Course · Act I: How a Business Works · Chapter 2
The accounting equation
Assets = liabilities + equity: what a balance sheet shows and why it always balances, built for a small café.
Key terms
- Balance sheet
- A snapshot of what a business owns and owes on one day.
- Assets = Liabilities + Equity
- Always true. Equity is the owner’s leftover claim.
“The Balance Sheet Equation” is part of the full course: 6 puzzles on the accounting equation, with a story that carries through all five acts. Try this act’s free chapter, “Revenue, Costs, Profit”, first.