The Notion of Assets Equals Liabilities Plus Equity Explained
Assets include cash and cash equivalents or liquid assets, which may include Treasury bills and certificates of deposit (CDs). If we rearrange the Accounting Equation, Equity is equal to Assets minus Liabilities. Liabilities are owed to third parties, whereas Equity is owed to the owners of the business. The formula defines the relationship between a business’s Assets, Liabilities […]
