The Accounting Equation — The Foundation of All Financial Literacy

By Jessica Arnwine, CAER Financial Group | caergroup.com

The Single Equation That Governs All of Finance

Assets = Liabilities + Owner's Equity

Every transaction that has ever occurred in any business — from a corner store to Apple — can be expressed within this equation. It always balances. This is the principle of double-entry bookkeeping, codified by Luca Pacioli in 1494.

Debit/Credit System Logic

The accounting system uses a two-column ledger for every account. Left = Debit, Right = Credit.

The confusion: a "debit" is not inherently positive or negative.…