What are the 3 accounting elements?

Answer 1

Assets

An asset is something (a resource) that the company currently owns and uses to get the business functioning.

Liabilities

A liability is an obligation that a business has towards an external entity, based on a previous transaction. That is, a liability is a debt or an obligation that a company has towards a person or another business. (In some cases or scenarios, the work liability seems to (always) have a pejorative meaning, not in accounting. Therefore, do not consider the concept or idea of liability as negative or as having negative effects. In fact, without liabilities, which are largely based on promises (that must be kept), it is hard to think of how businesses could function). There are various scenarios in which liabilities apply.

Owner's Equity

Introduction

The owner's equity is the difference between what the business owns and what it owes. Put it another way, the assets are the total of the liabilities and the owner's equity. This can be mathematically expressed as follows:

Assets = Liabilities + Owner's Equity

or

A = L + OE

As you can imagine, the owner's equity can be a measure by which a company has or does not have the needed resources for an effective conduct of its business. To express the relativity of this measure, we say that the owner's equity increases or decreases.

By: Loyd Liao