# Accounting Equation

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Registered Posts: 469 Dedicated contributor ๐ฆ
Hi guys

this is maybe an odd question but the accounting equation is A-L=E
but also A=E+L

with the new layouts under the IAS stadards a SofFP is presented as A=E+L but the book even the new ones still referr to the Accounting equation as A-L=E (see page 16 of the osbourne book)
my question is therefore if we were asked this on the paper which one would be correct or expected as they are both correct.

Many thanks

• Registered Posts: 1,774 Beyond epic contributor ๐งโโ๏ธ
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pirate wrote: ยป
Hi guys

this is maybe an odd question but the accounting equation is A-L=E
but also A=E+L

with the new layouts under the IAS stadards a SofFP is presented as A=E+L but the book even the new ones still referr to the Accounting equation as A-L=E (see page 16 of the osbourne book)
my question is therefore if we were asked this on the paper which one would be correct or expected as they are both correct.

Many thanks

Its Assets = Liabilities + Equity now. It changed when I was doing this I dont know if you would get away with using either anymore. Think they only let you off for so long.
• Registered Posts: 981 Epic contributor ๐
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hi Karen , my kaplan book still uses as well the Equity = Assets - Liabilities

as far as i know SFP's are drawn as

Non current assets
Current assets
Current liabilities
Net current assets
non current liabilities
Net assets

Equity

Where Net assets and Equity should be the same value

I dont think you would be marked wrong whether you state Assets= Equity + Liability OR Equity = Assets - Liabilities

PS from a maths point of view (and from a mathematician brain) i can tell you that both equations are the same (you can read the "equal" as you please)
• Registered Posts: 1,774 Beyond epic contributor ๐งโโ๏ธ
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Steve has posted on another thread to make sure you use the correct one. The books do still say it the old way but he recommends you do it the new way.
• Registered Posts: 469 Dedicated contributor ๐ฆ
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Thanks guys was just checking
• Registered Posts: 981 Epic contributor ๐
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Steve has posted on another thread to make sure you use the correct one. The books do still say it the old way but he recommends you do it the new way.

Well he knows better than me so i will use the correct one then!

thanks
• Registered Posts: 469 Dedicated contributor ๐ฆ
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Steve has posted on another thread to make sure you use the correct one. The books do still say it the old way but he recommends you do it the new way.

Hey Jewels
do you have a link the the other thread my search comes up with nothing hence the post

many thanks

Karen
• Registered Posts: 997 Epic contributor ๐
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Hi,

Again, the revised accounting equation is as a result to IAS 1 (revised). The DFS paper will contain proformas, but it is much better to do question practise using the correct version.

I know some students are 'chancing their luck' by continuing to refer to balance sheet and preparing under the old format but plan to answer correctly in the exam room! I do not advise such a tactic - it is much better to get into the habit of doing things correctly NOW because under exam pressure it can be easy to refer to the incorrect terminology/methodology and lose marks!

Kind regards
Steve
• Registered Posts: 981 Epic contributor ๐
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hi Steve....

i have now received the AAT newsletter and there is a table with what was called before and what is now called

i did prepare myself as well kind of like a table and everytime i go to bed it is like my prayer i check the list and try to remember the new names
• Registered Posts: 1,774 Beyond epic contributor ๐งโโ๏ธ
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Thank Goodness Steve replied on this thread as I have no idea how to add a link to another post! :laugh:
• Registered Posts: 981 Epic contributor ๐
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Thank Goodness Steve replied on this thread as I have no idea how to add a link to another post! :laugh:

have you tried copy and paste? *insert tongue smile here*
• Registered Posts: 1,774 Beyond epic contributor ๐งโโ๏ธ
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Hey smarty pants can you break it down exactly how to do it as I cant get it to work and it doing my head in!
• Registered Posts: 981 Epic contributor ๐
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open the page you want people to go to
go to the WEB URL address