The accounting equation: assets, liabilities and equity
Find your balance
Try the interactive lessonLet’s make it simple.
Everything a business owns has a source: it was borrowed or belongs to its owners. Assets = Liabilities + Equity.
Picture this.
You open a lemonade stand with $40 of your own and borrow $60. Your $100 cash is an asset. The $60 loan is a liability. Your $40 is equity.
Check your understanding
Your lemonade stand has $100 in assets and owes $60. How much is your equity?
Think it through, then reveal the explanation
Equity = Assets − Liabilities. $100 − $60 = $40 belongs to you.
Build the bigger picture.
- Assets
- Liabilities
- Equity
Build the equation: first what you own, then what you owe, then your share.
Now make it move.
Bring this idea to life with interactive practice, a 3D illustration and tips along the way. Your progress stays on your device.
Practice The Equation