Accounts and Finance

"Accounting equation creates a relation between the resources or the assets of a company and claims of resources to owners and creditors and the equation is :

 Assets = liability + owner's equity

where the owner's equity is 

  = {(owner's capital) + (owner's withdrawal) + (revenues) - (expenses)}

It's components are :

1. Assets : the resources owned and controlled by business and used to produce benefits for the company and are classified on the balance sheet as current assets, non-current assets, property, intangible assets.

2. Liabilities : The claims creditors have over resources or assets of a company are liabilities and are classified on the balanced sheets as current liabilities or long term liabilities. 

3. Owner's Equity : The financial interest of the owner to invest in the business and comprises of capital, revenues, drawings and expenses.

4. Revenues : these are the earning from the operation of a business."