The Accounting Equation

bill is founded on the basic disturbity that states a friendships Assets equal their total Liabilities plus their total owners Equity . This equality is summarized as ALOE . This isthe basis of the Balance Sheet. Assets ar the communitys furniture, fixtures and equipment, physical topographic point, intellectual property and other resources. These properties include the physical domain of a function as well as the equipmentand build improvements on the property.A companys liabilities are all of the obligations that the company has incurred. Thecompany has to service these liabilities by making payments on them. These payments may takethe course of instruction of cash income or may be sourced from loaned monies. If they borrow money, this is anadditional liability. Liability is money owed debts or pecuniary obligations (Dictionary. com,2009). Liabilities offset assets in the equation that is the Balance Sheet.Owners Equity, also cognize as owners/ stockholders equity, i s the final variable in theequation. When liabilities are subtracted from assets, the remaining balance is the owners equity. The term owners equity is used for privately have companies. If the business is an incorporatedentity which issued common stock in exchange for a percentage of company ownership, then theowners equity is termed owners/shareholders equity.Cash, stocks and carry earnings are allowners/shareholders equity. E1-1 Urlacher Company provides the following bill service tasks each year. Communication analysis and interpretation of financial data. Communication description of meaning, uses and limits of financial data. Communication Compiling a summary of financial events. Communication Accounting report preparation. Recording Maintaining a linear, chronological record of financial data.