basic accounting equation

The basic accounting equation states that:

$$\text{Assets}=\text{Liabilities}+\text{Stockholders’ Equity}$$

Do not use minus sign!

Keep the signs of Liabilities as positive. In accounting, liabilities (and other things with credit normal balance) do not use a minus sign.

After adding annotation for the normal balance of each term, we have:

$$\text{Assets(D)}=\text{Liabilities(C)}+\text{Stockholders’ Equity(C)}$$

We can expand stockholders’ equity further:

$$\text{Assets(D)}=\text{Liabilities(C)}+(\text{Common Stock(C)}+\text{Retained Earnings(C)})$$

We can then expand retained earnings further:

$$\text{Assets(D)}=\text{Liabilities(C)}+\text{Common Stock(C)}+(\text{Revenue(C)}-\text{Expenses(D)}-\text{Dividends(D)})$$