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Startups and Small Businesses
• Entrepreneurs use the equation to monitor cash flow and ensure that investments align with liabilities.
Corporate Analysis
• Business analysts evaluate financial statements using the equation to assess risk and profitability.
Banking and Credit Decisions
• Lenders use the equation to determine a borrower’s creditworthiness.
Case Study: Accounting Equation in Action
Consider a start-up, TechSolutions Pvt. Ltd., whose following transactions take place in its first month of operations:
Transaction Effect
Owner invests ₹1,00,000. Assets=₹1,00,000,Liabiliti

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