The Accounting Equation represents the relationship between the Assets, Liabilities, and Owner's equity of a person or a business.
It is the foundation for the double-entry bookkeeping system. The Accounting equation ensures that the balance sheet remains “balanced,”
Some examples of items that fall under each section
Assets: Cash, Accounts Receivable, Inventory, Equipment
Liabilities: Accounts Payable, Short-term borrowings, Long-term Debt
Shareholder’s Equity: Share Capital, Retained Earnings