I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

 

3

   The accounting equation 

The accounting equation is ASSETS = CAPITAL + LIABILITIES. 

We will start by showing how to account for a business's transactions from the time that trading first 

begins. We will use an example to illustrate the 'accounting equation', ie the rule that the assets of a 

business will at all times equal its liabilities. This is also known as the statement of financial position 

equation. 

 EXAM FOCUS POINT 

The ACCA examining team commented that processing of ledger accounts has been particularly well 

answered in past exams. 

BPP Tutor Toolkit Copy

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CHAPTER 5  

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  LEDGER ACCOUNTS AND DOUBLE ENTRY 

 

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3.1 Example: the accounting equation