The Accounting Equation

This week’s topics

The Accounting Equation

1. Definition of assets, liabilities, and capital
2. Relationship between balance sheet elements
3. Effect of business transactions on the equation
4. Calculating capital adjustments
5. The Basic Accounting Equation
6. ACCOUNTING EQUATION: Explained in (Almost) 2 Minutes!
7. ASSETS, LIABILITIES & EQUITY: Explained in (Almost) 2 Minutes!
8. Running a small business

What you will be able to do

• 1.1 Explain the principle that Capital = Assets – Liabilities.
• 1.2 Demonstrate the use of the accounting equation.

Activity

Start with this week’s 4 videos, then: Seminar, guided reading and a short written task: explain the principle that Capital = Assets – Liabilities.

Study materials

Videos

• The Basic Accounting Equation · YouTube · Edspira · 7 min · for registered students
• ACCOUNTING EQUATION: Explained in (Almost) 2 Minutes! · YouTube · Accounting Stuff · 3 min · for registered students
• ASSETS, LIABILITIES & EQUITY: Explained in (Almost) 2 Minutes! · YouTube · Accounting Stuff · 5 min · for registered students
• Running a small business · Oak National Academy, Key Stage 3 (lower secondary level) · for registered students

Further resources

• Principles of Accounting Vol. 1, ch. 3.2–3.4: The accounting equation and transactions · PDF · OpenStax, textbook chapter; pp. 109–122 · for registered students