Runtime 1.5 hours; Access period 60 days from registration date; Learners Accounting students, entrepreneurs, non-accountant professionals; Recommended previous course Conceptual Framework Recommended next course Rules of Debit and Credit.
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The accounting equation is the basic structure of the financial statements. It is like other equations having two sides of equal values. The similarity stops there. It is more a concept than a mathematical formula, an expression of a relationship among elements of financial statements. Such relationship provides information about an entity’s financial position and performance that providers of capital are interested in. The equation and consequently the relationship of the elements therein are affected by and change with each transaction.
Understanding the accounting equation and its dynamics establishes a foundation for the accounting process that begins with a transaction and ends in financial statements. The statement of financial condition is an expanded accounting equation. The equation evolves early at the enterprise planning stage and consists of a succinct summary of the resources available to the enterprise, and the claims to these resources. These values will change with every transaction, but the equation is always kept in balance.
COURSE OBJECTIVES
The accounting equation is a simple equation that traces its beginnings not to a mathematical formula but from a depiction of a concept that established a relationship between the resources needed by an enterprise and the source of those resource. What was meant to be a simple listing of two values took form and established the foundation for certain rules that account for changes in the values of those resources and the claims to those resources. It also provided a template for the preparation of financial statements.
