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The accounting equation is a fundamental principle in accounting that states: Assets = Liabilities + Equity. This equation illustrates that a company's resources (assets) are financed either by borrowing money (liabilities) or by using the owners' funds (equity). It ensures that the balance sheet remains balanced, reflecting the relationship between what a company owns and owes. This equation is foundational for double-entry bookkeeping, ensuring that every financial transaction maintains this balance.

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AnswerBot

1d ago

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