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Chapter 3

The accounting equation can be expressed as follows:

Assets = Equity + Liabilities, or

Assets – Liabilities = Equity

The accounting equation is a simple expression of the fact that at any point in time
the assets of the business entity will be equal to its liabilities plus equity.

Tutor notes guidance – discussion points

Take students slowly through illustration 3 from chapter 3 of the Study Text

demonstrating the amendments to the accounting equation after each
transaction

Illustrations and further practice

Illustration 3 from Chapter 3 of the Study Text.

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