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Equation in Balance Sheet

Equation in Balance Sheet

Balance sheet ( sometime called statement of financial position) is reported summary about financial position for company such as asset, liability and equity (capital).

Equation in balance sheet :

Asset= Liability + equity

Assets are classified two kinds : current assets ( less or equal one year) and long term asset ( greater than one year).

Liabilities are classified two kinds: current liabilities ( less or equal one year) and long term liabilities ( greater than one year).

Equity is called capital sometime.

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