Question

Describe the fundamental accounting equation.how are revenue and expensed related to it?​

Answer 1

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➠Tʜᴇ ғᴜɴᴅᴀᴍᴇɴᴛᴀʟ ᴀᴄᴄᴏᴜɴᴛɪɴɢ ᴇϙᴜᴀᴛɪᴏɴ ɪꜱ ᴀꜱꜱᴇᴛꜱ= ᴄᴀᴘɪᴛᴀʟ + ʟɪᴀʙɪʟɪᴛɪᴇꜱ. Rᴇᴠᴇɴᴜᴇꜱ ʟᴇᴀᴅ ᴛᴏ ɪɴᴄʀᴇᴀꜱᴇ ɪɴ ᴀꜱꜱᴇᴛꜱ ᴏʀ ᴄᴀᴘɪᴛᴀʟ ᴡʜɪʟᴇ ᴇxᴘᴇɴꜱᴇꜱ ʀᴇᴅᴜᴄᴇ ᴀꜱꜱᴇᴛꜱ ᴀɴᴅ ᴍᴀʏ ᴀʟꜱᴏ ᴄʀᴇᴀᴛᴇ ʟɪᴀʙɪʟɪᴛʏ. Rᴇᴠᴇɴᴜᴇ ᴀɴᴅ ᴇxᴘᴇɴꜱᴇꜱ, ᴛʜᴇʀᴇғᴏʀᴇ, ᴀʀᴇ ᴛʜᴇ ʀᴇᴀꜱᴏɴꜱ ғᴏʀ ꜱᴛᴀʙɪʟɪᴛʏ ᴀɴᴅ ꜱᴏᴜɴᴅɴᴇꜱꜱ ᴏғ ᴛʜᴇ ʙᴀʟᴀɴᴄᴇ ꜱʜᴇᴇᴛ.

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Answer 2

Answer:

Assets = Capital+ Liabilities

Explanation:

The fundamental accounting equation is assets= capital + liabilities. ... Revenues lead to increase in assets or capital while expenses reduce assets and may also create liability. Revenue and expenses, therefore, are the reasons for stability and soundness of the balance sheet.