the general ledger is designated as to its type: asset, liability, owner's equity, revenue, expense, gain, or loss account.

Answer

Assets also known as debtors capital is the value of  investment in the business by the owners it is that part of the business that belong to the owners,hence it is often described as the owners interest. Liabilities are the debts owned by the firm.

Answer

Because in balance sheet assets is always equals to liabilities which is capital +other liabilities such as outstanding expense

Answer

Hence, the total assets you have can either be acquired by your own funds(capital) or borrowed money(liabilities). So in any case the total of your assets will always beequal to the total of you capital andliabilities.

Answer

This equation is known Accounting equation or Balance Sheet equation. It signifies that the assets of business are equal to the total of its liabilities (from outsiders) and capital(from owner's equity).

Answer

Assets are resources and Liabilities are sources of resources. Since every resource has a source so all assets (resources) will have either owners funds(capital)or borrowed funds(liabilities)as source.

Answer

The Accounting Equation states that the Assets are always equal to the sum of Capital & Liabilities. This means that all the resources of economic value that a business has, comes from the investment made by the owners. That investment can be their own, and that is called owner's equity or capital.
Assets (what it owns); Liabilities (what it owes to others); Owner's Equity (the difference between assets and liabilities

Similar Commerce Doubts

A firm has a current ratio of 3:1. It's net working capital is Rs. 2,00,000 . You are required to determine: i) Current Assets , ii) Current Liabilities, and iii) Liquid Assets , assuming inventory (stock) of Rs. 2,20,000?

Financial position of the business means totled capital Plus liabilities and on the other side totled assets. is this sentence correct. first of all answer only in yes or no. I don't need any explanation about it.?

Which one is the correct statement (

Working Capital=5,40,000 Current Ratio=2.8 and Inventory=3,30,000.Find Current Assets, Current Liabilities and Quick Ratio?

Top Courses for CommerceView all

Chapter Notes for Commerce

Economics Class 12

Economics Class 11

NCERT Books & Solutions for Commerce

Economics for CBSE Class 12 Board Examinations

Top Courses for Commerce

Top Courses for Commerce

Suggested Free Tests

Related Content

Commerce Courses

Other Courses

How To Prepare?

Related Exams

Company