What is accounting, accounting equation?

Why can't the accounting equation be owned-owed=leftovers?

  • I'm having a lot of trouble with this for my accounting class. The normal accounting equation is assets=liabilities + equity. So why can't owned-owed=leftovers be the accounting equation?

  • Answer:

    What you say is correct, but if the 'leftovers' is minus ( loss) the equation will be owed - owned = leftovers !

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I have always wondered this myself. I think this is kind of like what Erin Brockovich said about lawyers: all they do is complicate things that are not complicated.

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