Fundamental accounting equation
Which of the following is the fundamental accounting equation?
The two sides of the accounting equation must be equal.
Consideration with calculating cash flow from operations--starting with basic accounting equation;
The accounting equation reflects the relationship among assets, liabilities, and owner's equity.
These three basic elements, assets, liability and capital, are connected by a fundamental relationship called balance sheet equation, sometimes called simply the accounting equation.
On the basis of the accounting equation, the financial position and the operating result of a business can be recorded and reported to the interested users of accounting
To meet with the demands of the developing private capital economy, reform has to be implemented in accounting equation, financial management objectives and distribution system.
According to the accounting equation, a firm is assumed to pos-sess its assets subject to the rights of the creditors and owners.
