From the principles of accounting, the accounting equation states that the total assets of a company equals the sum of its liabilities and equity contributions on the balance sheet.

The most important accounting formulas are practical and intuitive, making them easy to remember and apply.

This formula is also known as the accounting equation or the balance sheet equation. The balance sheet holds the data needed for the accounting equation.

The expanded accounting equation builds upon the basic accounting equation's use of assets, liabilities and equity by incorporating additional components such as revenues, expenses and withdrawals.

Essentially, the accounting equation is assets = liabilities + owners' equity. This is the basic balance seen on the balance sheet, but it is used throughout accounting.

Total assets are also the sum of its total liabilities and shareholder equity because of the balance sheet accounting equation. Both types of financing are used to fund a company’s operations.

EXECUTIVE SUMMARY Accounting for currency translation risks can be very complex. This article addresses only the basics and provides some tools to help the reader understand the issues and find ...