Accounts
Why does the accounting equation have to balance?
Due to its design, it was intended as check that your records were correct - think of it as a barometer of sorts. If you look at your general ledger or trial balance and the assets do not equal the liabilities plus equity (the debits don't equal the credits), then you know you have a problem that must be resolved prior to having numbers that should be relied upon for any purpose whatsoever.
Advertisement
More from this specialization
- What is the meaning of invoice?
- What is the difference between billable and non-billable expenses?
- What is debit and credit from the banks point of view ?
- Explain Different Functions Of Internal Audit?
- What is a register when referring to accounting or bookkeeping?
- What is a difference between public and private accounting?