Which financial statement involves all aspects of accounting equation?

The balance sheet is the financial statement that includes every element of the accounting equation. The basis of double-entry bookkeeping is the accounting formula “Assets = Liabilities + Equity.” A balance sheet, which lists a company’s assets (what it owns), liabilities (what it owes), and equity (the remaining ownership portion), gives a quick overview of its financial situation at a given time. It ensures that total assets equal the sum of total liabilities and total equity by reflecting the equality of the accounting equation. This assertion is essential for determining the solvency, liquidity, and general financial health of a corporation. The balance sheet provides important information about the financial structure and responsibilities of a company by providing a thorough perspective of the accounting equation.

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