Basic accounting formula

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Updated: Aug 20, 2021

Basic accounting formula

Can also be written as

Basic accounting formula

The basic accounting formula tells us that the company’s assets equals its liabilities (what it owes others), plus what it owes to its owners.

In other words itthe company was to sell all of its assets in an open market and then pay off its total liabilities, one would get the net worth of the company.



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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.