The short (basic) form of the accounting equation that consists of the three basic accounting elements: assets, liabilities, and equity (capital). In equation form, the basic accounting equation is defined as follows:

Assets = equity + liabilities

Or in shorthand,

A = L + C

Where: A, L, and C, stand for assets, liabilities, and capital (equity), respectively.

As opposed to the expanded accounting equation, the basic equation conceals other accounting elements: revenue, expenses, and drawing (dividends), as all of them are hidden in the capital element (owners’ equity).