The total amount of assets of an organization over a period of time must be equal to the amount of ownership. The equation through which all this is proved is called the calculation equation.

### The formula for the calculation equation is as follows:

**A=L+E**

###
**A = Assets**

### L = Liabilities

### E = Equity

**Assets :**

Asset means financial assets. Which is owned by a business and which is used for profit. Such as merchant-owned furniture, buildings, machinery, etc.

### Liabilities :

Liability is the financial responsibility of the business. Which must be paid after a certain period of time of the business i.e. the third party claim on the total assets of the business is a liability.

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### Equity :

Excluding third party claims from the total assets of the business, what remains is ownership, that is, the owner's claim on the total assets is ownership.

### There are four factors that affect ownership:

**Owner investment**

**Revenue**

**Lift**

**Cost or expense**

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