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The basic accounting equation, also called the balance sheet equation, represents the relationship between the assets, liabilities, and owner's equity of a business. It is the foundation for the double-entry bookkeeping system. For each transaction, the total debits equal the total credits. It can be expressed as : 〔Meigs and Meigs. ''Financial Accounting, Fourth Edition''. McGraw-Hill, 1983. pp.19-20.〕 : In a corporation, capital represents the stockholders' equity. Since every business transaction affects at least two of a company’s accounts, the accounting equation will always be “in balance,” meaning the left side should always equal the right side. Thus, the accounting formula essentially shows that what the firm owns (its assets) is purchased by either what it owes (its liabilities) or by what its owners invest (its shareholders equity or capital). For example: A student buys a computer for $945. This student borrowed $500 from his friend and spent another $445 earned from his part-time job. Now his assets are worth $945, liabilities are $500, and equity $445. The formula can be rewritten: :Assets - Liabilities = (Shareholders' or Owners' Equity)〔 Now it shows owners' interest is equal to property (assets) minus debts (liabilities). Since in a corporation owners are shareholders, owner's interest is called shareholders' equity. Every accounting transaction affects at least one element of the equation, but always balances. Simplest transactions also include:〔(Accounting equation explanation with examples ), accountingcoach.com.〕 These are some simple examples, but even the most complicated transactions can be recorded in a similar way. This equation is behind debits, credits, and journal entries. This equation is part of the transaction analysis model,〔Libby, Libby, and Short. ''Financial Accounting, Third Edition''. McGraw-Hill, 2001. p.120〕 for which we also write :Owners equity = Contributed Capital + Retained Earnings :Retained Earnings = Net Income − Dividends and :Net Income = Income − Expenses The equation resulting from making these substitutions in the accounting equation may be referred to as the ''expanded'' accounting equation, because it yields the breakdown of the equity component of the equation.〔Wild.''Financial Accounting, Third Edition''.McGraw-Hill, 2005. p.13, ISBN 978-0078025389〕 ==Applications== The accounting equation is fundamental to the double-entry bookkeeping practice. Its applications in accountancy and economics are thus diverse. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「Accounting equation」の詳細全文を読む スポンサード リンク
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