The balance sheet equation shows the equality of assets with liabilities plus shareholders' equity. This equation requires that an entity's assets exactly balance, or offset, an equal amount of financing provided by creditors and owners of the corporation.

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The balance sheet equation, also known as the accounting equation, states that assets = liabilities + shareholders' equity. This means that the total amount of assets that an entity owns must be equal to the total amount of financing that the entity has received from its creditors and owners. Therefore, the equation ensures that the balance sheet remains in balance, with the same amount on both sides of the equation.

The Balance Sheet Equation Shows the Equality of Assets with Liabilities