How are revenue and expenses treated in accounting equation
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Answer:
Did you know? To make the Accounting Equation topic even easier to understand, we created a collection of premium materials called AccountingCoach PRO. Our PRO users get lifetime access to our accounting equation visual tutorial, cheat sheet, flashcards, quick test, and more. From the large, multi-national corporation down to the corner beauty salon, every business transaction will have an effect on a company's financial position. The financial position of a company is measured by the following items:
Assets (what it owns)
Liabilities (what it owes to others)
Owner's Equity (the difference between assets and liabilities)
The accounting equation (or basic accounting equation) offers us a simple way to understand how these three amounts relate to each other. The accounting equation for a sole proprietorship is: