Balance Sheet Equation

Assets equal liabilities plus owners' equity.

Also called the fundamental accounting equation. The way to read it is as a statement about financing: anything of value the business holds was paid for by somebody, either a lender who has to be repaid or an owner who keeps whatever survives. Given two totals, solve for the missing one. Given all three, verify that the sides agree, since a sheet out of balance is a sheet containing a mistake.