# Accounting Equation Homework Help

## Accounting can be difficult too!

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### Students must get familiar with the following facts about accounting equation first:

Accounting equation is a method that defines that the company’s assets are equal to its liabilities, along with payment which is made to the shareholders of that company. The formulation for this equation is:

Total Assets = Total Liabilities + Shareholder Equity

A company does many different kinds of purchases and/or sales which actually affects both the sides of the equation, simultaneously, or even keeps the calculation same on the same side of the equation. For example, a company wants to make a payment of Rs. 100,000 to the bank. This company can either pay the bank by cash (assets to liabilities), or can take up a new loan to pay-off the earlier loan (liability to liability). In either of the cases, the calculation of both the sides will remain the same.

### There are two main important points which are to be taken care of:

1. Total Liabilities:

To find out total liabilities, it is very much important to know the short-term (or current) and long-term liabilities of the company. The total of these two liabilities will be the actual figure which will help in completing the equation

1. Shareholder equity:

To get the figure in order to find out the equation, the following method is to be used:

Share capital + retained earnings – Treasury shares

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