accounting equation

Definition

The fundamental balance sheet equation: namely, assets = liabilities + net worth.

Use accounting equation in a sentence

You should try to always use the same accounting equation so that any new hires can quickly pick up on it.

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The accounting equation was especially useful in developing and reaching an understanding of the new accounting methods as it relates to our bottom line.

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When my boss asked me to put together our company's balance sheets, he was adamant that it must show how our assets, liabilities and net worth compare in the accounting equation.

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