ACCOUNTING EQUATION Definition

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ACCOUNTING EQUATION is a mathematical expression used to describe the relationship between the assets, liabilities and owners equity of the business model. The basic accounting equation states that assets equal liabilities and owners equity, but can be modified by operations applied to both sides of the equation, e.g., assets minus liabilities equal owners equity.

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MANAGERIAL ACCOUNTING is a system using financial accounting records as basic data to enable better business decisions in the areas of planning and control.

OPERATING LEVERAGE is fixed operating costs divided by total (fixed plus variable) operating costs.

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