Accounting Equation

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Accounting Equation

Accounting Equation

Literature Review

McGowen, GB 1962, 'The Flow of Assets through a Business Enterprise and the Accounting Flow Equation Based Thereon', Accounting Review, 37, 1, p. 105, Business Source Complete, EBSCOhost, viewed 11 August 2012.

The accounting equation states the equality and establishes the relationship between the three main elements. Assets are economical resources and the granting to the Company owns, or any other juridical face, and to-rye should be profitable in the future. A liability is the company's debts to creditors. Shareholders' equity is shown in the equation as the remainder of the difference between assets and liabilities. Is used can also be represented as follows:

Assets = Liabilities + Equity

We call those non-current assets and property rights acquired with the intention of remaining in business for over a year. On the contrary, we call those current assets and rights acquired with the intention of staying less than a year. Equity is the difference between assets and liabilities of the company. It consists of shareholders' equity, adjustments for changes in value and Grants, donations and legacies.

The liabilities on the other hand, consist of all financial resources obtained by the company for the performance of its functions and estimates of future expenses. The financial resources of Liabilities are classified according to their enforceability, differentiating between those resources that are owned by owners of capital and therefore are not enforceable (except redemption of shares or distribution of the reserves), and those resources owned third party outside the company, therefore, are enforceable, and must be returned at some point.

In turn, within borrowings or enforceable, differentiate between current and noncurrent, depending on whether the time within which repayment is made ??above or below that year.

Kalbers, L. P., & Cenker, W. J. (2007). Organizational commitment and auditors in public accounting, Managerial Auditing Journal, 22(4), 354-375. doi: 10.1108/02686900710741928

Accountants writes the amounts in two or more explaining each transaction. This happens with the accounting software business as well, but the software could do some of the entries in the wings. There are various definitions of assets and liabilities. This introduces a degree of confusion in the minds of those who are trying to understand what it is. Ask about the assets and liabilities of people of different professions, you can hear two fundamentally different approaches to these terms. This can be call "approach accountant" and "approach is an economist." By the way, many think that the profession of economics and accountancy profession alike. This is misleading. In an economist and accountant fundamentally different problems, this often leads to the fact that it is easy to understand each other. On should know, what is the difference between an economist and an accountant? Economist, it is important that the company had a profit. And it does not matter whether the asset will converge to a liability.

A bookkeeper is essential that converged asset with a liability. And it does not matter whether a firm's profits. These jokes are very large grain of ...
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