Question

Is the Accounting Equation, by definition, true for any business entity?

Do you envision any circumstances under which this equation would ever become imbalanced?

Which element of this equation would be responsible for that occurrence?

Please explain your rationale for each of the three questions.

Answer 1

It is terribly true that the accounting equation is "Assets = Liabilities + Equity".

This accounting equation applies to all or any forms of businesses and is valid all over. it's thought-about that this accounting equation involves all the assets, liabilities and equity share capital that the business ownes. Under varied circumstances, this accounting equation would become unbalanced.

These ar as follows :

whenever the business owns a lot of liabilities then its assets, disturbance in equity also can imbalance the accounting equation, furthermore, if asstes owned by the business ar over its liabilities and equity, then accounting equation is in balanced.

There ar varied parts that ar chargeable for business incidence and these parts also are chargeable for making imbalance/balance in accounting equation.

various varieties of current moreover as fastened assets, various kind of current moreover as fastened liabilities, equity share capital

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