Accounting Equation

The assets,liabilities and capital are the backbones of modern day accounting. The relationship that they share can be expressed using the basic accounting equation. It is the mathematical form of explaining double entry system of book keeping according to which, the total assets being always equal to the total equities consisting of the capital and liabilities. The organization is represented by assets, which are the things owned by it and available for use in carrying on work of that organization. Creditors' claims for having sold, provided or loaned assets or services by them to the organization with the payments by the organization to be made in the future are represented by the liabilities. The capital represents the organization's claim against the assets after the liabilities have been subtracted.
It is expressed as:
Assets = Liability + Capital
For example: When the resources are supplied by persons other than the owner, these persons are known as liabilities, then the equation will be:-
Resources in business = Resources supplied by the owner + Resources supplied by the outsiders.
Assets=Capital+Liabilities
The twos sides of the equation are always equal, because both sides deal with the same thing but form a different viewpoint.
Resources in business(what they are)= Resources in business(who supplied them)