The accounting equation is the first organized form of financial statements. It is a simple equation with practical application based on its structure and components.
Why this course
It is easy to overlook the inner workings of a simple concept, which is easy to memorize and remember such as the accounting equation. It is not a difficult area of study yet is often the reason for difficulty in subsequent concepts. This course takes more than a cursory look at the accounting equation and gives it the attention it deserves. The bookkeeping and recording functions are based on steps influenced by the accounting equation. Learning these steps in an efficient manner starts with the accounting equation.
What you will learn
The course discusses the evolution of the accounting equation and traces its construction to the initial determination of resources and providers of resources. The expression of equality establishes the claims against resources by their providers. The resources and claims conform to the elements of financial statements. The need to maintain balance is a reminder that every transaction affect both resources and claims to resources. The equality of the two sides in the equation is maintained during the accounting process.