Topics, 100 Accounting Resources, 100 Lecture List
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The double entry accounting system and the balance sheet are related in that the balance sheet represents the double entry accounting system using the basic accounting equation as the sections of the balance sheet: assets = liabilities + equity. The double entry accounting system can be expressed in many different ways, the balance sheet being one, the accounting equation another, and debits and credit another. Understanding the formats that the double entry accounting system can be expressed in is important because it helps others with regard to the double entry accounting system, it helps us gain a greater understanding of the double entry accounting system, and it helps us build financial statements from debits and credits to an accounting equation format represented in the balance sheet.