By DeVry University
December 8, 2021
6 min read
December 8, 2021
6 min read
Accounting is full of various equations and formulas that are designed to help you quickly and effectively acquire information about the financial standing of your business. Among these many formulas is the famous accounting equation, which is used to calculate the total value of the assets held by your company.
In a situation where the business has a sole proprietor, the formula is as follows:
Assets = Liabilities + Owner's Equity
For publicly held corporations, the formula is the same, but the concept of “owner” is slightly modified:
Assets = Liabilities + Shareholder Equity
And as any accountant knows, having a clear picture a company’s finances and what it has on hand is one of the most important elements in making good financial decisions, and why the accounting equation is so critical.
In this article, we'll dig into each element of the accounting equation and explain some of its applications in order to help you become more familiar with the formula. You'll learn about all of these things and more as we explore the following sections (jump to):
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In New York, DeVry University operates as DeVry College of New York. DeVry University is accredited by The Higher Learning Commission (HLC), www.hlcommission.org. The University’s Keller Graduate School of Management is included in this accreditation. DeVry is certified to operate by the State Council of Higher Education for Virginia. Arlington Campus: 1400 Crystal Dr., Ste. 120, Arlington, VA 22202. DeVry University is authorized for operation as a postsecondary educational institution by the Tennessee Higher Education Commission, www.tn.gov/thec. Naperville Campus: 1200 E. Diehl Rd., Naperville, IL 60563. Unresolved complaints may be reported to the Illinois Board of Higher Education through the online compliant system https://complaints.ibhe.org/. View DeVry University’s complaint process https://www.devry.edu/compliance/student-complaint-procedure.html Program availability varies by location. In site-based programs, students will be required to take a substantial amount of coursework online to complete their program.
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