Assets, liabilities and equity are the components of the balance sheet. Here's a deeper look at these basic elements of accounting.
Definitions
Equity balance: The equity balance of a company is the result of comparing the economic structure (Assets) with the financial structure (Liabilities + Equity).
In this way, the value of each of them is expressed numerically, with the Equity being the difference between the sum of all the positive elements or Assets and the sum of all the negative elements or Liabilities.
According to this, we can establish the following fundamental relationships between Assets and Liabilities:
Active = Passive
Assets = Liabilities + Equity
Equity = Assets - Liabilities
Through the following video tutorial (5 videos, 40 minutes), from JAF Academy, you will have the opportunity to familiarize yourself with the concepts and learn more about assets, liabilities and equity.
Bibliography
- Ávila Macedo, Juan José. Introduction to Accounting. Editorial threshold, 2007. Pérez, Rosario. General Accounting and Treasury. Editex, 2008
