Buchhaltungsgleichung (EN)

Buchhaltungsgleichung

The accounting equation is the fundamental principle of double-entry bookkeeping and states that Assets = Liabilities. This equation means that all assets of a company are financed either by debts (liabilities) or by equity. The accounting equation ensures that the balance sheet is always balanced and forms the basis for all accounting processes.

Structure of the Accounting Equation

flowchart TD     A[Assets] --> B[Balance total]     C[Liabilities] --> B     D[Liabilities] --> C     E[Equity] --> C 

In Context

• Typically used together with balance sheet preparation and annual financial statements
• Related to: Balance sheet, income statement, double-entry bookkeeping
• Example use: Checking the financial stability of a company