Assets = liabilities+owners' equity: it is the theoretical basis for preparing balance sheets and double-entry bookkeeping. This formula is a mathematical expression that reflects the economic relationship of various accounting elements in accounting, that is, quantitative relationship, also known as accounting equation, accounting balance formula and accounting identity.

There are usually two kinds of rights and interests: one is the rights and interests formed by investing assets in enterprises as investors, which is called owner's rights and interests; Second, the rights and interests formed by providing assets to enterprises as creditors are called creditors' rights and interests or liabilities.

Understanding of the formula:

Assets equal to liabilities plus owner's equity is based on accounting identity. Assets = liabilities+owners' equity. The interdependence of assets and rights and interests determines that the sum of total assets and total liabilities plus total rights and interests of an enterprise must be equal in quantity.

Assets equals liabilities plus owner's equity. The company's assets are divided into the rights and interests formed by investing assets in the enterprise as an investor and the rights and interests formed by providing assets to the enterprise as a creditor, in which liabilities are the rights and interests formed by providing assets to the enterprise as a creditor, and owners' equity is the rights and interests formed by investing assets in the enterprise as an investor, so assets = owners' equity+liabilities.