An accounting equation is used by an accountant when recording transactions on a company.

Each transaction will be written, collected, grouped, and analyzed using the basic equation of accounting. 

The important thing to note is the basic equation of accounting should be able to show the balance between assets with equality, credit with debit.

Wealth of the company is assets. The right to property is the right to wealth (equality). From both of variables we can create a simple equation:

Equality or property rights is divided into 2, namely the rights of the creditor (lender) and the property itself. The equality right of the creditor is called the debt of the enterprise, while the equality rights of the firm are called capital. Here the equation:

Sources:

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