What is the goal of accounting equation?

Establishing a fundamental framework for preserving the balance of a company’s financial transactions is the aim of the accounting equation. The idea that a company’s assets are equal to the sum of its liabilities and equity is a fundamental one in double-entry accounting. In order to maintain a balanced and accurate portrayal of the company’s financial status, this equation, “Assets = Liabilities + Equity,” makes sure that every financial transaction has an impact on both sides of the equation. Making decisions and keeping accurate records are made easier because to it. The accounting equation helps organizations maintain their financial health and assists stakeholders in evaluating the overall performance and stability of the company by giving a systematic means to manage resources and commitments.

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