The accounting equation defines a company’s total assets as the sum of its liabilities and shareholders’ equity. It's the foundation of the double-entry accounting system.

The expanded accounting equation builds upon the basic accounting equation's use of assets, liabilities and equity by incorporating additional components such as revenues, expenses and withdrawals ...

The father of double-entry accounting, Luca Pacioli , was onto something when he contributed his wisdom in the 15th century to create what we now know is a basic accounting equation: assets ...