Assets = Liabilities + Equity.
It is the basic accounting equation that should be familiar to those in the world of business and even business students. These three are presented in the statement of financial position (or balance sheet’ as it is usually called). The balance sheet gives various stakeholders such an important view of the business, it is normally the first part to be presented in a complete set of financial statements (FS). For instance, potential investors may conclude that a company encumbered with a substantial amount of liabilities will consequently incur a significant amount of interest expense, which could negatively affect the bottom line.