Introduction:
The accounting equation is a fundamental concept in accounting that represents the relationship between a company's assets, liabilities, and owner's equity. It states that the sum of a company's assets is equal to the sum of its liabilities and owner's equity. The equation is expressed as follows:

Assets = Liabilities + Owner's Equity

This equation holds true under all circumstances and is the basis for double-entry bookkeeping. Let us explore four different scenarios to justify the statement.

Example 1: Starting a Business
When a business is started, the owner invests capital into the business. This capital becomes the owner's equity in the company. The value of the assets increases by the amount of capital invested, and the owner's equity also increases by the same amount. Therefore, the accounting equation remains balanced.

Example 2: Borrowing Money
If a company borrows money from a bank, it incurs a liability in the form of a loan payable. The value of the liabilities increases, but to maintain the balance, the value of the assets must also increase. The company receives cash from the loan, which is recorded as an asset. Hence, the accounting equation holds true.

Example 3: Purchasing Equipment
When a company purchases equipment, it acquires an asset. The value of the assets increases, and to maintain equilibrium, either the liabilities or owner's equity must also increase. If the company pays for the equipment in cash, the assets decrease (cash) and assets increase (equipment). On the other hand, if the company finances the purchase through a loan, the liabilities increase (loan payable) and assets increase (equipment). In both cases, the accounting equation remains balanced.

Example 4: Generating Revenue
When a company generates revenue through sales, it increases its assets (cash or accounts receivable) and also its owner's equity (retained earnings or revenue). The accounting equation remains true as the increases in assets and owner's equity are equal to the revenue generated.

Conclusion:
The accounting equation is a fundamental principle in accounting that holds true under all circumstances. It provides a framework for recording financial transactions and ensures that the balance between assets, liabilities, and owner's equity is maintained. Whether it is starting a business, borrowing money, purchasing assets, or generating revenue, the accounting equation remains balanced, reflecting the financial position of a company.