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 Assets = Liabilities + Equity is the accounting equation and it is the basic concept that ensures the balance of financial records of a company. It demonstrates that all that a business possesses is either debt financed or owner financed. The equality that loses at least two accounts whenever a transaction is made is what guarantees both accuracy in bookkeeping which is double-entry. The balance sheet is based on the equation and assists the users to comprehend the financial position, analyze the solvency, and identify errors. With this balance, the businesses are able to come up with dependable financial statements that facilitate decision making, accountability and uniformity of reporting.