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Case study on accounting equation

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Basic financial accounting is the set of the principle points, components and norms of financial accounting. Financial accounting is extremely important for the existence of every business organization, because with the help of accounting the general success and failure of the company is recorded and analyzed. In order to keep the finance of the company the system of accounting should be developed to the highest level. The employer should know everything about the profit, expenditure of the company, the possibility of the further development the finance which can be used for the production of goods and services , the ability of investment and improvement of the equipment and machinery. All the financial decisions of the company have their results in financial accounting, which is a valuable thing because it helps the boss to compare the rates of the development of the company from month to month, from year to year.
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Accounting Equation

Case study on accounting equation
Case study on accounting equation
Case study on accounting equation
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Case Study on Basic Financial Accounting | Case Study Template

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Accounting equation is the equation which is based on the equality of debits and credits which influenced the creation of double-entry bookkeeping system. Obviously, the organization should be very careful about its financial activity in order to keep its revenue and expenditures under the strict control which will be used in the process of decision making. The business transactions which occur in a company influence its economic condition seriously and the owner will need to pay attention to the slightest transactions in order to maintain the gradual development of the firm and its revenue. The whole financial position of the company can be named with a one word — assets, or everything what the company owns. Liabilities are the elements and finance which the company owes to investors, shareholders and other partners who play the considerable role in the activity of the organization.
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The accounting equation forms the basis of the double entry bookkeeping, wherein for each transaction, total debits are equals to total credits. Every business transaction usually imposes an impact on the financial position of a business entity, which is measured using assets, liabilities and owners equity. The accounting equation, sometimes referred to as the balance sheet equation, denotes the relationship between assets, liabilities and owners equity, and is used in understanding the relationship existing between the financial statements of a business entity.
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