Accounting Equation

Accounting equation formed based on the Double Entry system which is founded by Frater Luca Bartolomes Pacioli (Father of modern accounting)

Equity
At the start of a business, owners put some funding into the business or owners interest on a business its define as equity (Owners capital, Retained earning,etc)
Assets
The probable future benefit involves a capacity, singly or in combination with other assets, in the case of profit oriented enterprises, to contribute directly or indirectly to future net cash flows.

• Current Assets
  
  A balance sheet account that represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash.
  
• Non Current assets
  An asset which is not easily convertable to cash or not expected to become cash within the year. Examples include Property Plant Equipment. opposite of current asset
  This can be define in to two
  
• Tangible Assets
  Assets having a physical existence, such as cash, equipment, and real estate; accounts receivable are also usually considered tangible assets for accounting purposes.
  
• Intangible Assets
  Something of value that cannot be physically touched, such as a brand, franchise, trademark or patent. opposite of tangible assets.
  

Liability
An obligation that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed. This include accounts payable, taxes, wages, accrued expenses, and deferred revenues. Current liabilities are debts payable within one year or long.

• Current Liability
  An obligation that legally binds an individual or company to settle a debt with in ONE YEAR of period
  
• Long Term Liability
  An obligation that legally binds an individual or company to settle a debt MORE THAN ONE YEAR period.

Accounting Equations

• Equity = Assets - Liability
• Equity = (Current Assets + Non Current Assets)-(Current Liability + Long-Term Liability)
• Owners Capital + Retain Earnings = Assets - Liability
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