**Accounting Equation Homework Help**

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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:**

**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

**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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