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Here is the illustration or Example of Accounting Equation from the book of principles of accounting i.com part 1 or b.com part, chapter 2 for understanding the accounting equation through an illustration 2. Solve the following transactions in accounting equation 2014 June 1 .   Mr. Salman started his business with cash Rs.10,00,000            5 .   Purchased Furniture for cash Rs.4,000            6.   Purchased Goods for Cash Rs.25,000            10.   Paid Transportation on goods purchased Rs.1,000             12.   Sold Goods For cash Rs.15,000, costing Rs.11,000            15.   Purchased Goods on credit basis for Rs.15,000           ...

This is the most important topic and the whole Accounting is based on this equation as all the financial statements follow this accounting equation and this accounting equation includes all the five types of accounts used in accounting. These Accounts are:     ü   Assets     ü   Liabilities     ü   Owner's Equity     ü   Income     ü   Expenses You may also be interested in " Expanded Accounting Equation " What Do You Mean By Accounting Equation? Accounting Equation or Basic Accounting Equation or Fundamental Accounting Equation or Accou nti ng Formula Sheet  tells us that all the assets owned by the business are always equal to the sum of liabilities and Owner's Equity or i n other words it shows us the fu ndame ntal relatio nship exists betwee n Assets, Liabilities A nd Equity. Numerically, we can write Accou n ti ng Equatio n Formula as s...