What is accounting equations ?

The accounting equation is a fundamental principle in accounting that represents the relationship between a company's assets, liabilities, and equity. It is expressed as:

Assets = Liabilities + Equity

This equation shows that a company's assets are financed by either its liabilities (debts) or its equity (ownership interest). In other words, the total value of a company's assets must be equal to the sum of its liabilities and equity. This equation is used as the basis for recording and analyzing financial transactions in accounting.