Why total assets equal the sum of total liabilities & equity, Financial Management

Why do total assets equal the sum of total liabilities and equity?Explain.

Assets = Liabilities + Equity

Assets are the entities of value a business owns. Liabilities are liable claims on the business by non-owners and equities are the owners' claim on the business. The sum of the equity and liabilities is the total capital contributed to the business which by definition equals the total value of the assets.

 

Posted Date: 6/17/2013 1:29:11 AM | Location : United States







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