{"id":344,"date":"2025-09-28T14:30:51","date_gmt":"2025-09-28T13:30:51","guid":{"rendered":"http:\/\/ecourse.co.uk\/8135\/?p=344"},"modified":"2025-09-28T14:04:52","modified_gmt":"2025-09-28T13:04:52","slug":"week-2-2","status":"publish","type":"post","link":"https:\/\/ecourse.uk\/8135\/?p=344","title":{"rendered":"Week 02a [5] [CORE]: The Accounting Equation &#038; the Elements of Accounting"},"content":{"rendered":"<p><span style=\"color: #3366ff;\"><strong><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1685 alignnone\" src=\"https:\/\/ecourse.uk\/8135\/wp-content\/uploads\/2023\/09\/acc-equation.jpg\" alt=\"\" width=\"622\" height=\"190\" srcset=\"https:\/\/ecourse.uk\/8135\/wp-content\/uploads\/2023\/09\/acc-equation.jpg 622w, https:\/\/ecourse.uk\/8135\/wp-content\/uploads\/2023\/09\/acc-equation-300x92.jpg 300w\" sizes=\"auto, (max-width: 622px) 100vw, 622px\" \/><\/strong><\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/ecourse.uk\/8135\/?p=344\/#The_Accounting_Equation\" >The Accounting Equation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/ecourse.uk\/8135\/?p=344\/#Directed_Private_Study\" >Directed Private Study<\/a><\/li><\/ul><\/nav><\/div>\n<h4 style=\"text-align: left;\"><span class=\"ez-toc-section\" id=\"The_Accounting_Equation\"><\/span><span style=\"color: #3366ff;\"><strong>The Accounting Equation<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p style=\"text-align: left;\">The statement of financial position [i.e. balance sheet] reflects what is widely known as &#8216;<strong>the accounting equation<\/strong>&#8216;.<\/p>\n<p style=\"text-align: left;\">The accounting equation states that, for an entity, its total assets of a business minus its total liabilities will equal its equity or capital<br \/>\ni.e. A &#8211; L = E.<\/p>\n<p style=\"text-align: left;\">This concept is essentially quite simple. If someone purchases a building costing \u00a3400,000 partly financed by a \u00a3320,000 mortgage, the owner&#8217;s <strong>equity<\/strong> in the building is \u00a380,000. Equity is sometimes called capital. All statements of financial position will analyse and show totals for assets, liabilities and capital.<\/p>\n<p style=\"text-align: left;\">Like any equation, the accounting equation can be rearranged, for example:<\/p>\n<ul style=\"text-align: left;\">\n<li>Assets = Liabilities + Equity<\/li>\n<li>Non current assets + Current Assets = Non current liabilities + Current Liabilities + Equity<\/li>\n<li>and so on<\/li>\n<\/ul>\n<p style=\"text-align: left;\">Follow the link below to access an elearning resource which will take you through the <strong>accounting equation<\/strong> and the <strong>elements of accounting<\/strong>.<\/p>\n<p style=\"text-align: left;\"><a href=\"http:\/\/www.ecourse.co.uk\/equation\/\" target=\"_blank\" rel=\"noopener\"><strong>Link to learning materials<\/strong><\/a> (elearning resource on the accounting equation).<\/p>\n<p style=\"text-align: left;\">There is addtional reference material on the International Accounting Standards Board website at <a href=\"https:\/\/www.iasplus.com\/en-gb\/standards\/other\/framework\" target=\"_blank\" rel=\"noopener\"><strong>https:\/\/www.iasplus.com\/en-gb\/standards\/other\/framework<\/strong><\/a> &#8211; scroll down to the section on &#8216;The elements of financial statements&#8217;. <strong>This is authoritative material.<\/strong><\/p>\n<hr \/>\n<p><strong>CLASS EXERCISE<\/strong><\/p>\n<p>Ward Hadaway publishes an <strong><a href=\"https:\/\/www.wardhadaway.com\/what-we-do\/businesses\/fastest-50\/north-east\/north-east-fastest-50-companies-2024\/\">annual list<\/a><\/strong> of the top 50 companies in the North East based on growth. For 2024 the list was headed by <strong>RE:GEN North East Limited.<\/strong><\/p>\n<p>Things to do:<\/p>\n<p>Task 1: What does the company do?<\/p>\n<p>Task 2: Find its website and explore &#8230; Does the company publish its financial results on its website? Hint: it doesn&#8217;t &#8230; why do you think that is so?<\/p>\n<p>Task 3: Locate the company&#8217;s record at Companies House. Explore the legal information available about the company.<\/p>\n<p>Task 4: Explore the latest filed financial statements. Locate the balance sheet (statement of financial position) and explore how the statement reflects the accounting equation.<\/p>\n<p>Task 5: Fastest growing? Locate some measures of size, which are the best?<\/p>\n<hr \/>\n<h4 style=\"text-align: left;\"><span class=\"ez-toc-section\" id=\"Directed_Private_Study\"><\/span><span style=\"color: #3366ff;\"><strong>Directed Private Study<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<ul>\n<li style=\"text-align: left;\">Start preparing for your first seminar session: see separate post. The seminar tasks are concerned with helping you deepen your understanding of the material covered in Lecture Two.<\/li>\n<li style=\"text-align: left;\">Remember the purposes of the seminar sessions is to help you with any problems you are having with the lecture and directed private study sessions.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The Accounting Equation The statement of financial position [i.e. balance sheet] reflects what is widely known as &#8216;the accounting equation&#8216;. The accounting equation states that, for an entity, its total assets of a business minus its total liabilities will equal its equity or capital i.e. A &#8211; L = E. This concept is essentially quite [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-344","post","type-post","status-publish","format-standard","hentry","category-lectures"],"_links":{"self":[{"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/posts\/344","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=344"}],"version-history":[{"count":36,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/posts\/344\/revisions"}],"predecessor-version":[{"id":1963,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=\/wp\/v2\/posts\/344\/revisions\/1963"}],"wp:attachment":[{"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=344"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=344"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecourse.uk\/8135\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=344"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}