Accounting Equation Paper Essay Example for Free

Accounting Equation Paper EssayThe basic accounting equation is Assets = Liabilities + Stockholders Equity. When looking at the fit sheet one can acquit that assets must balance out each transaction and balance the claims to the assets (Kimmel, 2010). A balance sheet provides Assets of the troupe first and foremost, then Liabilities and Stockholders Equity and last contain earnings. This shows the companies incoming money, outgoing payments, and the money left or retained at the end of each time period being documented on the balance sheet.The components of the accounting equation affect each other in many ways. For example, when cash assets are received the company is making profit only as long as it is making more revenue than the liabilities owed. So, when using the Sierra Corporation on pg. 14 from the text the company has to pay the Liabilities Notes payable, Accounts payable, Salaries payable, Unearned dish up revenue, and Interest prior to ever turning a profit above the black. When looking at a balance sheet one needs to fuck all incoming as well as outgoing money to determine profitability and sustainability of a corporation.See more Satirical elements in the casualty of Huckleberry Finn essayNext, when looking at a balance sheet the liabilities + the stockholders Equity have to ALWAYS balance out to amount of assets to hear all things are accounted for and there are no accounting errors. When done properly the balance sheet can be used to verify the companys revenue and the financial stability of a company based upon debt to stockholders equity.ReferencesKimmel, P. D., Weygandt, J. J., Kieso, D. E. ( 2010). Financial accounting Tools for business decision making (6th ed.). Hoboken, NJ John Wiley Sons.